Docoh
Loading...

NECA New America Energy

Filed: 27 Apr 21, 9:54am

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal years ended August 31, 2015

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

000-54243

Commission File Number

 

NEW AMERICA ENERGY CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

26-4144571

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

 

240 Vaughan Drive, Alpharetta GA

30009

(Address of principal executive offices)

(Zip Code)

 

(470) 767-8794

(Registrant’s  telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Name of each exchange on which registered

n/a

n/a

 

Securities registered pursuant to Section 12(g) of the Exchange Act:

 

Common Stock, $0.001 par value

Title of class

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes  No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T


i


(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No

 

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was approximately $26,619,000 (based on 5,663,636,806 shares held by non-affiliates and a closing market price of $0.0047 per share) as of February 28, 2021 (the last business day of the registrant’s most recently completed second quarter), assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.

 

APPLICABLE ONLY TO CORPORATE REGISTRANTS

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 

5,670,596,576 shares of common stock issued and outstanding as of March 30, 2021

 

DOCUMENTS INCORPORATED BY REFERENCE

 

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes.

 

None

 

 

 

 


ii


 

TABLE OF CONTENTS

 

 

PART I

 

1

 

 

 

Item 1

Business

1

Item 1A

Risk Factors

4

Item 1B

Unresolved Staff Comments

16

Item 2

Properties

16

Item 3

Legal Proceedings

16

Item 4

Mine Safety Disclosures

16

 

 

 

PART II

 

17

 

 

 

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

17

Item 6

Selected Financial Data

18

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

21

Item 8

Financial Statements and Supplementary Data

21

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

22

Item 9A

Controls and Procedures

22

Item 9B

Other Information

24

 

 

 

PART III

 

25

 

 

 

Item 10

Directors, Executive Officers and Corporate Governance

25

Item 11

Executive Compensation

27

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

28

Item 13

Certain Relationships and Related Transactions, and Director Independence

29

Item 14

Principal Accounting Fees and Services

30

 

 

 

PART IV

 

32

 

 

 

Item 15

Exhibits, Financial Statement Schedules

32

 

 

 

SIGNATURES

 

34

 

 

 

 

 

 

 

 

 

 

 

 


iii


Table of Contents

 

Index to Financial Statements


PART I

 

ITEM 1. BUSINESS

 

Forward Looking Statements

 

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements.  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, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

These risks include, by way of example and not in limitation:

 

·the uncertainty that we will not be able to successfully identify commercially viable resources on our exploration properties; 

·risks related to the large number of established and well-financed entities that are actively competing for limited resources within the mineral property exploration field; 

·risks related to the failure to successfully manage or achieve growth of our business if we are successful in identify a viable mineral resource, and; 

·other risks and uncertainties related to our business strategy. 

 

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

 

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 are unavailable to us.

 

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

 

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.

 

As used in this Annual Report, the terms “we,” “us,” “Company,” “our” and “New America” mean New America Energy Corp., unless otherwise indicated.

 


1


Table of Contents

 

Index to Financial Statements


Corporate Information

 

The address of our principal executive office is 240 Vaughan Drive, Alpharetta GA 30009 Our telephone number is 470-767-8794. Our place of business is located at 4775 Buford Highway, Chamblee GA 30341

 

Our common stock is quoted on the OTCBB (“Over-the-Counter- Bulletin-Board”) under the symbol “NECA”.

 

New America Energy Corp (formerly “Atheron, Inc.”) was incorporated in Nevada on May 8, 2006 as a development stage company, initially developing a technology for ethanol-methanol gasoline. The Company did not progress the development of this technology.

 

On November 5, 2010, we underwent a change of control and the Company’s newly appointed sole director and majority shareholder approved a name change to New America Energy Corp. and a twenty-five (25) new for one (1) old forward stock split of the Company’s issued and outstanding shares of common stock.

 

On November 16, 2010, the Nevada Secretary of State accepted for filing the Certificate of Amendment to the Company’s Articles of Incorporation to change our name from Atheron, Inc. to New America Energy Corp. The forward stock split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on December 1, 2010.

 

On November 14, 2012, the Nevada Secretary of State accepted for filing an amendment to our articles of incorporation whereby we increased our authorized common shares from 75,000,000 to 800,000,000, pursuant to the approval of our board of directors and majority shareholders as of June 26, 2012.

 

On September 17, 2013, the Company purchased Title King LLC for 50,000,000 shares of common stock

 

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

 

As of the balance sheet date, we have not generated any revenues from operations.

 

Our common stock is traded over-the-counter on the OTCBB under the ticker symbol “NECA.”

 

Our Current Business

 

As of August 31, 2015, we were a pre-revenue generating enterprise engaged in short-term lending of high interest rate loans collateralized by automobiles.

 

Specifically, our business model entails lending no more than 25% of the retail value of an automobile and taking a security interest in the underlying asset. All transactions are with owners who own their vehicles outright with no outstanding liens. In order to ensure that the retail value is estimated correctly, we use the Vehicle Identification Number of the car to determine if there have been any accidents or reported mechanical failures. We use the Mannheim Market Report to determine the fair value and lend accordingly. We hold the title in our possession until the automobile is returned and the loan is paid off.

 

Commencing in May 2016, the Company has initiated an app on its website called BestTitleDeal. (“BTD”) BTD is a mobile application that allows consumers to know the value of their automobile for trade-in or title loans without the pressure of a dealership or predatory lending. We believe that this will drive traffic to us as well as to receive referral fees that we might derive by forwarding our customers for other services.


2


Table of Contents

 

Index to Financial Statements


Our Current Financing

 

On March 28, 2012, we entered into an investment agreement (the “Investment Agreement”) with Fairhills Capital Offshore Ltd., a Cayman Islands company (“Fairhills”). Pursuant to the terms of the Investment Agreement, Fairhills has committed to purchase up to Three Million Dollars ($3,000,000) of our common stock over a period of up to thirty-six (36) months.

 

On October 1, 2012, the Company drew down $15,000 in funds, after a commission of $1,500, under the Investment Agreement and issued 620,000 Shares to Fairhills.

 

As of the date of this filing, the Investment agreement is not outstanding.

 

Market, Customers and Distribution Methods

 

Our target market is the subprime market, borrowers with credit scores below 600, who require immediate cash. The overwhelming majority of our business comes from drive-by traffic. However, we acquire customers through placing postcards and fliers at nearby malls and parking lots. We also use direct door mailers

 

Competition

 

Our primary competition comes from payday lenders and pawn shops.

 

Intellectual Property

 

We have not filed for any protection of our trademark, and we do not have any other intellectual property.

 

Research and Development

 

We did not incur any research and development expenses during the three year period ended August 31, 2015.

 

Reports to Security Holders

 

We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders annual reports containing financial statements audited by our independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. After the effectiveness of this Registration Statement we will begin filing Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet our timely and continuous disclosure requirements. We may also file additional documents with the Commission if they become necessary in the course of our company’s operations.

 

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

 

Employees

 

As of August 31, 2015 we did not have any employees. Jeff Canouse is our Chief Executive on a part time basis.


3


Table of Contents

 

Index to Financial Statements


ITEM 1A. RISK FACTORS

 

An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development. An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment. In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered. You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our Common Shares. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.

 

The risks and uncertainties described below could materially and adversely affect our business, financial condition and results of operations and could cause actual results to differ materially from our expectations and projections. You should read these Risk Factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations.

 

Risks Relating to Our Business and Industry

 

The industry in which we operate is strictly regulated at both the state and federal levels. Changes in applicable laws and regulations governing consumer protection, lending practices and other aspects of our business, or our failure to comply with applicable laws and regulations, could have a significant adverse impact on our business, results of operations, financial condition and ability to service our debt obligations.

 

Our business and products are subject to extensive regulation by state, federal and local governments that may impose significant costs or limitations on the way we conduct or expand our business. In general, these regulations are intended to protect consumers, not our investors or creditors.

 

Our business operates under a variety of state statutes and regulations, including those relating to:

 

·licensing and posting of fees; 

·lending practices, including disclosure requirements such as those contained in state truth in lending laws and related consumer protection laws; 

·interest rates and fees; 

·currency reporting; 

·recording and reporting of certain financial transactions; 

·privacy and data security of personal consumer information; 

·prompt remittance of excess proceeds from the sale of repossessed automobiles in certain states in which we operate; and 

·serving as a credit services organization, or “CSO,” in certain states in which we may expand our operations. 

 

Most states with laws that specifically regulate our products and services establish allowable fees, interest and other financial terms. In addition, many states regulate the maximum amount, maturity and renewal or extension of terms for the loans we provide. The terms of our products and services vary from state to state in order to comply with the specific laws and regulations of those states. For example, we are prohibited from providing automobile title loans in excess of $2,500 in Mississippi and Tennessee, $3,500 in Florida and $4,000 in Illinois (under certain circumstances). In addition, we may not provide an automobile title loan to a customer under the age of 19 in


4


Table of Contents

 

Index to Financial Statements


Alabama and under the age of 18 in all other states in which we currently operate. Our business is primarily regulated at the state level, although at the federal level, we are subject to requirements applicable to military personnel and certain federal lending requirements such as Truth in Lending disclosure requirements. Our failure or the failure of any of our employees to comply with applicable state and federal requirements, whether voluntary or involuntary, could require us to discontinue our automobile title lending business in applicable jurisdictions, which could negatively impact our business. Failure to comply with applicable laws or regulations could result in sanctions by regulatory agencies, civil money penalties or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations.

 

The laws and regulations governing our business are subject to change. In recent years, certain consumer advocacy groups and federal and state legislators have asserted that laws and regulations should be tightened to severely limit, if not eliminate, the availability of certain consumer loan products, including title loans.

 

The Dodd-Frank Act, as well as proposed legislation in various states if adopted, could negatively affect our business and results of operations.

 

The Dodd-Frank Act that took effect on July 21, 2010 is extensive and significant legislation that, among other things:

 

·creates a liquidation framework for the resolution of large bank holding companies and systemically significant nonbank financial companies; 

·creates a new framework for the regulation of over-the-counter derivatives activities; 

·strengthens the regulatory oversight of securities and capital markets activities by the SEC; and 

·creates the CFPB, a new federal authority responsible for administering and enforcing the laws and regulations for consumer financial products and services. 

 

The Dodd-Frank Act will impact the offering, marketing and regulation of consumer financial products and services offered by financial institutions, which may include the products and services offered by the Company. The CFPB has supervision, examination and enforcement authority over the consumer financial products and services of certain non-depository institutions, which could include the Company. Compliance with the regulations implemented under the Dodd-Frank Act or the oversight of the SEC or CFPB may impose costs on, create operational constraints for or place limits on pricing with respect to finance companies such as the Company. Until implementing regulations are issued, no assurance can be given that these new requirements imposed by the Dodd-Frank Act will not increase our cost of doing business, impose new restrictions on the way in which we conduct our business or add significant operational constraints that might impair our profitability. The CFPB also has the power to define and ban “unfair, deceptive or abusive” practices in connection with consumer products.

 

We are currently following legislative and regulatory developments in Congress and in individual states where we conduct business. It is difficult to assess the likelihood of the enactment of any unfavorable federal or state legislation, and there can be no assurance that additional legislative or regulatory initiatives will not be enacted which would severely restrict, prohibit or eliminate our ability to offer title loans. Any federal or state legislative or regulatory action that would serve to restrict the types of activities in which the Company is engaged could have a material adverse impact on our business, prospects, results of operations, financial condition and cash flows and could impair our ability to service our debt obligations and to continue current operations. Examples of such actions include, among others, the imposition of limits on APRs on consumer loan transactions or the prohibition of cash advance and similar services. The extent of the impact of any future legislative or regulatory changes will depend on the nature of the legislative or regulatory change, the jurisdictions to which the new or modified laws would apply and the amount of business we do in that jurisdiction. Moreover, similar actions by states in which we do not currently operate could limit our opportunities to pursue our growth strategies.

 

In addition to state and federal laws and regulations, our business is subject to various local rules and regulations such as local zoning regulation and permit licensing. Local jurisdictions’ efforts to restrict the business of alternative financial services product providers through the use of local zoning and permitting laws have been on the rise.


5


Table of Contents

 

Index to Financial Statements


Actions taken in the future by local governing bodies to require special use permits or impose other restrictions on such lenders could have a material adverse effect on us. For example, the Dallas and Austin, Texas City Councils both recently passed ordinances that would restrict extensions of consumer credit by title lenders within city limits by, among other things, linking maximum allowable loan size to 3% of a consumer’s gross annual income, mandating a 25% principal reduction requirement on refinances or renewals and limiting the term of a loan to no more than four months.

 

Failure to maintain certain criteria required by state and local regulatory bodies could result in fines or the loss of our licenses to conduct business.

 

Most states in which we operate require licenses to conduct our business. These states or their respective regulatory bodies have established criteria we must meet in order to obtain, maintain and renew those licenses. For example, many of the states in which we operate require us to maintain a minimum amount of net worth or equity. From time to time, we are subject to audits in these states to ensure we are meeting the applicable requirements to maintain these licenses. Failure to meet these requirements could result in the revocation of our existing licenses, the denial of our new licensing requests or the imposition of fines, which could adversely affect our results of operations, cash flows and ability to service our debt obligations. We also cannot guarantee that future license applications or renewals will not be denied. If we were to lose any of our licenses to conduct our business, it could result in the temporary or permanent closure of stores, which could adversely affect our results of operations, cash flows and ability to service our debt obligations.

 

Media reports and public perception of consumer loans, such as automobile title loans, as being predatory or abusive could materially adversely affect our business.

 

Certain consumer advocacy groups and federal and state legislators have asserted that laws and regulations should be tightened to severely limit, if not eliminate, the availability of certain loan products, such as automobile title loans, to consumers. The consumer advocacy groups and media reports generally focus on the cost to a consumer for this type of loan, which is often alleged to be higher than the interest typically charged by banks or similar lending institutions to consumers with better credit histories. The consumer advocacy groups and media reports characterize these consumer loans as predatory or abusive without discussing the lack of viable alternatives for our customers’ borrowing needs or the comparatively higher cost to the customer when alternatives are not available. If the negative characterization of these types of loans becomes increasingly accepted by consumers, demand for automobile title loans could significantly decrease, which could have a material adverse effect on our business, results of operations and financial condition. Additionally, if the negative characterization of these types of loans is accepted by legislators and regulators, we could become subject to more restrictive laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition.

 

Legal proceedings may have a material adverse impact on our results of operations, cash flows, financial condition and ability to service our debt obligations.

 

In the past, we and our competitors have been subject to regulatory proceedings, class action lawsuits and other litigation regarding the offering of alternative financial services. We are currently a defendant in multiple legal proceedings. See “Item 3. Legal Proceedings.” It is likely that in the future, we will be subject to currently unforeseen legal proceedings. The adverse resolution of any current or future legal proceeding could cause us to have to refund fees and interest collected, refund the principal amount of advances, pay damages or other monetary penalties or modify or terminate our operations in certain local, state or federal jurisdictions. The defense of such legal proceedings, even if successful, requires significant time and attention of our senior officers and other management personnel that would otherwise be spent on other aspects of our business and requires the expenditure of substantial amounts for legal fees and other related costs. Settlement of lawsuits may also result in significant cash payouts and modifications to our operations. Due to the uncertainty surrounding the litigation process, except for those matters for which an accrual has been provided, we are unable to reasonably estimate the range of loss, if any, at this time in connection with the legal proceedings in which we are currently involved. An adverse judgment or settlement of a legal proceeding may substantially exceed any amount currently accrued and could have a material adverse effect on our business, future results of operations, financial condition and ability to service our debt obligations.


6


Table of Contents

 

Index to Financial Statements


Judicial decisions, CFPB rule-making or amendments to the Federal Arbitration Act could render the arbitration agreements we use illegal or unenforceable.

 

We include pre-dispute arbitration provisions in our loan agreements. These provisions are designed to allow us to resolve any customer disputes through individual arbitration rather than in court. Our arbitration provisions explicitly provide that all arbitrations will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability. They do not generally have any impact on regulatory enforcement proceedings.

 

We take the position that the Federal Arbitration Act requires the enforcement in accordance with the terms of arbitration agreements containing class action waivers of the type we use. While many courts, particularly federal courts, have agreed with this argument in cases involving other parties, an increasing number of courts, including courts in California, Missouri, Washington, New Jersey, and a number of other states, have concluded that arbitration agreements with class action waivers are “unconscionable” and hence unenforceable, particularly where a small dollar amount is in controversy on an individual basis.

 

While the U.S. Supreme Court recently ruled in the AT&T Mobility v. Concepcion case that consumer arbitration agreements meeting certain specifications are enforceable, our arbitration agreements differ in several respects from the agreement at issue in that case, thereby potentially limiting the precedential effect of the decision on our business. In addition, Congress has considered legislation that would generally limit or prohibit mandatory pre-dispute arbitration in consumer contracts and has adopted such a prohibition with respect to certain mortgage loans and also certain consumer loans to members of the military on active duty and their dependents. Further, the Dodd-Frank Act directs the CFPB to study consumer arbitration and report to Congress, and authorizes the CFPB to adopt rules limiting or prohibiting consumer arbitration, consistent with the results of its study. Any such rule would apply to arbitration agreements entered into more than six months after the final rule becomes effective (and not to prior arbitration agreements).

 

Any judicial decisions, legislation or other rules or regulations that impair our ability to enter into and enforce pre-dispute consumer arbitration agreements could significantly increase our exposure to class action litigation as well as litigation in plaintiff-friendly jurisdictions. Such litigation could have a material adverse effect on our business, results of operations and financial condition.

 

If our insurance coverage limits are inadequate to cover our liabilities or we suffer losses due to one or more of our insurance carriers defaulting on their obligations, our financial condition and results of operations could be materially adversely affected.

 

As a result of the liability risks inherent in our line of business, we maintain liability insurance intended to cover various types of property, casualty and other risks. The types and amounts of insurance that we obtain vary from time to time, depending on availability, cost and our decisions with respect to risk retention. The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insured basis. Our insurance policies are subject to annual renewal. The coverage limits of our insurance policies may not be adequate, and we may not be able to obtain liability insurance in the future on acceptable terms or at all. In addition, our insurance premiums may be subject to increases in the future which may be material. Furthermore, the losses that are insured through commercial insurance are subject to the credit risk of those insurance companies. While we believe our commercial insurance providers are currently credit worthy, we cannot assure you that such insurance companies will remain so in the future. Inadequate insurance coverage limits, increases in our insurance costs or losses suffered due to one or more of our insurance carriers defaulting on their obligations, could have a material adverse effect on our financial condition and results of operations.


7


Table of Contents

 

Index to Financial Statements


If we lose key management or are unable to attract and retain the management talent required to operate and grow our business, our business, results of operations, cash flows, financial condition and ability to service our debt obligations could be negatively affected.

 

Our continued growth and future success will depend on our ability to retain the members of our senior management team, who possess valuable knowledge of, and experience with, the legal and regulatory environment of our industry and who have been instrumental in developing our strategic plans and procuring capital to enable the pursuit of those plans. The loss of the services of members of senior management, together with any inability to attract new skilled management, could harm our business and future development.

 

The interests of our sole member may be different than those of our investors.

 

Jeff Canouse is our founder, Chairman of the Board, Chief Executive Officer and sole member As a result, Mr. Canouse has the ability to control substantially all matters of significance to the Company, including the strategic direction of our business, the approval or rejection of a sale, merger, consolidation or other business combination, the issuances of additional equity or debt securities, amendments of our organizational documents, the entering into of related party transactions and the dissolution and liquidation of the Company.

 

As a result of Mr. Canouse’s control of our Company, his interests could conflict with the interests of the Company’s other shareholders and debtholders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, Mr. Canouse’s interests owner might conflict with the interests of our other stakeholders. Mr. Canouse might also have an interest in pursuing transactions that, in his judgment, could enhance his equity investment, even though such transactions might involve risks to our other stakeholders. In addition, Mr. Canouse could cause us to make acquisitions that increase the amount of our indebtedness or sell assets, either of which may impair our ability to make payments under the notes.

 

Economic recession, unemployment and other factors that result in a reduction in demand for our products and services and failure by us to adapt to such a reduction could adversely affect our business and results of operations, as well as our ability to service our debt obligations.

 

Factors that influence demand for our products and services include macroeconomic conditions such as employment, personal income and consumer sentiment. If consumers become more pessimistic regarding the outlook for the economy and therefore spend less and save more, demand for title loans may decline. In addition, weakened economic conditions may result in an increase in loan defaults and loan losses. We can give no assurance that we will be able to sustain our current bad debt rates or that we will not experience increasing difficulty in collecting defaulted loans. Further, in an economic slowdown, we could be required to tighten our underwriting standards, which likely would reduce our loan balances.

 

Worldwide pandemic, such as the coronavirus may result in an almost total elimination for the demand for our services.

 

Should we fail to adapt to significant changes in consumers’ demand for our products or services, our revenues could decrease significantly and our operations could be harmed. Even if we do make changes to existing products or services or introduce new products or services to fulfill consumer demand, consumers may resist or may reject such products or services.

 

We are subject to liabilities for claims related to repossession of automobiles.

 

We use approved third-party providers in connection with the repossession of defaulting customers’ automobiles. We typically enter into agreements with these providers in which they indemnify us for all losses related to claims arising from a repossession and warrant that they maintain insurance sufficient to cover such claims and indemnification obligations; however, we do not enter into these agreements with every third-party provider. We are subject to the risk that any third-party provider that we use may not have sufficient insurance to cover such claims or indemnification obligations. In such event, we may be subject to claims of customers related to repossession, which could have an adverse effect on our business.


8


Table of Contents

 

Index to Financial Statements


Disruptions in the credit and capital markets could negatively impact the availability and cost of borrowing, which could adversely affect our results of operations, cash flows, financial condition and ability to service our debt obligations.

 

Borrowed funds represent a significant portion of our capital. We rely on borrowed capital, together with cash flows from operations, to fund our working capital needs, including making title loans. Disruptions in the credit and capital markets, such as those experienced in 2008 and 2009, could adversely affect our ability to obtain capital to make title loans and to refinance existing debt obligations. Efficient access to these markets is critical to our ongoing financial success; however, our future access to the credit and debt capital markets could become restricted due to a variety of factors, including a deterioration of our earnings, cash flow, balance sheet quality or overall business or industry prospects, a sustained disruption or further deterioration in the state of the credit or capital markets or a negative bias toward our industry by market participants. The disruptions and volatility in the credit and capital markets in 2008 and 2009 have caused banks and other credit providers to restrict availability of new credit facilities and require higher pricing upon renewal of existing credit facilities. Our ability to obtain additional financing in the future will depend in part upon prevailing credit and capital markets conditions, and the current state of the credit and capital markets may adversely affect our efforts to arrange additional financing on satisfactory terms. If adequate funds are not available, or are not available on acceptable terms, we may not be able to make future title loans, take advantage of acquisitions or other opportunities or respond to competitive challenges.

 

Changes in credit ratings issued by statistical rating organizations could adversely affect our costs of financing.

 

Credit rating agencies rate our indebtedness based on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing us on a watch list for possible future downgrading. Downgrading the credit rating of our indebtedness or placing us on a watch list for possible future downgrading could limit our ability to access the capital markets to meet liquidity needs and refinance maturing liabilities or increase the interest rates and our cost of financing.

 

Competition in the financial services industry could cause us to lose market share and revenues.

 

The industry in which we operate has low barriers to entry and is highly fragmented and very competitive. We encounter significant competition from other automobile title lending companies, pawnshops, installment lending companies, online lenders, consumer finance companies and providers of other forms of alternative financial services, many of which have significantly greater financial resources than we do. Significant increases in the number or size of competitors or other changes in competitive influences could cause us to lose market share and experience slowing or declining revenues, thereby affecting our ability to generate sufficient cash flow to fund our operations and service our indebtedness. We cannot assure you that we will be able to compete successfully with our competitors.

 

Competition for market share will likely intensify. Increased competition could lead to consolidation within the industry. If our competitors get stronger through consolidation and we are unable to identify attractive consolidation opportunities, we could be at a competitive disadvantage and experience declining market share and revenue. If these events materialize, they could negatively affect our ability to generate sufficient cash flow to fund our operations and service our indebtedness.

 

In addition to increasing competition among traditional providers of alternative financial services to consumers, there is a risk of losing market share to new market entrants such as banks and credit unions. Several large financial institutions have introduced payday-like products in the last few years. Broad consumer adoption of these alternatives could reduce the number of loans we make and adversely affect our cash flows.

 

Our growth strategy calls for opening additional stores, both in states in which we currently operate and states into which we are looking to expand. If our competitors aggressively pursue store expansion, competition for store sites could result in a failure to open the planned number of stores and could result in increased costs to procure desired locations, both of which could impair our results of operations.


9


Table of Contents

 

Index to Financial Statements


External factors and other circumstances over which we have limited control or that are beyond our control could adversely affect our ability to grow through the opening of new stores.

 

Our expansion strategy includes opening new stores. The success of this strategy is subject to numerous external factors, including, but not limited to:

 

·the availability of sites with acceptable restrictions and suitable terms; 

·our ability to attract, train and retain qualified store management personnel; 

·our ability to access capital; 

·our ability to obtain required government permits and licenses; 

·the prevailing laws and regulatory environment of each state or jurisdiction in which we operate or seek to operate, which are subject to change at any time; and 

·the degree of competition in new markets and its effect on our ability to attract new customers and our ability to adapt our infrastructure and systems to accommodate our growth. 

 

Some of these factors are outside of our control. The failure to execute our expansion strategy would adversely affect our ability to expand our business and could materially adversely affect our business, prospects, results of operations and financial condition.

 

If our estimates of allowance for loan losses and accrual for losses on loans we process and guarantee for an unconsolidated third-party lender are not adequate to absorb losses, our results of operations and financial condition may be negatively affected.

 

We maintain an allowance for loan losses for estimated probable losses on our title loans.. These reserves, however, are estimates, and if actual losses are greater than our reserves, our results of operations and financial condition could be adversely affected.

 

Our business and results of operations may be adversely affected if we are unable to manage our growth effectively.

 

There can be no assurance that we will be able to continue to grow our business or that our current business, results of operations and financial condition will not suffer if we fail to prudently manage our growth. Failure to grow the business and generate estimated future levels of cash flow could inhibit our ability to service our debt obligations. Our expansion strategy, which contemplates growing our title loans receivable in existing stores, opening new stores in existing markets and opening new stores in new markets, is subject to significant risks. Our current business and results of operations and any future growth depend upon a number of factors, including the ability to obtain and maintain financing to support these opportunities, the ability to hire, train and retain an adequate number of qualified employees, the ability to obtain and maintain any required government permits and licenses, the ability to successfully integrate any acquired operations as well as other factors, some of which are outside of our control, such as the continuation of favorable regulatory and legislative environments. Further, expansion into additional states will increase our regulatory and legal risks. Regulatory and legal actions could divert management’s attention away from executing our growth strategy. The profitability of our current operations could suffer as management’s attention is diverted toward our expansion plans.


10


Table of Contents

 

Index to Financial Statements


We may not be successful at entering new businesses or broadening the scope of our existing product and service offerings.

 

We may enter into new businesses that are adjacent or complementary to our existing businesses and that broaden the scope of our existing product and service offerings. We may not achieve our expected growth if we are not successful in these efforts. In addition, entering into new businesses and broadening the scope of our existing product and service offerings may require significant upfront expenditures that we may not be able to recoup in the future. These efforts may also divert management’s attention and expose us to new risks and regulations which may have a material adverse effect on our business, results of operations and financial condition.

 

In certain states, we rely on third parties to make loans to our customers, and the loss of access to any of these third parties could significantly increase our costs and change the way we operate in these jurisdictions.

 

In certain states, we operate as a CSO and therefore arrange for an unrelated third party to make loans to our customers. There are a limited number of third parties that make these types of loans, and there is significant demand and competition for the services of these third parties. These third parties rely on borrowed funds in order to make consumer loans. If these third parties lose their ability to make loans or become unwilling to make loans and we are unable to find another lending partner, our cost of arranging these loans may increase significantly and we could be forced to change the way we operate in these jurisdictions, which may have a material adverse effect on our financial results, make it difficult to operate profitably in these locations and negatively affect our ability to service our debt obligations.

 

We depend on hiring an adequate number of hourly employees to run our business and are subject to government regulations concerning these and our other employees, including minimum wage laws.

 

Our workforce is comprised primarily of employees who work on an hourly basis. In certain areas where we operate, there is significant competition for employees. The lack of availability of an adequate number of hourly employees or an increase in wages and benefits to current employees could adversely affect our business, results of operations, cash flows, financial condition and ability to service our debt obligations. We are subject to applicable rules and regulations relating to our relationship with our employees, including minimum wage and break requirements, health benefits, unemployment and sales taxes, overtime and working conditions and immigration status. Accordingly, legislated increases in the federal minimum wage, as well as increases in additional labor cost components such as employee benefit costs, workers’ compensation insurance rates and compliance costs and fines, would increase our labor costs, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

 

Any disruption in the availability or security of our information systems could adversely affect our business operations.

 

We rely heavily upon our information systems to process customer loan transactions, account for our business activities and generate the reporting used by management for analytical and decision-making purposes. Each of our stores is part of an integrated data network designed to facilitate underwriting decisions, reconcile cash balances and report revenue and expense transaction data. Our back-up systems and security measures could fail to prevent a disruption in the availability or performance of our information systems. Any disruption in the availability or performance of our information systems could significantly disrupt our operations and cause us to lose customers and revenue. Further, a security breach of our information systems could also interrupt or damage our operations or harm our reputation. We could be subject to liability if confidential customer information is misappropriated from our information systems. Despite the implementation of significant security measures, our information systems may still be vulnerable to physical break-ins, computer viruses, programming errors, employee misappropriation and attacks by third parties or similar disruptive problems, which could require us to incur significant expense to eliminate these problems and address related data security concerns.


11


Table of Contents

 

Index to Financial Statements


We may be unable to protect our proprietary technology or keep up with that of our competitors.

 

The success of our business depends to a significant degree upon the protection of our software and other proprietary intellectual property rights. We may be unable to deter misappropriation of our proprietary information, detect unauthorized use or take appropriate steps to enforce our intellectual property rights. In addition, competitors could, without violating our proprietary rights, develop technologies that are as good as or better than our technology. Our failure to protect our software and other proprietary intellectual property rights or to develop technologies that are as strong as our competitors’ could put us at a disadvantage to our competitors. Any such failures could have a material adverse effect on our business, prospects, results of operations and financial condition.

 

Adverse real estate market fluctuations could affect our profits.

 

We currently lease all of our locations. A significant rise in real estate prices or real property taxes could result in an increase in store lease costs as we open new locations and renew leases for existing locations. Any such increase, especially in Georgia could have a material adverse effect on our business, prospects, results of operations and financial condition.

 

Our business is seasonal, which causes our revenues to fluctuate and may adversely affect our ability to service our debt.

 

Our business typically declines slightly in the first quarter as a result of customers’ receipt of tax refund checks. Demand for our services is generally greatest during the fourth quarter. This seasonality requires us to manage our cash flows over the course of the year. If the state or federal government were to pursue economic stimulus actions or issue additional tax refunds or tax credits at other times during the year, such actions could have a material adverse effect on our business, prospects, results of operations and financial condition during those periods. If our revenues were to fall substantially below what we would normally expect during certain periods, our annual financial results would be adversely impacted and our ability to service our debt may also be adversely affected.

 

We have incurred increased costs as a result of becoming subject to the reporting requirements of the Exchange Act, and such reporting requirements may divert management’s attention from our business.

 

Upon registration of our senior secured notes under the Securities Act of 1933, as amended, we became subject to a number of additional requirements, including certain requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act.” These requirements caused us to incur increased costs and might place a strain on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting, and also requires that our internal controls be assessed by management beginning with our fiscal year ending December 31, 2012. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight will be required. As a result, our management’s attention might be diverted from other business concerns, which could have a material adverse effect on our business, prospects, financial condition and results of operations. Further, we may not be able to complete our evaluation, testing and any required remediation in a timely fashion. We will be testing our internal controls in connection with the Section 404 requirements and could, as part of that documentation and testing, identify material weaknesses, significant deficiencies or other areas for further attention or improvement. Implementing any appropriate changes to our internal controls may require specific compliance training for our managers, officers and employees, require the hiring of additional finance, accounting and other personnel, entail substantial costs to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business.


12


Table of Contents

 

Index to Financial Statements


Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the senior secured notes.

 

We have substantial indebtedness. As of December 31, 2011, we had approximately $346.1 million of total debt outstanding. Subject to restrictions in the Indenture, we may incur additional indebtedness.

 

Our substantial level of indebtedness could have important consequences to our bondholders and significant effects on our business, including the following:

 

·it may be more difficult for us to satisfy our financial obligations, including with respect to the notes; 

·our ability to obtain additional financing for working capital, capital expenditures, strategic acquisitions or general corporate purposes may be impaired; 

·we must use a substantial portion of our cash flow from operations to pay interest on the notes and our other indebtedness as well as to fund excess cash flow offers on the notes, which will reduce the funds available to use for operations and other purposes; 

·our ability to fund a change of control offer may be limited; 

·our substantial level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt; 

·our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and 

·our substantial level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business. 

 

We expect to obtain the funds to pay our expenses and repay our indebtedness primarily from our operations and, in the case of our indebtedness, from a refinancing thereof. Our ability to meet our expenses and make these payments therefore depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future, and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the notes, or to fund other liquidity needs. If we do not have enough funds, we may be required to refinance all or part of our then existing debt, sell assets or borrow more funds, which we may not be able to accomplish on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements may restrict us from pursuing any of these alternatives.

 

Despite our current indebtedness level, we and any of our existing or future subsidiaries may still be able to incur substantially more debt, which could exacerbate the risks associated with our substantial leverage.

 

We and any of our existing and future subsidiaries may be able to incur substantial additional indebtedness in the future. Although the terms of the Indenture contain limitations on our ability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions. If we incur any additional indebtedness that ranks equally with the notes, the holders of that additional debt will be entitled to share ratably with the holders of the notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of the Company, subject to any collateral securing the notes. If new debt is added to our or any of our existing and future subsidiaries’ current debt levels, the related risks that we now face could be exacerbated.

 

 

 


13


Table of Contents

 

Index to Financial Statements


RISKS RELATING TO OUR COMPANY

 

We currently have no source of operating cash flow and we have a history of operating losses.

 

We will not receive revenues from operations at any time in the near future, and we have no prior year’s history of earnings or cash flow. We have incurred losses. There can be no assurance that our operations will ever generate sufficient revenues to fund our continuing operations or that we will ever generate positive cash flow from our operations. Further, we can give no assurance that we will attain or sustain profitability in any future period.

 

We depend on our officers and directors and the loss of these individuals could adversely affect our business.

 

Our Company is completely dependent on our sole officer and director, Jeffrey M. Canouse.  We currently have no employees and the loss of either or both of these individuals could significantly and adversely affect our business.  We do not carry any life insurance on our directors and officers.

 

RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES

 

Our Common Stock Price May be Volatile

 

The trading price of our common stock may fluctuate substantially. The price of our common stock, at any given time, may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include the following: (i) price and volume fluctuations in the overall stock market from time to time; (ii) volatility resulting from trading in derivative securities related to our common stock including puts, calls, long-term equity anticipation securities, or leaps, or short trading positions; (iii)actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations of securities analysts; (iv) general economic conditions and trends; (v) loss of a major funding source; or (vi) departures of key personnel.

 

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

 

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We are engaged in the business of exploring and, if warranted and feasible, developing natural resource properties. Our mining claims are in the exploration stage only and are without proven reserves of natural resources. Accordingly, we have not generated any revenues nor have we realized a profit from our -operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of natural resources, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

 

We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.

 

The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.

 

Market for Penny Stock has suffered in recent years from patterns of fraud and abuse.

 

Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices


14


Table of Contents

 

Index to Financial Statements


through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.

 

Our common shares are subject to the “Penny Stock” Rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

The SEC has adopted regulations that generally define a “penny stock” to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended. For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.

 

Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction.

 

To the extent these requirements may be applicable; they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.

 

FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.

 

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

 

Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.

 

Our common stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to): (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-trading and particularly , microcap companies.

 

Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common


15


Table of Contents

 

Index to Financial Statements


stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTCBB and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.

 

We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.

 

We intend to retain any future earnings to finance the development and expansion of our business. We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

 

A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.

 

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

The address of our principal executive office is 240 Vaughan Drive, Alpharetta GA 30009 Our telephone number is 470-767-8794. Our place of business is located at 4775 Buford Highway, Chamblee GA 30341

 

ITEM 3. LEGAL PROCEEDINGS

 

We know of no material, active or pending legal proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable


16


Table of Contents

 

Index to Financial Statements


PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Market Information

 

The Company's common stock is currently quoted on the Over-the-Counter Bulletin Board (OTC/BB) under the trading symbol “NECA”.Following is a report of high and low closing bid prices for each quarterly period for the fiscal years ended August 31, 2013 and August 31, 2015.

 

Quarter

 

High ($)

 

Low ($)

4th Quarter ended 8/31/2015

 

0.0003

 

0.0001

3rd Quarter ended 5/31/2015

 

0.0003

 

0.001

2nd Quarter ended 2/28/2015

 

0.0002

 

0.0001

1st Quarter ended 11/30/2014

 

0.0005

 

0.0003

 

 

 

 

 

4th Quarter ended 8/31/2014

 

0.0007

 

0.0004

3rd Quarter ended 5/31/2014

 

0.002

 

0.0005

2nd Quarter ended 2/28/2014

 

.002

 

0.0009

1st Quarter ended 11/30/2013

 

0.006

 

.002

 

 

 

 

 

4th Quarter ended 8/31/2013

 

0.008

 

0.004

3rd Quarter ended 5/31/2013

 

0.01

 

0.005

2nd Quarter ended 2/28/2013

 

0.024

 

0.007

1st Quarter ended 11/30/2012

 

0.045

 

0.011

 

The above information was provided by OTC Markets.  The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

Holders

 

As of August 31, 2015 there were 26record holders of the Company’s common stock (which number does not include the number of stockholders whose shares are held by a brokerage house or clearing agency, but does include such brokerage houses or clearing agencies as one record holder). 430,680,662 shares were in the public float.

 

Dividends

 

We have never declared or paid dividends on our common stock.  We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

Recent Sales of Unregistered Securities:

 

There were no unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.


17


Table of Contents

 

Index to Financial Statements


ITEM 6. SELECTED FINANCIAL DATA

 

The Company is a smaller reporting company and is not required to provide this information.

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

This current report contains forward-looking statements relating to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “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 which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance 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 or performance.  You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

 

In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares of our capital stock.

 

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

Overview

 

We were incorporated as “Atheron, Inc.” in the State of Nevada on May 8, 2006. On November 5, 2010 we underwent a change of control and on November 15, 2010 we changed our name to New America Energy Corp., and began looking for opportunities to acquire exploration stage oil and gas or mineral properties. Also on November 15, 2010 we effected a split of our issued and outstanding common shares on a 25 for 1 basis. This forward split did not affect the number of our company’s authorized common shares, which remains at 75,000,000. The forward stock split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on December 1, 2010 under the symbol “NECA”. Our CUSIP number is . Our mailing address is 240 Vaughan Drive, Alpharetta GA  30009. Our telephone number is 470-767-8794.

 

On September 17, 2013, the Company made a decision to change its business model and decided to enter the short-term loan business. In order to do this, the company acquired Title King LLC (“Title King”), a 100% owned subsidiary. Title King provides short-term high interest loans to consumers through the collateral use of car and truck titles. Title King operates in the alternative financial services industry, providing automobile title loans to consumers who their own vehicle free and clear and need convenient and simple access to funds. On September 27, 2013, the company issued to its Chief Executive Officer a Series A Preferred, which guarantees him majority voting rights.

 

Our Current Business

 

We are currently involved in the issuance of short term loans collateralized by automobiles.


18


Table of Contents

 

Index to Financial Statements


Liquidity & Capital Resources

 

To date, we have generated minimal revenue. Our financial condition is summarized below:

 

 

 

As of August 31,

 

 

2015

 

2014

 

2013

Current assets

 

$

1,115

 

$

5,588

 

$

4

Current liabilities

 

 

1,221,951

 

 

906,299

 

 

829,924

Working capital/(deficit)

 

$

(1,220,836)

 

$

(900,711)

 

$

(829,920)

 

 

 

Years Ended August 31,

 

 

2015

 

2014

 

2013

Cash flows used in operating activities

 

$

(122,847)

 

$

(85,803)

 

$

(94,197)

Cash flows used in investing activities

 

 

(6,576)

 

 

(3,109)

 

 

-

Cash flows provided by financing activities

 

 

124,950

 

$

94,500

 

 

15,785

Net increase (decrease) in cash

 

$

(4,473)

 

$

5,588

 

$

(78,416)

 

Cash on hand at August 31, 2015 was $1,115 as compared to $5,588 as of August 31, 2014. Our total liabilities were $1,221,951 as compared to $906,299 at August 30, 2014. Total liabilities increased due to that the Company did not have enough cash to pay down operational expenses during the year ended August 31, 2015.

 

Cash on hand at August 31, 2014 was $5,588 as compared to $4 as of August 31, 2013. Our total liabilities were $906,299 as compared to $829,924 at August 30, 2014. Total liabilities increased due to that the Company did not have enough cash to pay down operational expenses during the year ended August 31, 2013.

 

Results of Operations

 

For the year ended August 31, 2015 as compared to the year ended August 31, 2014:

 

Our operating results for the years ended August 31, 2015 and 2014 are summarized as follows:

 

 

 

Years Ended August 31,

 

$

 

%

 

 

2015

 

2014

 

Change

 

Change

Revenue

 

$

-

 

$

-

 

$

-

 

 

-

General and administrative expenses

 

 

127,768

 

 

263,294

 

 

(135,526)

 

 

(51%)

Compensation Expense related to

Series A Preferred

 

 

-

 

 

156,349

 

 

(156,349)

 

 

(100%)

Interest expense

 

 

155,958

 

 

163,819

 

 

(7,861)

 

 

(5%)

Amortization of debt discount

 

 

181,306

 

 

111,179

 

 

(70,127)

 

 

(63%)

Loss on conversion of debt

 

 

-

 

 

186,060

 

 

(186,060)

 

 

-

Change in derivative liability

 

 

(148,312)

 

 

(251,282)

 

 

(102,970)

 

 

(41%)

Net loss

 

 

(314,769)

 

 

(629,419)

 

 

158,301

 

 

33%

 

Revenues

 

As of the end of the fiscal year ended August 31, 2015, there were no revenues at our Title King, LLC subsidiary.

 

Operating Expenses

 

For the years ended August 31, 2015 and 2014, we incurred $131,173 and $371,283, respectively, in total operating expenses, a period-to-period decrease of $135,526.

 

Compensation expense related to series A Preferred stock decreased $156,349 to $-0- as this related to the one-time event from the issuance of Series A Preferred stock in 2014.


19


Table of Contents

 

Index to Financial Statements


Interest expense for the years ended August 31, 2015 were $155,958 as compared to as compared to interest expense of $163,819 for the years ended August 31, 2014.

 

Net Loss

 

Our net loss for the year ended August 31, 2015 was ($320,125) as compared to ($737,408) for the year ended August 31, 2014, respectively.  Losses decreased due to decreased operations and no losses from the issuance of preferred stock or conversions of debt.

 

Our operating results for the years ended August 31, 2014 and 2013 are summarized as follows:

 

 

 

Years Ended August 31,

 

$

 

%

 

 

2014

 

2013

 

Change

 

Change

Revenue

 

$

-

 

$

-

 

$

-

 

 

-

General and administrative expenses

 

 

371,283

 

 

379,224

 

 

(7,941)

 

 

(2%)

Compensation Expense related to

Series A Preferred

 

 

156,349

 

 

-

 

 

156,349

 

 

100%

Interest expense

 

 

163,819

 

 

122,910

 

 

(40,909)

 

 

(5%)

Amortization of debt discount

 

 

111,179

 

 

211,172

 

 

(70,127)

 

 

(63%)

Loss on conversion of debt

 

 

186,060

 

 

-

 

 

186,060

 

 

-

Change in derivative liability

 

 

(251,282)

 

 

-

 

 

(102,970)

 

 

(41%)

Net loss

 

 

(737,408)

 

 

(713,306)

 

 

25,102

 

 

3%

 

Revenues

 

We have had no operating revenues to date.

 

Operating Expenses

 

For the years ended August 31, 2015 and 2014, we incurred $371,283 and $379,224, respectively, in total operating expenses, a period-to-period decrease of $7,941.

 

Compensation expense related to series A Preferred stock increased $156,349 from $-0- as this related to the one-time event from the issuance of Series A Preferred stock in 2014.

 

Interest expense for the year ended August 31, 2014 was $163,819 as compared to as compared to interest expense of $122,910 for the year ended August 31, 2013. The increase was due to an increased level of debt.

 

Net Loss

 

Our net loss for the year ended August 31, 2014 was ($737,408) as compared to ($713,306) for the year ended August 31, 2013, respectively.

 

Off-Balance Sheet Arrangements

 

We have no 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 of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are


20


Table of Contents

 

Index to Financial Statements


affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

 

Use of Estimates

 

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

 

Basic Loss Per Share

 

Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company is a smaller reporting company and is not required to provide this information.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

All financial information required by this Item is attached hereto below beginning on page F-1.

 

AUDITED FINANCIAL STATEMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 


21



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the shareholders and the board of directors of New America Energy Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of New America Energy Corp. as of August 31, 2015, 2014 and 2013, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2015, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

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 from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial 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.

 

/s/ BF Borgers CPA PC

BF Borgers CPA PC

 

We have served as the Company's auditor since 2013

Lakewood, CO

April 27, 2021

 

 


F-1



TITLE KING, LLC AND SUBSIDIARY

BALANCE SHEETS

AS OF AUGUST 31, 2015, 2014 AND 2013

 

 

2015

 

2014

 

2013

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash

 

$

1,115

 

$

5,588

 

$

4

Loans receivable

 

 

-

 

 

-

 

 

-

Total Current Assets

 

 

1,115

 

 

5,588

 

 

4

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

-

 

 

-

 

 

-

Accumulated depreciation

 

 

-

 

 

-

 

 

-

Total Non-current assets

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

1,115

 

$

5,588

 

$

4

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficiency)

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

115,318

 

$

113,568

 

$

23,567

Accounts payable - related party

 

 

20,681

 

 

20,681

 

 

20,681

Accrued interest

 

 

83,553

 

 

42,191

 

 

20,867

Short-term notes

 

 

95,370

 

 

95,370

 

 

202,285

Convertible notes, net of discount of $58,694,

 $83,812 and $38,828 at August 31, 2015, 2014

 and 2013, respectively

 

 

443,655

 

 

262,350

 

 

211,172

Derivative liability

 

 

463,374

 

 

372,139

 

 

351,352

Total current liabilities

 

 

1,221,951

 

 

906,299

 

 

829,924

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

1,221,951

 

 

906,299

 

 

829,924

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficiency)

 

 

 

 

 

 

 

 

 

Preferred stock, Series A, 51, 51 and -0- shares

 outstanding as of August 31, 2015, 2014 and 2013,

 respectively, no par value

 

 

-

 

 

-

 

 

-

Common stock, 500,850,385, 500,850,385 and

 53,312,133 shares outstanding as of August 31,

 2015, 2014 and 2013, respectively. Par value $0.001

 

 

500,850

 

 

500,850

 

 

53,312

Additional paid-in capital

 

 

1,315,194

 

 

1,315,194

 

 

1,096,115

Accumulated deficit

 

 

(3,036,880)

 

 

(2,716,755)

 

 

(1,979,347)

Total Stockholders Deficiency

 

 

(1,220,836)

 

 

(900,711)

 

 

(829,920)

Total Liabilities and Stockholders' Deficiency

 

$

1,115

 

$

5,588

 

$

4

 

 

 

 

 

 

See accompanying notes to the financial statements


F-2



TITLE KING, LLC AND SUBSIDIARY

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED AUGUST 31, 2015, 2014 AND 2013

 

 

2015

 

2014

 

2013

 

 

 

 

 

 

 

Revenue

 

$

-

 

$

-

 

$

-

Cost of sales

 

 

-

 

 

-

 

 

-

Gross profit

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

General and administrative

 

 

131,173

 

 

371,283

 

 

379,224

Compensation expense related to

Issuance of Series A Preferred

Stock

 

 

-

 

 

156,349

 

 

-

Total operating expenses

 

 

131,173

 

 

527,632

 

 

379,224

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(131,173)

 

 

(527,632)

 

 

(379,224)

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(155,958)

 

 

(163,819)

 

 

(122,910)

Amortization of debt discounts

 

 

(181,306)

 

 

(111,179)

 

 

(211,172)

Loss on conversion of debt

 

 

-

 

 

(186,060)

 

 

-

Change in derivative liability

 

 

148,312

 

 

251,282

 

 

-

Total other income (expense)

 

 

(188,952)

 

 

(209,776)

 

 

(334,082)

 

 

 

 

 

 

 

 

 

 

Income (loss) before taxes

 

 

(320,125)

 

 

(737,408)

 

 

(713,306)

 

 

 

 

 

 

 

 

 

 

Provision for taxes

 

 

-

 

 

-

 

 

-

Net income (loss)

 

$

(320,125)

 

$

(737,408)

 

$

(713,306)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the financial statements


F-3



NEW AMERICA ENERGY CORP.

STATEMENT OF STOCKHOLDERS’ (DEFICIT)

FOR THE PERIOD FROM AUGUST 31, 2012 TO AUGUST 31, 2015

 

 

 

Common Stock

 

 

 

 

 

 

 

Shares

 

Amount

 

Additional

Paid-in

Capital

 

Accumulated

Deficit

 

Total

Stockholders’

Deficit

Balance August 31, 2012

 

52,692,133

 

$ 52,692

 

$ 1,083,235

 

$ (1,266,041)

 

$ (130,114)

Stock issued for cash,

 net of fees

 

620,000

 

620

 

12,880

 

-

 

13,500

Net loss

 

-

 

-

 

-

 

(713,306)

 

(713,306)

Balance, August 31, 2013

 

53,312,133

 

53,312

 

1,096,115

 

(1,979,347)

 

$(829,920)

Issuance of common stock

 for Title King, LLC (an entity

 under common control)

 

50,000,000

 

50,000

 

55,000

 

-

 

105,000

Issuance of common stock

 for conversion of debt

 

362,187,481

 

362,187

 

(4,375)

 

-

 

357,812

Issuance of Series A

 Preferred stock

 

-

 

-

 

156,349

 

-

 

156,349

Issuance of common stock

 for consulting services

 

35,350,771

 

35,351

 

12,105

 

-

 

47,456

Net loss

 

-

 

-

 

-

 

(737,408)

 

(737,408)

Balance, August 31, 2014

 

500,850,385

 

500,850

 

1,315,194

 

(2,716,755)

 

(900,711)

Net loss

 

-

 

-

 

-

 

(320,125)

 

(320,125)

Balance, August 31, 2015

 

500,850,385

 

$ 500,850

 

$ 1,315,194

 

$ (3,036,880)

 

$ (1,220,836)

 

On September 27, 2013, 51 shares of Series A Preferred stock were issued to our President, Jeffrey Canouse. These shares were assigned no par value and provide only voting rights.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the financial statements


F-4



NEW AMERICA ENERGY CORP.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED AUGUST 31, 2015, 2014 AND 2013

 

 

2015

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Net loss

 

$

(320,125)

 

$

(737,408)

 

 

(713,306)

Adjustments to reconcile net loss to

 net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Depreciation

 

 

1,220

 

 

120

 

 

-

Shares issued for consulting services

 

 

-

 

 

47,456

 

 

-

Write-off of receivables and fixed assets,

net of revenue at Title King LLC

 

 

3,405

 

 

-

 

 

-

Amortization of debt discounts

 

 

172,470

 

 

95,014

 

 

211,172

Loss on conversion of debt to equity

 

 

-

 

 

186,060

 

 

-

Issuance of Series A Preferred stock

 

 

-

 

 

156,349

 

 

-

Equity issued for purchase of Title King, LLC

 

 

-

 

 

105,000

 

 

-

Convertible notes issued for cash

 

 

-

 

 

-

 

 

250,000

Amortization of financing costs

 

 

-

 

 

-

 

 

2,391

Change in derivative liability

 

 

(134,733)

 

 

(243,482)

 

 

 

Financing costs

 

 

114,596

 

 

116,279

 

 

101,352

Change in current assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

1,750

 

 

104,912

 

 

14,346

Accounts payable- related party

 

 

-

 

 

-

 

 

20,681

Accrued interest

 

 

38,829

 

 

24,521

 

 

19,167

Net cash used in operating activities

 

 

(122,847)

 

 

(85,803)

 

 

(94,197)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Purchase of furniture and equipment

 

 

(3,678)

 

 

(3,109)

 

 

-

Issuance of loans receivable

 

 

(3,240)

 

 

-

 

 

-

Prepayment of loans receivable

 

 

342

 

 

-

 

 

-

Net cash used by investing activities

 

 

(6,576)

 

 

(3,109)

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Proceeds from related parties

 

 

-

 

 

-

 

 

2,285

Proceeds from sale of common stock

 

 

-

 

 

-

 

 

13,500

Proceeds from issuance of convertible notes

 

 

124,950

 

 

94,500

 

 

-

Net cash provided by financing activities

 

 

124,950

 

 

94,500

 

 

15,785

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN

CASH AND CASH EQUIVALENTS

 

 

(4,473)

 

 

5,588

 

 

(78,412)

 

 

 

 

 

 

 

 

 

 

CASH, BEGINNING BALANCE

 

 

5,588

 

 

4

 

 

78,416

 

 

 

 

 

 

 

 

 

 

CASH, ENDING BALANCE

 

$

1,115

 

$

5,588

 

$

4

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

 

Interest

 

$

-

 

$

-

 

 

-

Income taxes

 

$

-

 

$

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash financing activities

 

 

 

 

 

 

 

 

 

Common stock issued for Title King LLC

 

$

-

 

$

105,000

 

$

-

Issuance of Series A Preferred stock

 

$

-

 

$

156,349

 

 

-

Common stock issued for conversion of debt

 

$

-

 

$

357,812

 

$

-

Shares issued to acquire option on mineral property

 

$

-

 

$

-

 

$

200,000

 

See accompanying notes to the financial statements


F-5



NEW AMERICA ENERGY CORP.

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

 

Nature of Business

 

New America Energy Corp (formerly “Atheron, Inc.”) was incorporated in Nevada on May 8, 2006 as a development stage company, initially developing a technology for ethanol-methanol gasoline. The Company did not progress the development of this technology.

 

On November 5, 2010, we underwent a change of control and the Company’s newly appointed sole director and majority shareholder approved a name change to New America Energy Corp. and a twenty-five (25) new for one (1) old forward stock split of the Company’s issued and outstanding shares of common stock, such that its issued and outstanding shares of common stock increased from 2,150,000 to 53,750,000.

 

On November 16, 2010, the Nevada Secretary of State accepted for filing of the Certificate of Amendment to the Company’s Articles of Incorporation to change our name from Atheron Inc. to New America Energy Corp.

 

The forward stock split and name change has become effective with the Over-the-Counter Bulletin Board at the opening of trading on December 1, 2010 under the Company’s new symbol “NECA”. Our new CUSIP number is 641872 106.

 

The effect of the stock split has been recognized retroactively in the stockholders’ equity accounts as of May 8, 2006, the date of our inception, and in all shares and per share data in the financial statements.

 

On February 3, 2011 we entered into property acquisition agreements with First Liberty Power Corp. (“FLPC”), and GeoXplor Inc. (“GeoXplor”). Pursuant to the terms of the agreements, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Southern Utah which we refer to the “Uravan Property”. On May 31, 2011, we amended the agreement to extend the payment date for an additional 120 days.  The Company did not pay the required option payments under the agreements and the property was lost on September 30, 2011.

 

On May 31, 2011, we entered into a property acquisition agreement with GeoXplor Corp. Pursuant to the terms of the agreement. Pursuant to the terms of the agreement, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Clayton Valley, Nye County, Nevada. Subsequently on October 27, 2011, we entered into an amended property acquisition agreement whereby we acquired additional claims. Further on June 20, 2012, we entered into an amended property acquisition agreement which amended and replaced the May 31, 2011 agreement and the October 27, 2011 agreement. Under the amended agreement we amended and extended the terms for payments to GeoXplor Corp. in exchange for the issuance of additional shares.  On May 24, 2013, the Company received a letter of default from GeoXplor which give the Company 30 days to cure such default or the property rights will terminate and the Company will have no further rights or interest in or to the property.

 

On June 26, 2012, the board of directors of the Company and certain shareholders hold majority voting rights approved the increase of our authorized capital from 75,000,000 to 800,000,000 shares of common stock. On November 14, 2012, the Company filed the articles of amendment with the State of Nevada to effect the increase in authorized share capital.

 

On September 17, 2013, the Company made a decision to change its business model and decided to enter the short term loan business. In order to do this, the company acquired Title King LLC (“Title King”), a 100% owned subsidiary. Title King provides short-term high interest loans to consumers through the collateral use of car and truck titles. Title King operates n the alternative financial services industry, providing automobile title loans to consumers who their own vehicle free and clear and need convenient and simple access to funds. On September 27, 2013, the company issued to its Chie Executive Officer a Series A Preferred, which guarantees him majority voting rights.

 

The Company currently has no interest in the mining and natural resources sector and does not anticipate returning to this sector.


F-6



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

 

The Company made the following changes in its authorized shares with the Nevada Secretary of State as follows:

 

Date

 

Prior authorized shares

 

New authorized shares

 

Change

 

 

 

 

 

 

 

2/3/16

 

800,000,000

 

1,900,000,000

 

1,100,000,000

9/29/16

 

1,900,000,000

 

3,900,000,000

 

2,000,000,000

12/15/16

 

3,900,000,000

 

2,900,000,000

 

(1,000,000,000)

9/4/17

 

2,900,000,000

 

4,900,000,000

 

2,000,000,000

4/8/20

 

4,900,000,000

 

7,000,000,000

 

2,100,000,000

 

Use of Estimates

 

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

 

Cash and Cash Equivalents

 

We consider all highly liquid investments with maturities of three months or less to be cash equivalents. As of August 31, 2015, 2014 and 2013, the Company had $1,115, $5,588 and $4 in cash and cash equivalents.

 

Fair Value of Financial Instruments

 

New America Energy Corp’s financial instruments consist of cash and cash equivalents, deferred financing costs, accounts payable and accrued expenses, accrued interest and loans payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 


F-7



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

 

Basic Loss Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There are no potentially dilutive securities outstanding during any periods presented.

 

Recent Accounting Pronouncements

 

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclosure the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 will no longer be required for interim and annual reporting periods beginning after December 15, 2014, and the revised consolidation standards will take effect in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company will adopt the provisions of ASU 2014-10 effective for its financial statements for the period ended August 31, 2014, and will no longer present the inception-to-date information formally required.

 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

NOTE 2 - LIQUIDITY AND GOING CONCERN

 

We have negative working capital, and have incurred losses since inception, and have not yet generated meaningful revenues. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.

 

NOTE 3 - COMMITMENTS AND CONTINGENCIES

 

On January 18, 2015, the Company entered into an agreement with Midsouth Capital Inc. (“Midsouth”), whereby Midsouth was to seek financing for the Company.  Midsouth introduced the Company to Fairhills Capital. Midsouth will receive certain commissions for the financings with Fairhills Capital pursuant to an agreement whereby Midsouth is the Company’s non-exclusive financial advisor, investment banker and placement agent for the purpose of assisting the Company to raise capital.  Pursuant to the Midsouth Agreement, the Company agreed to: (i) issuance of 80,000 shares of the Company’s common stock; (ii) a success fee of 10% of the amount for any capital raised; (iii) 150,000 restricted shares, with piggy back registration rights, of the Company’s common stock per $1,000,000 of capital raised for a period of two years.


F-8



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 3 - COMMITMENTS AND CONTINGENCIES (continued)

 

Pursuant to our agreement with Midsouth we have issued Midsouth 80,000 shares of our common stock, and paid them a stock fee of 30,000 additional shares of our common stock and a cash fee of $20,000 based on 10% of the initial $200,000 funded by Fairhills.

 

The Company recorded the amount of $32,100 as professional fees based on the market value of the common stock on the date of execution of the Midsouth Agreement. The amount of $20,000 was recorded as deferred financing costs which were amortized for the period as financing expenses.

 

During the year ended August 31, 2013, we paid $1,500 to Midsouth in regard to draw down of $15,000 pursuant to the financing agreement described below in Note 6, which amount was recorded as additional paid in capital.

 

NOTE 4 - RELATED PARTY TRANSACTIONS

 

Issuance of Common Shares and Rescission

 

On October 1, 2013, the Company issued 50,000,000 shares of common stock to Jeffrey Canouse, our chief Executive Officer, for the contribution of the assets of Title King LLC. On March 4, 2016, Mr. Canouse returned all of these shares to treasury.

 

Issuance of Preferred Stock

 

On September 27, 2013, the Company issued to Mr. Canouse 51 shares of Series A Preferred stock.  The Preferred stock is convertible into shares of common stock on a one for one basis. However, for voting rights purposes, they have super-voting rights and are convertible into voting shares of common stock that would comprise 51% of the total outstanding common stock taking into account the conversion. As of August 31, 2015, they would give the holder the right to vote 521,293,258 shares given the common shares outstanding of 500,850,385 as of August 31, 2015.

 

NOTE 5- SHORT TERM DEBT

 

On March 28, 2012, we entered into a debt instrument with Fairhills whereby Fairhills provided us with a $200,000 loan which was due by September 28, 2012, and carries a 2% annual rate of interest. During the year ended, $107,700 of debt was sold by Fairhills to various entities. The balance of short-term debt is as follows:

 

Date

 

Event

 

Amount

 

Balance

 

 

 

 

 

 

 

3/28/12

 

Issuance of debt

 

$

200,000

 

$

200,000

8/31/13

 

Accrual of interest

 

 

2,580

 

 

202,580

9/22/13

 

Sale of debt

 

 

(50,000)

 

 

152,580

12/11/13

 

Sale of debt

 

 

(25,000)

 

 

127,580

4/15/14

 

Sale of debt

 

 

(25,000)

 

 

102,580

4/15/14

 

Sale of debt

 

 

(7,700)

 

 

94,880

8/31/14

 

Accrual of interest

 

 

490

 

 

95,370

 

Balances of short term debt:

 

For the period ended August 31,

2015

 

2014

 

2013

 

$ 95,370

 

$ 95,370

 

$202,285


F-9



NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 6 - CONVERTIBLE NOTES, NET OF DISCOUNT

 

The Company has the following levels of debt:

 

 

2015

 

2014

 

2013

 

 

 

 

 

 

 

Convertible notes

 

$

502,349

 

$

346,162

 

$

250,000

Discount

 

 

58,694

 

 

83,812

 

 

38,828

Convertible notes,

 

 

 

 

 

 

 

 

 

Net of discount

 

$

443,655

 

$

262,350

 

$

211,172

 

Following is a list of balances by note

 

As of August 31, 2015:

 

 

Date

Maturity

 

Remaining

 

Issuer

Issued

Date

Amount

Discount

Book value

 

 

 

 

 

 

Jahoco LLC

2-Dec-12

28-Mar-13

$80,000

$  -

$80,000

Machiavelli LTD, LLC

2-Dec-12

4-Dec-13

113,000

-

113,000

War Chest Capital Multi-Strategy Fund LLC

3-Oct-13

3-Apr-14

12,000

-

12,000

Filer Support Services

31-Oct-13

31-Aug-14

14,912

-

14,912

Tarpon Bay Partners (consulting note)

7-Jan-14

7-Jan-15

25,000

-

25,000

Machiavelli LTD, LLC

26-Feb-14

26-Feb-15

12,500

-

12,500

Jeff M. Canouse

7-Mar-14

7-Mar-15

1,250

-

1,250

Machiavelli LTD, LLC

20-Mar-14

20-Mar-15

6,250

-

6,250

Jahoco LLC

17-Apr-14

17-Apr-15

6,250

-

6,250

Machiavelli LTD, LLC

24-Apr-14

24-Apr-15

6,250

-

6,250

Machiavelli LTD, LLC

14-May-14

14-May-15

6,250

-

6,250

Machiavelli LTD, LLC

29-May-14

29-May-15

12,500

-

12,500

Jahoco LLC

4-Jun-14

4-Jun-15

18,750

-

18,750

Machiavelli LTD, LLC

21-Jul-14

21-Jul-15

12,500

-

12,500

Carpathia, LLC

5-Aug-14

5-Aug-15

12,500

-

12,500

Jahoco LLC

28-Aug-14

28-Aug-15

6,250

-

6,250

JP Carey Irrevocable Trust

24-Sep-14

24-Sep-15

15,625

1,027

14,598

JP Carey Irrevocable Trust

28-Oct-14

28-Oct-15

12,500

1,986

10,514

Marisol Malave & Julio Perieira

31-Oct-14

31-Oct-15

31,250

5,223

26,027

Marisol Malave & Julio Perieira

31-Oct-14

31-Oct-15

31,250

5,223

26,027

JP Carey Irrevocable Trust

26-Feb-15

26-Feb-16

9,375

4,598

4,777

Anvil Financial Management LLC

27-Mar-15

27-Mar-16

12,500

7,138

5,362

Anvil Financial Management LLC

23-Apr-15

23-Apr-16

10,000

6,448

3,552

Anvil Financial Management LLC

13-May-15

13-May-16

6,250

4,372

1,878

Anvil Financial Management LLC

14-May-15

14-May-16

8,750

6,144

2,606

JP Carey Irrevocable Trust

16-Jun-15

16-Jun-16

4,125

3,268

857

Jeff M. Canouse

6-Jul-15

6-Jul-16

2,625

2,223

402

Machiavelli LTD, LLC

14-Jul-15

14-Jul-16

1,250

1,086

164

JP Carey Irrevocable Trust

6-Aug-15

6-Aug-16

10,688

9,957

730

 

 

 

 

 

 

 

 

 

$502,349

$58,694

$443,655


F-10



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 6 - CONVERTIBLE NOTES, NET OF DISCOUNT (continued)

 

As of August 31, 2014

 

 

Date

Maturity

 

Remaining

 

Issuer

Issued

Date

Amount

Discount

Book value

 

 

 

 

 

 

Jahoco LLC

2-Dec-12

28-Mar-13

$80,000

$-

$80,000

Machiavelli LTD, LLC

2-Dec-12

4-Dec-13

113,000

-

113,000

War Chest Capital Multi-Strategy Fund LLC

3-Oct-13

3-Apr-14

12,000

-

12,000

Filer Support Services

31-Oct-13

31-Aug-14

14,912

-

14,912

Tarpon Bay Partners

7-Jan-14

7-Jan-15

25,000

8,836

16,164

Machiavelli LTD, LLC

26-Feb-14

26-Feb-15

12,500

6,130

6,370

Jeff M. Canouse

7-Mar-14

7-Mar-15

1,250

644

606

Machiavelli LTD, LLC

20-Mar-14

20-Mar-15

6,250

3,442

2,808

Jahoco LLC

17-Apr-14

17-Apr-15

6,250

3,921

2,329

Machiavelli LTD, LLC

24-Apr-14

24-Apr-15

6,250

4,041

2,209

Machiavelli LTD, LLC

14-May-14

14-May-15

6,250

4,384

1,866

Machiavelli LTD, LLC

29-May-14

29-May-15

12,500

9,281

3,219

Jahoco LLC

4-Jun-14

4-Jun-15

18,750

14,229

4,521

Machiavelli LTD, LLC

21-Jul-14

21-Jul-15

12,500

11,096

1,404

Carpathia, LLC

5-Aug-14

5-Aug-15

12,500

11,610

890

Jahoco LLC

28-Aug-14

28-Aug-15

6,250

6,199

51

 

 

 

 

 

 

 

 

 

$346,162

$83,812

$262,350

 

As of August 13, 2013

 

 

Date

Maturity

 

Remaining

 

Issuer

Issued

Date

Amount

Discount

Book value

 

 

 

 

 

 

Jahoco LLC

02-Dec-12

28-Mar-13

$100,000

$-

$100,000

Machiavelli LTD, LLC

02-Dec-12

04-Dec-13

150,000

38,828

111,172

 

 

 

 

 

 

 

 

 

$250,000

$38,828

$211,172

 

NOTE 7 - CAPITAL STOCK

 

Common stock

 

On October 1, 2012, the Company drew down $15,000 pursuant to the financing agreement described above in Note 6, and issued a total of 620,000 shares of common stock of the Company at a price of $0.02419 per share.

 

On September 17, 2013, the Company issued 50,000,000 shares of common stock to Jeffrey Canouse, our Chief Executive, for the purchase of Title King.

 

On November 5, 2013, the Company issued 3,000,000 shares of common stock to Ludlow Capital for consulting services.

 

On April 2, 2014, the Company issued 32,350,771 shares of common stock to Mr. Rock Walchuk, its former Chief Executive in order to make good on prior obligations.


F-11



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 7 - CAPITAL STOCK (continued)

 

The Company also issued the following shares for conversions of debt during the three year period ended August 31, 2015:

 

Date of

conversion

 

Converter

 

Amount of

conversion

 

Shares

issued

 

 

 

 

 

 

 

9/10/13

 

Southridge Partners II LP

 

$3,000

 

1,500,000

9/20/13

 

Southridge Partners II LP

 

6,594

 

5,274,959

10/1/13

 

Southridge Partners II LP

 

5,276

 

5,276,044

10/10/13

 

Southridge Partners II LP

 

11,415

 

11,415,137

10/24/13

 

War Chest Capital

 

3,000

 

6,000,000

10/29/13

 

Machiavelli Ltd

 

7,700

 

7,700,000

10/29/13

 

Jahoco LLC

 

10,000

 

10,000,000

10/31/13

 

Southridge Partners II LP

 

6,279

 

11,416,391

11/13/13

 

Southridge Partners II LP

 

7,916

 

14,392,364

12/2/13

 

Southridge Partners II LP

 

7,030

 

10,043,386

12/10/13

 

Southridge Partners II LP

 

7,229

 

14,752,980

12/20/13

 

ASC Recap LLC

 

9,090

 

23,000,000

1/7/14

 

ASC Recap LLC

 

6,057

 

20,199,244

1/7/14

 

Machiavelli Ltd

 

10,800

 

20,000,000

1/23/14

 

ASC Recap LLC

 

5,048

 

20,191,320

1/28/14

 

Machiavelli Ltd

 

10,000

 

30,000,000

2/3/14

 

ASC Recap LLC

 

4,904

 

19,615,400

2/6/14

 

Jahoco LLC

 

10,000

 

30,000,000

2/26/14

 

Machiavelli Ltd

 

16,200

 

30,000,000

5/6/14

 

ASC Recap LLC

 

13,657

 

39,027,089

4/16/18

 

ASC Recap LLC

 

10,558

 

35,193,467

 

 

 

 

 

 

 

Totals

 

 

 

$171,753

 

362,187,481

 

Preferred stock

 

On September 28, 2013, the Company issued 51 shares of No par Series A Preferred stock to Jeffrey Canouse, our Chief Executive. The shares are convertible into one share of our existing common stock. However, for voting purposes, they are convertible into 51% of the outstanding common stock at any time.

 

For purposes of valuing the Preferred stock, the Company used the prevailing stock price at the time and multiplied that amount by the number of shares that would be issued to Mr. Canouse had there been a conversion of these shares. The total amount attributed to expense was $156,349 and has been recorded separately on the face of the Statement of Operations.

 

NOTE 8 - INCOME TAXES

 

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.


F-12



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 8 - INCOME TAXES (continued)

 

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total gross deferred tax asset at August 31, 2013 is $476,583, which is calculated by multiplying a 34% estimated tax rate by the cumulative net operating loss (NOL). Changes in the gross deferred tax asset for the past two fiscal years is as follows:

 

For the period ended August 31,

 

 

 

 

 

 

 

2015

 

2014

 

2013

Book loss for the year

 

$

(314,769)

 

$

(629,419)

 

$

(713,306)

Adjustments

 

$

32,994

 

$

202,306

 

$

211,172

Tax loss for the year

 

$

(281,775)

 

$

(427,113)

 

$

(502,134)

Estimated effective tax rate

 

 

34%

 

 

34%

 

 

34%

Deferred tax asset

 

$

95,804

 

$

145,218

 

$

170,725

 

The total valuation allowance at August 31, 2015 is $476,583. Details of changes in the valuation allowance for the last three periods are as follows:

 

For the period ended August 31,

 

 

 

 

 

 

 

2015

 

2014

 

2013

Deferred tax asset

 

$

95,804

 

$

145,218

 

$

170,725

Valuation allowance

 

 

(95,804)

 

 

(145,218)

 

 

(170,725

Current taxes payable

 

 

-

 

 

-

 

 

-

Income tax expense

 

$

-

 

$

-

 

$

-

 

Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire. The total NOL carryforward as of August 31, 2015 was $1,401,716 as itemized below:

 

Year

 

Amount ($)

 

Expiration

2006

 

43,985

 

2026

2007

 

25,000

 

2027

2008

 

9,000

 

2028

2009

 

10,000

 

2029

2010

 

10,842

 

2030

2011

 

692,217

 

2031

2012

 

474,997

 

2032

2013

 

170,725

 

2033

2014

 

145,218

 

2034

2015

 

95,804

 

2035

 

 

1,677,788

 

 

 

 

 


F-13



NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 9 - SUBSEQUENT EVENTS

 

Changes in authorized shares of Common stock

 

The Company made the following changes in its authorized shares with the Nevada Secretary of State as follows:

 

Date

 

Prior authorized shares

 

New authorized shares

 

Change

 

 

 

 

 

 

 

2/3/16

 

800,000,000

 

1,900,000,000

 

1,100,000,000

9/29/16

 

1,900,000,000

 

3,900,000,000

 

2,000,000,000

12/15/16

 

3,900,000,000

 

2,900,000,000

 

(1,000,000,000)

9/4/17

 

2,900,000,000

 

4,900,000,000

 

2,000,000,000

4/8/20

 

4,900,000,000

 

7,000,000,000

 

2,100,000,000

 

Issuance of common stock

 

Since the balance sheet date, the Company has issued 5,169,746,231 shares of common stock as follows:

 

Conversion of debt

 

4,440,383,154

Liabilities Purchase Agreement

 

822,573,000

Rescission of debt conversion

 

(30,000,000)

Return to treasury of Officer shares

 

(63,209,923)

Total shares issued

 

5,169,746,231

 

 

 

Shares outstanding at August 31, 2015

 

500,850,385

Shares issued

 

5,169,644,561

Total shares outstanding at

 

5,670,596,576

 

Conversion of debt

 

Date of

conversion

 

Converter

 

Amount of

conversion ($)

 

Shares

issued

 

 

 

 

 

 

 

10/28/15

 

Machiavelli Ltd

 

2,700

 

45,000,000

11/10/15

 

Machiavelli Ltd

 

2,700

 

45,000,000

2/10/16

 

Beaufort Capital Partners

 

6,200

 

62,000,000

11/10/15

 

Machiavelli Ltd

 

8,000

 

66,666,667

2/26/16

 

Beaufort Capital Partners

 

2,300

 

23,000,000

3/21/16

 

Beaufort Capital Partners

 

3,375

 

67,500,000

4/1/16

 

World Market Ventures

 

4,020

 

67,000,000

4/4/16

 

Beaufort Capital Partners

 

3,725

 

74,500,000

4/11/16

 

Beaufort Capital Partners

 

2,900

 

58,000,000

4/11/16

 

Machiavelli Ltd

 

4,200

 

70,000,000

4/1/16

 

World Market Ventures

 

5,700

 

95,000,000

5/6/16

 

World Market Ventures

 

3,207

 

53,450,333

5/27/16

 

Machiavelli Ltd

 

6,600

 

110,000,000

6/9/16

 

V2IP, Inc.

 

4,200

 

111,000,000

7/1/16

 

Machiavelli Ltd

 

5,700

 

130,000,000

8/24/16

 

Jahoco Ltd.

 

3,207

 

130,000,000

8/29/16

 

Integrated Business Alliance, Inc.

 

6,600

 

111,000,000

 


F-14



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 9 - SUBSEQUENT EVENTS (continued)

 

Date of

conversion

 

Converter

 

Amount of

conversion ($)

 

Shares

issued

 

 

 

 

 

 

 

10/4/16

 

World Market Ventures

 

4,650

 

155,000,000

10/31/16

 

Machiavelli Ltd.

 

2,000

 

100,000,000

12/20/16

 

Machiavelli Ltd.

 

35,100

 

195,000,000

12/20/16

 

World Market Ventures

 

6,250

 

95,525,000

3/3/17

 

Machiavelli Ltd.

 

26,400

 

220,000,000

6/30/17

 

Machiavelli Ltd

 

14,350

 

239,166,667

9/20/17

 

JGP Consulting

 

8,000

 

160,000,000

10/3/17

 

Tarpon Bay Partners LLC

 

10,000

 

200,000,000

11/17/17

 

Tarpon Bay Partners LLC

 

24,219

 

267,173,000

3/7/18

 

World Market Ventures

 

16,494

 

274,906,849

3/27/18

 

World Market Ventures

 

8,299

 

138,316,500

4/16/18

 

World Market Ventures

 

16,450

 

137,083,583

12/30/20

 

Oscaleta Partners LLC

 

19,623

 

425,365,800

12/30/20

 

Livingston Asset Management LLC

 

2,234

 

44,680,800

12/30/20

 

Carpathia LLC

 

28,143

 

469,047,945

 

 

 

 

 

 

 

Totals

 

 

 

265,689

 

3,970,336,544

 

Liabilities Purchase Agreement

 

As of the Balance sheet date, the Company has issued 822,573,000 shares as follows:

 

Date of issuance

 

Shares

 

 

 

4-9-18

 

386,329,000

4-1-20

 

436,244,000

Total

 

822,573,000

 

See Institution of Liabilities Purchase Agreement below for details.

 

Rescission of debt conversion

 

On June 23, 2016, Machiavelli Ltd. issued a rescission for a conversion of $16,200 of debt which resulted in the issuance of 30,000,000 shares of common stock. The original conversion occurred on February 26, 2014. There was difficulty with share issuance and as such the conversion was rescinded.

 

Return to treasury of Officer shares

 

On March 14, 2016, Jeffrey Canouse, Chief Executive Officer of the Company, returned 63,209,923 shares to Treasury. This was done as a result of the issuance of the Series A Preferred Stock to Mr. Canouse, which gave him voting control.

 


F-15



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 9 - SUBSEQUENT EVENTS (continued)

 

Institution of Liabilities Purchase Agreement

 

On March 13, 2018, New America Energy Corp., a Nevada Corporation (the “Company”) entered into a Settlement Agreement (the “Settlement Agreement”) with Livingston Asset Management LLC, a Florida limited liability company (“LAM”), pursuant to which the Company agreed to issue certain common stock to LAM, in tranches, as necessary, in exchange for the settlement of certain past-due obligations and accounts payable of the Company acquired by LAM (the “LAM Assigned Accounts”). Such past-due obligations and accounts payable contained in the Settlement Amount covers approximately $785,000 in Company obligations as reported in the Company’s most recent quarterly financial report dated February 28, 2018, which LAM has settled with the Company’s creditors.

 

On April 2, 2018, the Circuit Court of Baltimore County, Maryland (the “Court”), entered an Order Granting Approval Of Settlement Agreement And Stipulation (the “LAM Order”) approving, among other things, the fairness of the terms and conditions of an exchange of the Company’s common stock to settle the LAM Acquired Accounts, pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in the matter entitled Livingston Asset Management LLC v. New America Energy Corp. (the “LAM Action”). The LAM Order provides for the full and final settlement of the LAM Action. The Settlement Agreement became effective and binding upon the Company and LAM upon execution of the LAM Order by the Court on April 2, 2018.

 

Pursuant to the terms of the Settlement Agreement approved by the LAM Order, the Company agreed to issue to LAM shares (the “LAM Settlement Shares”) of the Company’s common stock, $0.00001 par value (the “Common Stock”) at a forty five percent (45%) discount to market. The Settlement Agreement provides that the LAM Settlement Shares will be issued in one or more tranches, as necessary, sufficient to satisfy the LAM Settlement Agreement through the issuance of freely trading securities, exempt from registration, issued pursuant to Section 3(a)(10) of the Securities Act.

 

Issuance of debt

 

The following page details the issuance of convertible debt (including original issue discount) of $746,165 from September 1, 2016 through the date of this report:

 

 

Issuance

Maturity

Services

Cash

Original

Issue

Total

Investor

Date

Date

Provided

Amount

Discount

Note

Machiavelli LTD, LLC

17-Oct-17

17-Oct-18

 

6,000

1,500

7,500

JPC Enterprises

15-Nov-17

14-May-18

 

3,000

1,500

4,500

Oscaleta Partners LLC

17-Nov-17

03-May-18

 

15,000

-

15,000

JPC Enterprises

14-Dec-17

14-Jun-18

 

7,000

1,750

8,750

JPC Enterprises

05-Jan-18

05-Jul-18

 

3,350

-

3,350

JPC Enterprises

10-Jan-18

10-Jul-18

 

10,000

2,500

12,500

JPC Enterprises

06-Feb-18

06-Aug-18

 

10,000

2,500

12,500

JPC Enterprises

12-Feb-18

12-Aug-18

 

25,000

-

25,000

JPC Enterprises

09-Mar-18

09-Sep-18

 

10,000

2,500

12,500

JPC Enterprises

09-Apr-18

09-Oct-18

 

8,000

2,000

10,000

JPC Enterprises

07-May-18

07-Nov-18

 

10,000

2,500

12,500

JPC Enterprises

08-Jun-18

08-Dec-18

 

10,000

2,500

12,500

JPC Enterprises

12-Jul-18

12-Jan-19

 

8,000

2,000

10,000

JPC Enterprises

13-Aug-18

13-Feb-19

 

8,000

2,000

10,000

JPC Enterprises

17-Sep-18

17-Mar-19

 

8,000

2,000

10,000

JPC Enterprises

10-Oct-18

10-Apr-19

 

7,725

1,931

9,656


F-16



 

NEW AMERICA ENERGY CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 31, 2015

 

NOTE 9 - SUBSEQUENT EVENTS (continued)

 

 

Issuance

Maturity

Services

Cash

Original

Issue

Total

Investor

Date

Date

Provided

Amount

Discount

Note

JPC Enterprises

21-Nov-18

21-May-19

 

5,000

2,500

7,500

JPC Enterprises

11-Dec-18

12-Jun-19

 

8,000

2,000

10,000

JPC Enterprises

14-Jan-19

14-Jul-19

 

3,000

1,000

4,000

JPC Enterprises

30-Jan-19

30-Jul-19

 

10,000

2,500

12,500

JPC Enterprises

28-Feb-19

28-Nov-19

 

7,500

1,875

9,375

Carpathia, LLC

20-Mar-19

20-Dec-19

 

7,500

1,875

9,375

Carpathia, LLC

09-Apr-19

09-Jan-20

 

3,000

750

3,750

JPC Enterprises

29-Apr-19

29-Jan-20

 

7,500

1,875

9,375

JPC Enterprises

14-May-19

14-Feb-20

 

3,000

750

3,750

JPC Enterprises

13-Jun-19

13-Mar-20

 

7,000

1,750

8,750

JPC Enterprises

25-Jul-19

25-Apr-20

 

7,500

1,875

9,375

JPC Enterprises

27-Aug-19

27-May-20

 

7,500

1,875

9,375

JPC Enterprises

27-Sep-19

27-Jun-20

 

7,500

1,875

9,375

JPC Enterprises

28-Oct-19

28-Jul-20

 

7,500

1,875

9,375

JPC Enterprises

27-Nov-19

27-Aug-20

 

7,500

1,875

9,375

JPC Enterprises

30-Dec-19

30-Sep-20

 

7,500

1,875

9,375

JPC Enterprises

30-Jan-20

30-Oct-20

 

6,278

1,570

7,848

JPC Enterprises

27-Feb-20

27-Nov-20

 

6,278

1,570

7,848

JPC Enterprises

30-Mar-20

30-Dec-20

 

6,300

1,575

7,875

JPC Enterprises

30-Mar-20

30-Dec-20

 

6,300

1,575

7,875

JPC Enterprises

28-Apr-20

28-Jan-21

 

6,300

1,575

7,875

JPC Enterprises

08-May-20

28-Jan-21

 

5,000

1,250

6,250

JPC Enterprises

28-May-20

28-Feb-21

 

6,300

1,575

7,875

JPC Enterprises

23-Sep-20

23-Jun-21

 

6,300

1,575

7,875

JPC Enterprises

02-Oct-20

02-Jul-21

 

1,700

425

2,125

JPC Enterprises

16-Oct-20

16-Jul-21

 

6,300

1,575

7,875

JPC Enterprises

25-Nov-20

25-Aug-21

 

6,300

1,575

7,875

JPC Enterprises

25-Nov-20

25-Aug-21

 

4,500

1,125

5,625

Stout LLC

29-Dec-20

29-Sep-21

10,000

-

-

10,000

JPC Enterprises

31-Dec-20

30-Sep-21

-

6,300

1,575

7,875

JPC Enterprises

15-Jan-21

15-Oct-21

-

7,700

1,925

9,625

JPC Enterprises

10-Feb-21

10-Nov-21

 

7,900

1,975

9,875

JPC Enterprises

02-Mar-21

02-Nov-21

 

5,000

1,250

6,250

JPC Enterprises

18-Mar-21

18-Nov-21

 

7,700

1,925

9,625

 

 

 

 

 

 

 

 

 

 

$10,000

$575,076

$161,089

$746,165

 

 

 

 

 


F-17



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

In the fiscal years ended August 31, 2015, August 31, 2014 and August 31, 2013, there have been no changes in the Company’s accounting policies, nor have there been any disagreements with our accountants.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of August 31, 2012, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of our internal control over financial reporting as of August 31, 2012. In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of August 31, 2015, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

 

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of August 31, 2015:

 

1)Lack of an independent audit committee or audit committee financial expert, and no independent directors.  We do not have any members of the Board who are independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management; 


22



2)Inadequate staffing and supervision within our bookkeeping operations. We have one consultant involved in bookkeeping functions, who provides two staff members. The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC; 

 

3)Outsourcing of our accounting operations.  Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management. This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the independent firm; 

 

4)Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; 

 

5)Ineffective controls over period end financial disclosure and reporting processes. 

 

Management's Remediation Initiatives

 

As of August 31, 2015, management assessed the effectiveness of our internal control over financial reporting.  Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.

 

Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so. We will implement further controls as circumstances, cash flow, and working capital permits.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the period ended August 31, 2015, fairly presents our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.

 

Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size. Management also believes that these weaknesses did not have an effect on our financial results.

 

We are committed to improving our financial organization. As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.

 

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.


23



Changes in Internal Control over Financial Reporting

 

During the period covered by this report, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


24



PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Executive Officer and Directors

 

Our Officers and Directors and their ages and positions are as follows:

 

Name

Age

Position

Date of Appointment

Jeff Canouse

45

Director, Chief Executive Officer, President

September 17, 2013

 

 

Mr. Canouse, 45, combines over twenty-three years of experience in financial senior management following a thirteen-year career as an Investment Banker. Previously, he had been involved in various companies in the investment industry holding positions including Vice President, Senior Vice President and Managing Director at J. P. Carey Inc., J.P. Carey Securities Inc. and JPC Capital a boutique (the “Carey Company’s”) investment banking firm that assisted in arranging over $2 billion in financing. During his time with the Carey Company’s Mr. Canouse was personally responsible for sourcing new corporate clients, presenting to institutional investors, structuring terms, and working with counsel for timely closings. From July 11, 2011 through the present day, Mr. Canouse has acted as Managing Member of Anvil Financial Management, LLC where he has offered his expertise to companies in need of restructuring, financing, debt settlement and compliance assistance. In addition, Mr. Canouse founded Title King LLC, a short-term lending company using customer vehicles as collateral. Title King was acquired by New America Energy Corp of which Mr. Canouse is currently the Chief Executive Officer.

 

Other Directorships

 

Other than as disclosed above, during the last 5 years, none of our directors held any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

 

Board of Directors and Director Nominees

 

Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board, as well as a list of references.

 

The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

 

 


25



Conflicts of Interest

 

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

 

In general, officers and directors of a corporation are required to present business opportunities to the corporation if:

 

·the corporation could financially undertake the opportunity; 

·the opportunity is within the corporation’s line of business; and 

·it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation. 

 

We have adopted a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.

 

Significant Employees

 

Other than as described above, we do not expect any other individuals to make a significant contribution to our business.

 

Legal Proceedings

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

·been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); 

·had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; 

·been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; 

·been  found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 

·been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 

·been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 


26



Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence - Transactions with Related Persons,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

Audit Committee and Charter

 

We do not currently have an audit committee.

 

Code of Ethics

 

We have not yet adopted a corporate code of ethics. When we do adopt a code of ethics, we will announce it via the filing of a current report on form 8-K.

 

Family Relationships

 

There are no family relationships among our officers, directors, or persons nominated for such positions.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our Directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

 

Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the registrant during its most recent fiscal year ending August 31, 2015, the following represents each person who did not file on a timely basis reports required by Section 16(a) of the Exchange Act:

 

Name

Reporting Person

Form 3/# of

transactions

Form 4/# of

transactions

Form 5/# of

transactions

Jeffrey Canouse

President, CEO, and Director

n/a

n/a

n/a

 

ITEM 11. EXECUTIVE COMPENSATION.

 

The particulars of compensation paid to our executive officers during the fiscal period ended August 31, 2011 and 2010 are set out in the summary compensation table below:

 

SUMMARY COMPENSATION TABLE

Name

Fiscal

Year

Ended

August

31,

Salary

($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings

($)

All Other

Compensation

($)

Total

($)

Jeffrey Canouse,

CEO and CFO

2015

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

Jeffrey Canouse,

CEO and CFO

2014

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

Jeffrey Canouse,

CEO and CFO

2013

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

 

Outstanding Equity Awards at Fiscal Year-End

 

None


27



Option Grants and Exercises

 

None

 

Employment Agreements

 

The Company has no outstanding employment agreements with Mr. Canouse.

 

Compensation of Directors

 

Name

Fees Earned

or

Paid in Cash

($)

Stock

Awards

($)

Option

Awards

($)

All Other

Compensation

($)

Total

($)

Jeffrey Canouse (1)

-0-

-0-

-0-

-0-

-0-

 

1.)This is for the fiscal years ended August 31, 2015, 2014 and 2013. 

 

During the most recent fiscal year, no directors were provided any compensation for their role as directors.

 

The Company has made no arrangements for the cash remuneration of its directors, and to the extent that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on the Company’s behalf. No further remuneration has been paid to the Company’s directors for services to date, other than the stock awards granted as disclosed in the table above.

 

Compensation Committee

 

We do not currently have a compensation committee. The Company’s Executive Compensation is currently approved by the Board of Directors of the Company in the case of the Company’s Principal Executive Officer. For all other executive compensation contracts, the Principal Executive Officer negotiates and approves the contracts and compensation.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth information, as of November 13, 2012, with respect to the beneficial ownership of the Company’s Common Stock by each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable 5% stockholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.

 

Title of Class

Name and Address

of Beneficial Owner

Amount and Nature

of Beneficial Ownership

Percentage

of Class (1)

Preferred stock Series A

Jeff Canouse

51 shares held directly

100%

 

(1)Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of November 24, 2011 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based on 53,312,133 shares of common stock outstanding as of November 13, 2012. 


28



Security Ownership of Management

 

The following table shows, as of November 13, 2012, the shares of the Company’s common stock beneficially owned by each director (including each nominee), by each of the executive officers and by all directors and executive officers as a group. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable officers and directors have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.

 

Title of Class

Name of Beneficial Owner

Amount and Nature

of Beneficial Ownership

Percentage

of Class (1)

Common Stock

Jeffrey Canouse

-0- shares held directly

-%

 

 

 

 

 

All Officers and Directors as a Group

-0

-%

 

(1)Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of November 24, 2011 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based shares of common stock outstanding as of October 22, 2012. 

 

Changes in Control

 

There are no existing arrangements that may result in a change in control of our Company.

 

Securities authorized for issuance under equity compensation plans.

 

None

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Certain Relationships and Related Transactions

 

Other than as disclosed herein, we have not entered into any transaction since the last fiscal year nor are there any proposed transactions that exceed one percent of the average of our total assets at year end for the last three completed fiscal years in which any of our Directors, executive officers, stockholders or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.

 

Review, Approval or Ratification of Transactions with Related Persons

 

The Company does not currently have any written policies and procedures for the review, approval or ratification of any transactions with related persons.

 

Promoters and Certain Control Persons

 

None

 

Parents

 

There are no parents of the Company.


29



Director Independence

 

As of the date of this Annual Report, we have no independent directors.

 

The Company has developed the following categorical standards for determining the materiality of relationships that the Directors may have with the Company. A Director shall not be deemed to have a material relationship with the Company that impairs the Director's independence as a result of any of the following relationships:

 

1.the Director is an officer or other person holding a salaried position of an entity (other than a principal, equity partner or member of such entity) that provides professional services to the Company and the amount of all payments from the Company to such entity during the most recently completed fiscal year was less than two percent of such entity’s consolidated gross revenues; 

2.the Director is the beneficial owner of less than five (5%) per cent of the outstanding equity interests of an entity that does business with the Company; 

3.the Director is an executive officer of a civic, charitable or cultural institution that received less than the greater of one million ($1,000,000) dollars or two (2%) per cent of its consolidated gross revenues, as such term is construed by the New York Stock Exchange for purposes of Section 303A.02(b)(v) of the Corporate Governance Standards, from the Company or any of its subsidiaries for each of the last three (3) fiscal years; 

4.the Director is an officer of an entity that is indebted to the Company, or to which the Company is indebted, and the total amount of either the Company's or the business entity's indebtedness is less than three (3%) per cent of the total consolidated assets of such entity as of the end of the previous fiscal year; and 

5.the Director obtained products or services from the Company on terms generally available to customers of the Company for such products or services. The Board retains the sole right to interpret and apply the foregoing standards in determining the materiality of any relationship. 

 

The Board shall undertake an annual review of the independence of all non-management Directors. To enable the Board to evaluate each non-management Director, in advance of the meeting at which the review occurs, each non-management Director shall provide the Board with full information regarding the Director’s business and other relationships with the Company, its affiliates and senior management.

 

Directors must inform the Board whenever there are any material changes in their circumstances or relationships that could affect their independence, including all business relationships between a Director and the Company, its affiliates, or members of senior management, whether or not such business relationships would be deemed not to be material under any of the categorical standards set forth above. Following the receipt of such information, the Board shall re-evaluate the Director's independence.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Silberstein Ungar, PLLC CPAs (“Silberstein”) had been our principal accountants from inception through ______, 20.  As of the date, we dismissed_Silberstein and retained BF Borgers CPA, PC (“Borgers”) The following table sets forth the fees billed to the Company for professional services rendered by the Company's principal accountants for the fiscal years ended August 31, 2015, 2014 and 2013.

 

Silberstein

 

Services

2015

$

2014

$

2013

$

Audit fees

-

-

-

Audit related fees

-

-

-

Tax fees

-

-

-

Total fees

-

-

-


30



Audit fees consist of fees for the audit of the Company's annual financial statements or the financial statements of the Company’s subsidiaries or services that are normally provided in connection with the statutory and regulatory filings of the annual financial statements.

 

Audit-related services include the review of the Company's financial statements and quarterly reports that are not reported as Audit fees.

 

Tax fees included tax planning and various taxation matters.

 

Borgers

 

Services

2015

$

2014

$

2013

$

Audit fees

-

-

-

Audit related fees

-

-

-

Tax fees

-

-

-

Total fees

-

-

-

 

Audit fees consist of fees for the audit of the Company's annual financial statements or the financial statements of the Company’s subsidiaries or services that are normally provided in connection with the statutory and regulatory filings of the annual financial statements.

 

Audit-related services include the review of the Company's financial statements and quarterly reports that are not reported as Audit fees.

 

Tax fees included tax planning and various taxation matters.

 

Pre-Approval Policies and Procedures

 

We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services.  Under these procedures, our board of directors pre-approves all services to be provided by our auditors and the estimated fees related to these services.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


31



PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

Exhibits:

 

Number

Description

 

3.1

Articles of Incorporation, as amended

Incorporated by reference to the Registration Statement on Form SB-2 filed on October 25, 2006.

3.1 (i)

Certificate of Amendment to the Articles of Incorporation as filed with the State of Nevada on November 15, 2010

Incorporated by reference to the Current Report on Form 8-K filed on November 16, 2010.

3.2

Bylaws, as amended

Incorporated by reference to the Registration Statement on Form SB-2 filed on October 25, 2006.

10.1

Release entered into by Susanna Hilario

Incorporated by reference to the Current Report on Form 8-K filed on November 8, 2010.

10.2

Release entered into by Rey V. Supera

Incorporated by reference to the Current Report on Form 8-K filed on November 8, 2010.

10.3

Share Cancellation Agreement with Jeffrey Canouse dated December 23, 2010

Incorporated by reference to the Current Report on Form 8-K filed on January 19, 2011.

10.4

Consulting Agreement with Jeffrey Canouse dated January 14, 2011

Incorporated by reference to the Current Report on Form 8-K filed on January 19, 2011.

10.5

Property assignment and acquisition agreement, dated February 3, 2011

Incorporated by reference to the Current Report on Form 8-K filed on February 4, 2011.

10.6

Property option agreement dated February 3, 2011

Incorporated by reference to the Current Report on Form 8-K filed on February 4, 2011.

10.7

Property option agreement between GeoXplor and the Company dated effective May 31, 2011

Incorporated by reference to the Current Report on Form 8-K filed on June 7, 2011.

10.8

Extension Agreement between First Liberty Power Corp., GeoXplor Corp. and the Company

Incorporated by reference to the Current Report on Form 8-K filed on August 4, 2011.

10.9

Amended Property Purchase Agreement with GeoXplor Corp. and the Company dated October 27, 2011

Incorporated by reference to the Current Report on Form 8-K filed on October 31, 2011.

10.10

Form of Financing Agreement

Incorporated by reference to the Current Report on Form 8-K filed on November 25, 2011.

10.11

Investment Agreement with Fairhills Capital Offshore Ltd.

Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012.


32



Number

Description

 

10.12

Registration Rights Agreement with Fairhills Capital Offshore Ltd.

Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012.

10.13

First Amendment to the Investment Agreement with Fairhills Capital Offshore Ltd.

Incorporated by reference to our Form S-1 filed on July 25, 2012.

10.14

2% Secured Note dated March 28, 2012 with Fairhills Capital Offshore Ltd.

Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012.

10.15

Amended Property Purchase Agreement with GeoXplor Corp. and the Company dated June 20, 2012

Incorporated by reference to the Current Report on Form 8-K filed on June 20, 2012.

10.16

Second Amendment to the Investment Agreement with Fairhills Capital Offshore Ltd.

Incorporated by reference to our Form S-1 filed on July 25, 2012.

10.17

Assignment and Assumption Agreement between Fairhills Capital Offshore LLC, Deer Valley Management LLC and the Company.

Incorporated by reference to our Form 10-Q filed on January 22, 2013

31.1

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed Herewith

31.2

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed Herewith

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed Herewith

101.INS

XBRL Instance Document**

Filed Herewith

101.SCH

XBRL Taxonomy Extension Schema**

Filed Herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase**

Filed Herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase**

Filed Herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase**

Filed Herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase**

Filed Herewith

 

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

 

 

 

 

 

 

 

 

 

 

 


33



SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

NEW AMERICA ENERGY CORP.

 

 

 

 

Date:

April 27, 2021

By:

/s/ Jeffrey Canouse

 

 

Name:

Jeffrey Canouse

 

 

Title:

President, Treasurer, Director

(Principal Executive, Financial and

Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

Date:

April 27, 2021

By:

/s/ Jeffrey Canouse

 

 

Name:

Jeffrey Canouse

 

 

Title:

President, Treasurer, Director

(Principal Executive, Financial and

Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


34