U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2013
Commission File No. 000-09047
AMERIGO ENERGY, INC.
(Exact name of small business issuer as
specified in its charter)
Delaware 20-3454263
------ ----------
(State or other (I.R.S. Employer
jurisdiction of incorporation Identification No.)
or organization)
2580 Anthem Village Drive
Henderson, NV 89052
_________________________________________________
(Address of principal executive offices) (Zip Code)
(702) 399-9777
_________________________
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. YES
[X] NO[ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T
({section}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 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 (Do not check if a smaller reporting company)[ ]
Smaller reporting company[X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)
YES [ ] NO [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
25,424,824 shares of common stock, $0.001 par value, as of November 14, 2013
TABLE OF CONTENTS
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS............................2
CONDENSED CONSOLIDATED BALANCE SHEET...........................................3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS................................4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS................................5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...........................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.............10
ITEM 4. CONTROLS AND PROCEDURES...............................................10
PART II - OTHER INFORMATION...................................................10
ITEM 1. LEGAL PROCEEDINGS.....................................................11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.............................11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.......................................11
ITEM 4. MINE SAFETY DISCLOSURES...............................................11
ITEM 5. OTHER INFORMATION.....................................................11
ITEM 6. EXHIBITS..............................................................12
SIGNATURES....................................................................12
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERIGO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
AS OF AS OF
September 30, December 31,
2013 2012
ASSETS
Current assets:
Cash $ - $ 55
Account receivable 1,559 -
Prepaids 54,119 -
Interest receivable 16,266 -
Loan receivable 78,733 -
----------- ---------
Total current assets 150,677 55
Other assets:
Deposits 950 950
License agreement 2,212,400 -
----------- ---------
Total other assets 2,213,350 950
Total assets $2,364,027 $1,005
=========== =========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $206,490 $38,087
Accounts payable and accrued liabilities, related party 179,800 154,732
Accrued compensation, related party 243,000 108,000
Accrued interest - related party - 36,571
Note payable 9,000 -
Convertible note payable 10,000
Line of credit 95,535 -
Judgment payable 120,000 120,000
Current portion of long-term convertible debt 25,000 -
----------- ---------
Total current liabilities 888,825 457,390
Long-term liabilities:
Convertible note payable 1,975,000 -
----------- ---------
Total liabilities 2,863,825 457,390
Stockholders' (deficit)
Preferred stock; $0.001 par value; 25,000,000 shares authorized
3,500,000 and 500,000 shares outstanding as of September 30, 2013
and December 31, 2012, respectively. 3,500 500
Common stock; $0.001 par value; 100,000,000 shares
authorized; 25,424,824 and 24,124,824 shares outstanding of
September 30, 2013 and December 31, 2012 respectively. 25,424 24,124
Common stock-authorized and unissued; 2,895,592 shares
and no shares as of September 30, 2013 and
December 31, 2012, respectively. 2,896 -
Unamortized stock-based compensation (26,100) -
Treasury shares (46,000) -
Additional paid-in capital 15,990,761 15,441,512
Accumulated (deficit) (16,450,279) (15,922,521)
----------- ---------
Total stockholders' (deficit) (499,798) (456,385)
----------- ---------
Total liabilities and stockholders' (deficit) $2,364,027 $1,005
=========== =========
AMERIGO ENERGY, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
UNAUDITED
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDING SEPTEMBER 30, ENDING SEPTEMBER 30,
2013 2012 2013 2012
Revenue
Oil revenues $- $145 $514 $600
Gas revenues - 70 - 278
Sales 804 - 1,559 -
-------- -------- --------- --------
Total Revenue 804 215 2,073 878
Operating expenses
Lease operating expenses 95 81 282 346
Consulting expense 135,878 - 418,781 -
Selling, general and administrative 780 1,114 13,829 4,314
Professional fees 3,500 48,614 12,256 141,325
-------- -------- --------- --------
Total operating expenses 140,253 49,809 445,148 145,985
-------- -------- --------- --------
Loss from operations (139,449) (49,594) (443,075) (145,107)
Other income (expenses):
Gain on debt settlement - - 19,195 -
Interest expense, net (41,907) (550) (103,878) (550)
-------- -------- --------- --------
Total other income (expenses) (41,907) (550) (84,683) (550)
-------- -------- --------- --------
Net loss $(181,356) $(50,144) $(527,758) $(145,657)
Net loss per share - basic $(0.01) $(0.00) $(0.02) $(0.01)
Weighted average number
of common shares outstanding - basic 25,424,824 24,217,930 24,678,868 24,217,930
AMERIGO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
UNAUDITED
FOR THE NINE MONTHS
ENDING SEPTEMBER 30,
2013 2012
Cash flows from operating activities:
Net loss $(527,758) $(145,657)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock based compensation - shares for services 63,281 1,000
Interest expense 118,994 -
Warrants granted 148,150 -
Gain on extinguishment of debt (19,196) -
Changes in operating assets and liabilities:
(Increase) / decrease in accounts receivable (1,559) -
(Increase) / decrease in other assets (16,266) -
Increase / (decrease) in accounts payable and accrued liabilities 187,567 54,457
Increase / (decrease) in accounts payable - related party 14,088 91,739
-------------- ---------
Net cash provided (used) by operating activities (32,699) 1,539
Cash flows from investing activities:
(Purchase) of notes receivable (88,810) -
-------------- ---------
Net cash (used) by investing activities (88,810) -
Cash flows from financing activities:
Repurchase and retirement of shares - (1,500)
Increase in bank overdraft 2,814 -
Proceeds from line of credit 89,640 -
Proceeds from loans 20,000 -
Proceeds from loan - related party 12,000 -
Payment on loans - related party (3,000) -
-------------- ---------
Net cash provided (used) by financing activities 121,454 (1,500)
-------------- ---------
Net (decrease) increase in cash (55) 39
Cash, beginning of period 55 16
-------------- ---------
Cash, end of period $ - $ 55
============== =========
Cash paid for interest $ - $ -
Cash paid for taxes $ - $ -
Supplementary cash flow information:
Stock issued for services $93,850 $1,000
Warrants issued $148,150 $-
Stock and warrants for License $212,400 $-
Note payable for purchase of intangibles $2,000,000 $-
AMERIGO ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The interim condensed consolidated financial statements included herein,
presented in accordance with United States generally accepted accounting
principles and stated in US dollars, have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
interim financial statements be read in conjunction with the financial
statements of the Company for the year ended December 31, 2012 and notes
thereto included in the Company's Form 10-K. The Company follows the same
accounting policies in the preparation of interim reports.
Operating results for the nine months ended September 30, 2013 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2013.
Recent pronouncements:
The Company's management has reviewed all of the FASB's Accounting Standard
Updates through September 30, 2013 and has concluded that none will have a
material impact on the Company's financial statements. Management does not
believe that any other recently issued but not yet effective accounting
pronouncements, if adopted, would have an effect on the accompanying
consolidated financial statements.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has incurred
cumulative net losses of approximately $16,431,661 since its inception and
requires capital for its contemplated operational and marketing activities to
take place. The Company's ability to raise additional capital through the
future issuances of the common stock is unknown. The obtainment of additional
financing, the successful development of the Company's contemplated plan of
operations, and its transition, ultimately, to the attainment of profitable
operations are necessary for the Company to continue operations. The ability to
successfully resolve these factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements of the Company
do not include any adjustments that may result from the outcome of these
aforementioned uncertainties.
NOTE 3 - OIL AND GAS LEASES
For the nine months ended September 30, 2013 and 2012, the Company generated
revenues on producing oil and gas properties in the amount of $514 and $878,
respectively.
NOTE 4 - INTEREST AND LOAN RECEIVABLE
Concurrent with the company entering into a line of credit agreement for
production, the Company entered into a corresponding line of credit with its
supply chain related to the production of the liquor brands. The line of
credit for the importer is $100,000, which will bear interest at 20% of funds
advanced. The line of credit will advance up to 50% of the value of a Purchase
Order to be financed. The line of credit is guaranteed by the importer as well
as the owner of the import company, personally. As of September 30, 2013,
$78,733 is owed to the Company along with interest receivable in the amount of
$16,266. The Company anticipates the line of credit being paid off before year
end.
AMERIGO ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - INTELLECTUAL PROPERTY
On February 25, 2013, the Company announced the acquisition of Le Flav Spirits
license agreement for the promotion of a liquor line featuring the celebrity
Flavor Flav. As consideration in connection with the acquisition, the Company
agreed to issued 360,000 shares of its common stock fair valued at $32,400,
warrants to purchase up to two million (2,000,000) shares of the Company's
common stock valued at $180,000 utilizing the Black-Scholes Model, and a
convertible promissory note in the amount of $2,000,000. Pursuant to the terms
of the agreement, the warrants are subject to specific vesting requirements
related to sales benchmarks whereas for each 5,000 cases sold the seller will
receive 500,000 fully vested warrants exercisable at a rate of $1.00 per share
for a term of five years. As of September 30, 2013, no warrants have been
vested.
The convertible promissory note bears interest at a rate of 8% per annum,
matures March 1, 2016 and requires payment to be made at an amount equal to
$1.00 for each bottle of product sold for the first 2,000,000 bottles sold.
This will be treated as a convertible promissory note, convertible at $1.00 per
share (at the option of the note holder). Promissory note bears interest at 8%
per year. The Company has the ability to make principal and interest payments
above what is earned from the 'per bottle' during the term. Unless otherwise
satisfied, the balance of the promissory note is due by March 1, 2016. The CEO
had a minority interest in the entity from which the license agreement was
purchased.
NOTE 6 - LINE OF CREDIT
On March 22, 2013, the Company executed a line of credit agreement with a third
party for $100,000 to be used as purchase order financing for the production of
liquor brands. The line of credit bears interest at twenty percent (20%) on the
advanced amount. In consideration for this line of credit, the company issued a
warrant to purchase up to 300,000 shares of common stock valued at $21,000, at
an exercise price of $1.00 per share. The value of these warrants estimated by
using the Black-Scholes option pricing model with the following assumptions:
expected life of 5 years; risk free interest rate of .95%; dividend yield of 0%
and expected volatility of 954%. The Company issued 3,000,000 shares of
preferred stock as collateral which are being held in trust.
As of September 30, 2013, there has been $89,640 received and $10,077 in
payments made directly to the creditor on this line of credit. Upon receipt of
these funds, the money was then advanced to the distribution company for use in
production of the liquor brands in relation to purchase orders received from
distributors.
As of September 30, 2013, the Company has recorded $16,266 in interest expense
related the line of credit.
During October 2013, an additional $21,776 has been paid towards this line of
credit.
NOTE 7 - NOTES PAYABLE
Notes and loans payable consisted of the following:
SEPTEMBER 30, DECEMBER 31,
2013 2012
_____________________________________
Note payable bearing interest rate of 12%, unsecured and $ 9,000 $ -
maturing on October 30, 2013
Convertible note payable bearing interest rate of 12% per 10,000 -
annum, collateralized through a security interest
in all assets of the Company; and maturing on July 10, 2014
Convertible note payable bearing interest at a rate of 8% per annum,
maturing on March 1, 2016, and requiring periodic repayment in an
amount equal to $1.00 per every bottle of the Company's product sold 2,000,000 -
____________ ______________
Total notes payable 2,019,000 -
Less: current portion 25,000 -
____________ ______________
Total long-term notes payable $1,994,000 $ -
============ ==============
As of September 30, 2013 and 2012, the Company record interest expense in
connection with these notes in the amount of $103,878 and $0, respectively.
NOTE 8 - COMMITMENTS
Flavor Flav
In connection with the February 25, 2013 license acquisition, the Company
entered into a three-year consulting agreement with Flavor Flav to assist with
the promotion of the company's liquor brands, as well as negotiate and assist
in the acquisition of other liquor brands by well-known personalities. The
Consulting agreement, subsequently modified by addendum in March 2013, requires
compensation to be paid to the consultant as follows: 1) Commission at a rate
of $12 per each case sold, 2) 360,000 shares of the Company's common stock
valued at $32,400 3) a bonus payment of twenty-five thousand dollars ($25,000)
based upon the acquisition of license agreements with additional celebrities
and well known personalities, 4) a bonus of five thousand dollars ($5,000) upon
the release of a new liquor variety in the marketplace, and 5) annual
compensation in the amount of thirty six thousand dollars ($36,000) for
appearance and promotion fees.
In accordance with the terms of the March addendum, payment of the initial
annual appearance compensation of $36,000 requires $25,000 to be paid within
fourteen days of signature of the addendum; balance of to be paid equally from
month two to twelve. For the remaining two-year term of the agreement, the
Company will pay the annual $36,000 in equal monthly installments of $3,000 per
month.
Consulting Agreements
On April 1, 2013, the Company entered into a consulting agreement with an
individual for sales and marketing services related to the promotion of the
Company's liquor brands. The agreement is for a term of one year commencing on
April 1, 2013. Pursuant to the terms of the agreement, the Company has agreed
to issue 1,000,000 fully vested shares of common stock with a fair value of
$65,000 upon the execution of the agreement to be amortized on a straight line
basis over the term of the agreement. Additionally the consultant will receive
monthly cash compensation in the amount of $6,250 throughout the one-year term.
As of September 30, 2013, no cash has been paid to the consultant.
On April 1, 2013, the Company entered into a consulting agreement with a liquor
marketing company for assistance in the acquisition of other liquor brands and
the promotion of current brands. The agreement is for a term of two years
commencing on April 1, 2013. Pursuant to the terms of the agreement, the
Company has agreed to issue 1,140,000 fully vested shares of common stock with
a fair value of $74,100 upon the execution of the agreement to be amortized on
a straight line basis over the term of the agreement.
On June 1, 2013, the Company entered into a Public/Investor Relation Agreement.
The agreement is for a term of two years commencing on June 1, 2013. Pursuant
to the terms of the agreement, the Company has agreed to issue a total of
1,000,000 shares of common stock of which 500,000 shares are due upon execution
of the agreement and the remaining 500,000 due on June 1, 2014.
On June 3, 2013, in connection with the aforementioned agreement, the Company
issued a warrant to purchase shares of the company and issued 500,000 shares in
connection with this warrant. The Company terminated this contract on October
23, 2013 and received back 150,000 shares of stock related to the above and
there are no further amounts due to the Consultant.
On June 3, 2013, the Company entered into a consulting agreement with an
unrelated third party for assistance in the acquisition of other liquor brands
and the promotion of current brands. The agreement is for a term of seven
months commencing on June 1, 2013. Pursuant to the terms of the agreement, the
Company has agreed to issue 300,000 fully vested shares of common stock with a
fair value of $24,000 upon the execution of the agreement to be amortized on a
straight line basis over the term of the agreement.
Advisory Agreement
On August 14, 2013, the company entered into a two year Business Consulting
Agreement with an individual for business development services in exchange for
250,000 shares of restricted common stock as well as the option to purchase an
additional 250,000 shares for $0.01 during the next 1 year.
AMERIGO ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' DEFICIT
As of September 30, 2013, there were 25,424,824 shares of common stock
outstanding, 2,895,592 common stock authorized and unissued and 3,500,000
preferred shares outstanding.
Preferred Stock
On March 22, 2013, the company pledged 3,000,000 shares of its preferred stock
as collateral in connection with its line of credit. The shares are held in
trust and have been recorded at the par value of $3,000.
Common Stock
In February 2013, the Company issued 35,592 shares of its common stocks for the
settlement of debt in the amount of $35,592 of which the Company's chief
executive officer was indirectly owed $14,263. As of September 30, 2013 the
Company recorded a gain of $19,195 in connection with the settlement. As of
September 30, 2013, the shares are unissued.
On February 25, 2013, the Company authorized the issuance of a total of 720,000
shares of its common stock , of which 360,000 shares were attributable to Le
Flav Spirits for license agreement and the remaining 360,000 attributable to
Flavor Flav, in connection with its consulting agreement. The fair value of
each grant totaled $32,400. The Company recorded intellectual property in the
amount of $32,400 representing the shares issued for the license agreement and
$32,400 as prepaid equity-based compensation representing the shares
attributable to the consulting agreement to be amortized on a straight line
basis over the three-year term of the consulting agreement. During the nine-
month period ended September 30, 2013, the Company has recognized compensation
expense of $6,300 and the unamortized prepaid balance totaled $26,100. As of
September 30, 2013, the shares are unissued.
On April 1, 2013, the Company authorized the issuance of 2,140,000 shares of
common stock in connection with two consulting agreements. The estimated fair
value of the shares totaled $139,100 and will be amortized over the respect
terms of the agreements (Note 6). As of September 30, 2013, the shares are
unissued.
On June 1, 2013, the Company authorized the issuance of 500,000 shares
of common stock in connection with a consulting agreement. The estimated fair
value of the shares totaled $40,000 and will be amortized over the term of the
agreements (Note 6). As of September 30, 2013, the Company recognized $6,667 in
consulting expense with an unamortized prepaid balance of $33,333.
On June 3, 2013, the Company authorized the issuance of 300,000 shares of
common stock in connection with a consulting agreement. The estimated fair
value of the shares totaled $24,000 and will be amortized over the term of the
agreements (Note 6). As of September 30, 2013, the Company recognized $13,714
in consulting expense with an unamortized prepaid balance of $10,286.
On June 13, 2013, the Company issued a total of 500,000 shares of common stock
of which 214,286 related to the cashless exercise of 500,000 warrants and
285,714 shares recorded as additional compensation to the warrant holder valued
at $40,000.
Treasury Stock
In April 2013, the Company agreed to re-purchase 900,000 shares of its common
stock from three investors for cash totaling $10,000 and warrants to purchase
up to 900,000 shares at an exercise price of $0.25 for a term of five years.
The fair value of the warrants granted utilizing the Black-Scholes Model
totaled $36,000. Pursuant to the terms of the re-purchase agreement, the cash
portion of the re-purchase payment will be paid by the Company in ten (10)
equal monthly installments totaling $1,000. As of September 30, 2013, the
Company has record treasury stock in the amount of $46,000 comprised of the
cash and warrant fair values.
Warrants
On March 22, 2013, the Company granted a warrant to purchase up to 300,000
shares of the Company's common stock in connection with its line of credit
agreement. The warrant is excisable at $1.00 for a term of five years. The
estimated fair value of the warrant utilizing the Black-Scholes Model totaled
$21,000 and has been recorded as interest expense as of September 30, 2013.
On April 30, 2013, the Company granted a warrant to purchase up to 5,000 shares
of the Company's common stock in connection with its $10,000 note payable
agreement. The warrant is excisable at $1.00 for a term of five years. The
AMERIGO ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' DEFICIT, CONTINUED
Warrants, continued
estimated fair value of the warrant utilizing the Black-Scholes Model totaled
$150 and has been recorded as interest expense as of September 30, 2013.
On June 3, 2013, the Company granted a warrant to purchase a total of 4,300,000
shares of the Company's common stock at an exercise price of $0.08 subject to
specific vesting and for a term of eighteen months. The vesting provisions are
as follows: 800,000 at signing; 1,500,000 on December 1, 2013; 2,000,000 on
June 1, 2014. As of September 30, 2013, the Company recognized $63,657 as
consulting expense.
On July 10, 2013, the Company issued a warrant valued at $1,000 to purchase up
to 5,000 shares of the Company's common stock in connection with its $10,000
Convertible Promissory Note dated the same. The warrant is exercisable at a
price of $1.00 per share for a term of three years. The value of these warrants
was estimated by using the Black-Scholes option pricing model with the
following assumptions: expected life of . years; risk free interest rate of
..73%; dividend yield of 0% and expected volatility of 455%. The value totaled
of $1,000 has been recorded as interest expense as of September 30, 2013.
In August 2013, the Company issued a warrant valued at $22,343 to purchase up
to 250,000 shares of the Company's common stock at an exercise price of $0.01
for a term of one year pursuant to a consulting agreement. The value of these
warrants was estimated by using the Black-Scholes option pricing model with the
following assumptions: expected life of 1 years; risk free interest rate of
..12%; dividend yield of 0% and expected volatility of 455%. This has been
recorded as a prepaid consulting fee which will be recognized over 12 months
equal to the term of the agreement. As of September 30, 2013 a total of $3,724
was recognized as a consulting expense.
The following table summarizes the Company's warrant information:
WEIGHTED
NUMBER OF AVERAGE
WARRANTS EXERCISE PRICE
___________ _______________
Balance, December 31, 2011 10,000,000 $ 0.01
Granted -0- -
Expired -0- -
Cancelled or forfeited -0- -
Exercised -0- -
___________ _______________
Balance, December 31, 2012 10,000,000 $ 0.01
Granted 4,860,000 0.19
Expired -0- -
Cancelled or forfeited -0- -
Exercised -0- -
___________ _______________
Balance, September 30, 2013 14,860,000 $ 0.07
=========== ===============
Exercisable 11,360,000 $ 0.06
=========== ===============
NOTE 10 - RELATED PARTY TRANSACTIONS
On January 1, 2013, the Company entered into an Executive Compensation
Agreement with its sole officer for a term of five years. Pursuant to the terms
of the agreement, the Company agreed to annual compensation in the amount of
$180,000. In addition, the Company agreed to accrue interest at a rate of 8%
per annum on all unpaid compensation. As of September 30, 2013, the Company
owed a total of $247, 581 in accrued payroll and interest to its executive
officer.
The Company previously had a consulting agreement with a firm controlled by the
Company's Chief Executive Officer for a fee of $3,500 per month. The consulting
firm had been engaged to assist in organizing and completing the process of
filings with the Securities and Exchange Commission and other tasks. The
Company owed the firm $110,623 as of September 30, 2013 which is included as
part of accounts payable - related party in the accompanying financial
statements.
NOTE 11 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events in accordance with ASC 855 through
the date in which it has made its financial statements available, and has
identified no significant reportable events through that date.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission this Form 10-Q,
including exhibits, under the Securities Act. You may read and copy all or any
portion of the registration statement or any reports, statements or other
information in the files at SEC's Public Reference Room located at 100 F
Street, NE., Washington, DC 20549, on official business days during the hours
of 10 a.m. to 3 p.m.
You can request copies of these documents upon payment of a duplicating fee by
writing to the Commission. You may call the Commission at 1-800-SEC-0330 for
further information on the operation of its public reference room. Our filings,
including the registration statement, will also be available to you on the
website maintained by the Commission at http://www.sec.gov.
We intend to furnish our stockholders with annual reports which will be filed
electronically with the SEC containing consolidated financial statements
audited by our independent auditors, and to make available to our stockholders
quarterly reports for the first three quarters of each year containing
unaudited interim consolidated financial statements.
The company's website address is http://www.amerigoenergy.com; however, the
site has recently come down and is being revamped to account for the updates to
the company's business plan. Our website and the information contained on that
site, or connected to that site, is not part of or incorporated by reference
into this filing.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This discussion contains forward-looking statements. The reader should
understand that several factors govern whether any forward-looking statement
contained herein will be or can be achieved. Any one of those factors could
cause actual results to differ materially from those projected herein. These
forward-looking statements include plans and objectives of management for
future operations, including plans and objectives relating to the products and
the future economic performance of the Company. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions, future business decisions, and the
time and money required to successfully complete development projects, all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of those assumptions could prove inaccurate and, therefore,
there can be no assurance that the results contemplated in any of the forward-
looking statements contained herein will be realized. Based on actual
experience and business development, the Company may alter its marketing,
capital expenditure plans or other budgets, which may in turn affect the
Company's results of operations. In light of the significant uncertainties
inherent in the forward-looking statements included therein, the inclusion of
any such statement should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved.
A complete discussion of these risks and uncertainties are contained in our
Annual Financial Statements included in the Form 10-K for the fiscal year ended
December 31, 2012, as filed with the Securities and Exchange Commission on
April 12, 2013.
INTRODUCTION
We have historically has derived our revenues from various working interests in
producing oil and gas properties. In February 2013, as a means to expand our
business development, we entered into a license agreement with Le Flav Spirits
for the promotion of a liquor line featuring the celebrity Flavor Flav. We
have generated $1,560 in revenue from the date of agreement through September
30, 2013 as a result of the aforementioned license agreement. It is the goal of
management to further expand its specialty liquor brands the celebrity
promotion.
The following is a discussion of the Company's financial condition, results of
operations, financial resources and working capital. This discussion and
analysis should be read in conjunction with the Company's financial statements
contained in this Form 10-Q.
OVERVIEW
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDING SEPTEMBER 30,
2013 AND 2012
REVENUES
During three months period ended September 30, 2013 the company generated
revenues from its producing oil and gas properties in the amount of $0 compared
to $215 for the same period in 2012. Additionally, the Company generated $804
in revenues from liquor sales compared to $0 for the same period in 2012.
During nine months period ended September 30, 2013 the company generated
revenues from its producing oil and gas properties in the amount of $514
Compared to $878 for the same period in 2012. Additionally, the Company
generated $1,559 in revenues from liquor sales compared to $0 for the same
period in 2012.
OPERATING EXPENSES
Lease Operating - Lease operating expense for the three months ended September
30, 2013 and 2012 totaled $95 and $81, respectively. The expense for the nine
month periods totaled $282 and $346, respectively. The decrease in expense for
each comparable period is directly related to the decrease in interest the
Company holds.
General and Administrative - General and administrative expenses total $780 and
$1,114 during the comparable three month period and $13,829 compared to $4,314
for the nine month period September 30, 2013. The increase is primarily the
result of an increase in business activities related to the sales and marketing
of liquor product.
Professional and Consulting Fees - During the three month period ended
September 30, 2013, the Company incurred a total of $139,378 compared to
$48,614 in professional and consulting fees during the three month period ended
September 30, 2012, an increase of $90,764. In the nine month period, the
Company incurred $431,037 in 2013 compared to $141,325 in 2012, an increase of
$289,712. The significant increase is directly related to new consulting
agreements entered into during the quarter ended June 30, 2013 for the purpose
of developing and expanding the Company's sales of branded liquor.
OTHER INCOME AND EXPENSES
During the three and nine month periods ended September 30, 2013, the Company's
other income and expense totaling $41,907 and $84,683 are primarily
attributable to accrued interest related to new debt financing in 2013. The
Company did not recognize other income or expenses in the 2012 comparable
periods. Additionally, the company recorded a $19,195 gain on settlement of
debt with third parties representing the difference between the amount paid and
the face value of the debt.
NET LOSS ATTRIBUTABLE TO COMMON STOCK
The company realized a net loss of $181,356 for the three months ended
September 30, 2013, compared to a net loss of $50,144 for the three months
ended September 30, 2012, an increase of $131,212. The net loss recognized for
the nine month period ended September 30, 2013 totaled $527,758, compared to a
net loss of $145,657 for the same period in the previous year, an increase of
$382,101. The increase in net loss for each respective period is attributable
to an increase in consulting and interest expense as compared to the 2012
comparable periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2013, we had cash overdraft in the amount of $2,814, a working
capital deficit of $738,148 and stockholders' deficit was $481,180. Our
accumulated deficit increased from $15,922,521 at December 31, 2012 to
$16,431,661 at September 30, 2013.
Our operations used net cash of ($32,699) during the nine months ended
September 30, 2013, compared to earning net cash of $1,539 during the nine
months ended September 30, 2012, a decrease of $31,160.
Net cash used by investing activities was ($88,810) for the nine months ended
September 30, 2013, compared to providing net cash of $0 for the nine months
ended September 30, 2012.
Our financing activities provided net cash of $121,454 during the nine months
ended September 30, 2013, compared to using net cash of ($1,500) during the
nine month ended September 30, 2012.
INFLATION
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its
operations in the future.
OFF- BALANCE SHEET ARRANGEMENTS
The Company currently does not have any off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS
We evaluated the effectiveness of our disclosure controls and procedures as of
September 30, 2013, the end of the period covered by this Quarterly Report on
Form 10-Q. This evaluation was undertaken by our Chief Executive Officer and
Chief Financial Officer, Jason F. Griffith.
Mr. Griffith serves as our principal executive officer and as our principal
accounting and financial officer.
We reviewed and evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as of the end of the fiscal quarter covered
by this report, as required by Securities Exchange Act Rule 13a-15, and
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed in our reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management on a timely
basis, including our principal executive officer and principal financial and
accounting officer.
CONCLUSIONS
Based on this evaluation, our principal executive officer and principal
financial and accounting officer concluded that our disclosure controls and
procedures are effective to ensure that the information we are required to
disclose in reports that we file pursuant to the Exchange Act are recorded,
processed, summarized, and reported in such reports within the time periods
specified in the Securities and Exchange Commission's rules and forms.
CHANGES IN INTERNAL CONTROLS
There were no changes in our internal controls over financial reporting that
occurred during the last fiscal quarter, i.e., the nine months ended September
30, 2013, that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Amerigo has signed an agreement with the individual to acquire his interest in
certain oil and gas leases for $120,000, payable at $10,000 per month starting
April 1, 2010, with subsequent payments due on the 1st of each month. The term
of the note is One (1) year. The Company is offered a prepayment discount if
the Company pays $100,000 on or before Tuesday, June 1, 2010. Upon final
payment and settlement of the note, the individual will return all shares of
stock (with properly executed stock power) that he individual holds of Granite
Energy and / or Amerigo Energy, along with his entire interest in the Kunkel
lease, which is 3.20% working interest (2.54% net revenue interest), as well as
his ownership in what is known as the 4 Well Program (0.325% working interest,
0.2438% net revenue interest).
The company has not kept current with the agreement and the individuals
promissory note has now been escalated to a judgment against the company. As of
the date of this filing, terms of settling the judgment have not been resolved
despite efforts of the judgment holder to collect the amount owed.
As of September 30, 2013, other than the lawsuit disclosed in the previous
paragraphs, the Company is not a party to any pending material legal
proceeding. To the knowledge of management, no federal, state or local
governmental agency is presently contemplating any proceeding against the
Company. To the knowledge of management, no director, executive officer or
affiliate of the Company, any owner of record or beneficially of more than five
percent of the Company's Common Stock is a party adverse to the Company or has
a material interest adverse to the Company in any proceeding.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
Effective July 23, 2012, the Company had its stock quotation under the symbol
"AGOE" deleted from the OTC Bulletin Board (the "OTCBB"). The symbol was
deleted for factors beyond the Company's control due to various market makers
electing to shift their orders from the OTCBB. As a result of not having a
sufficient number of market makers providing quotes on the Company's common
stock on the OTCBB for four consecutive days, the Company was deemed to be
deficient in maintaining a listing standard at the OTCBB pursuant to Rule 15c2-
11. That determination was made entirely without the Company's knowledge. The
Company's common stock is now listed for quotation on the OTCQB under the
symbol "AGOE".
ITEM 6. EXHIBITS
(a) Exhibits.
31.1 Certification of our Principal Executive Officer and Principal Financial
and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32.1 Certification of our Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 19, 2013
By: /s/ Jason F. Griffith
-------------------------
Jason F. Griffith
Chief Executive Officer,
and Chief Financial Officer