Nevada
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26-3121630
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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3 |
ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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9 |
ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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10 |
ITEM 4.
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CONTROLS AND PROCEDURES
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10 |
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PART II. OTHER INFORMATION
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ITEM 1.
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LEGAL PROCEEDINGS
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11 |
ITEM 1A.
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RISK FACTORS
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11 |
ITEM 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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11 |
ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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11 |
ITEM 4.
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[REMOVED AND RESERVED]
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11 |
ITEM 5.
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OTHER INFORMATION
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11 |
ITEM 6.
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EXHIBITS
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12 |
INDEX
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F-1
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Unaudited Consolidated Balance Sheet as of Three Months Ended March 31, 2012 and Audited Consolidated Balance Sheet as of December 31, 2011
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F-2
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Unaudited Consolidated Statement of Operations for the Three Months Ended March 31, 2012 and 2011
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F-3
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Unaudited Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2012 and 2011
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F-4
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Notes to Condensed Consolidated Financial Statements Unaudited
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F-5
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March 31,
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December 31,
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|||||||
2012
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2011
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(unaudited)
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(audited)
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ASSETS
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Current Assets
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||||||||
Cash
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$ | 61,227 | $ | 106,850 | ||||
Accounts Receivable--Oil & gas sales
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40,280 | 53,466 | ||||||
Total Current Assets
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101,507 | 160,316 | ||||||
Pipeline, net of accumulated depreciation of $195,755
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||||||||
and $179,289, respectively
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792,245 | 808,711 | ||||||
Producing Oil & Gas Properties, net of accumulated depletion
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||||||||
of $663,295 and $628,795, respectively
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1,429,266 | 1,433,068 | ||||||
Other Depreciable Equipment, net of accumulated
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||||||||
depreciation of $38,597 and $31,339, respectively
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175,306 | 180,264 | ||||||
Other Assets
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31,575 | 31,575 | ||||||
TOTAL ASSETS
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$ | 2,529,899 | $ | 2,613,934 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current Liabilities
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||||||||
Accounts Payable--Trade
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$ | 704,276 | $ | 443,114 | ||||
Accounts Payable--Related Party
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71,221 | 50,617 | ||||||
Accrued Liabilities
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110,793 | 72,158 | ||||||
Total Current Liabilities
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886,290 | 565,889 | ||||||
Asset Retirement Obligation
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25,540 | 25,540 | ||||||
TOTAL LIABILITIES
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911,830 | 591,429 | ||||||
STOCKHOLDERS' EQUITY
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||||||||
Preferred Stock, 10,000,000 shares authorized, 5,911,000 designated as follows:
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||||||||
Preferred Stock Series B, $0.001 par value
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||||||||
5,910,000 issued and outstanding
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5,910 | - | ||||||
Preferred Stock Series A, $0.001 par value
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||||||||
issued and outstanding
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1 | 1 | ||||||
Common Stock, $0.001 par value, 1,000,000,000 shares authorized,
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||||||||
112,787,511 and 110,727,511 issued and outstanding, respectively
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112,788 | 110,727 | ||||||
Additional Paid-In Capital
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19,546,968 | 13,406,937 | ||||||
Accumulated Deficit
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(18,047,597 | ) | (11,495,160 | ) | ||||
Total Stockholders' Equity
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1,618,069 | 2,022,505 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 2,529,899 | $ | 2,613,934 |
Three Months Ended March 31,
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2012
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2011
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Revenues
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Oil & Gas Sales
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$ | 81,731 | $ | 41,945 | ||||
Pipeline Revenue
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8,903 | 1,064 | ||||||
Total Revenue
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90,634 | 43,009 | ||||||
Costs and Expenses
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||||||||
Cost of Revenue
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84,486 | 59,358 | ||||||
Depletion, Depreciation and Amortization
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58,224 | 27,967 | ||||||
Impairment
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5,903,000 | - | ||||||
General and Administrative
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597,362 | 435,355 | ||||||
Total Expenses
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6,643,072 | 522,680 | ||||||
Loss from Operations and Income Taxes
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(6,552,438 | ) | (479,671 | ) | ||||
Income Tax Benefit
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- | - | ||||||
Net Loss
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(6,552,438 | ) | (479,671 | ) | ||||
Stock Dividends
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- | (875 | ) | |||||
Net Loss Available to Common Stockholders
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$ | (6,552,438 | ) | $ | (480,546 | ) | ||
Loss per share--basic and diluted
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$ | (0.06 | ) | $ | (0.01 | ) | ||
Weighted average number of shares--basic and diluted
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112,147,511 | 83,880,266 |
Three Months Ended March 31,
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2012
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2011
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OPERATING ACTIVITIES
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Net Loss
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$ | (6,552,438 | ) | $ | (479,671 | ) | ||
Adjustments to reconcile net loss to
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cash used by operating activitites:
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Depletion and depreciation
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58,224 | 27,967 | ||||||
Stock issued for services
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- | 271,276 | ||||||
Impairment
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5,903,000 | - | ||||||
Change in other asset and liabilities:
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Decrease in oil & gas receivables
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13,187 | 840 | ||||||
(Decrease) Increase in accounts payable
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281,767 | (9,556 | ) | |||||
Increase in accrued liabilities
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38,635 | 75 | ||||||
Cash used in operating activities
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(257,625 | ) | (189,069 | ) | ||||
INVESTING ACTIVITIES
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Investment in oil & gas properties
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(23,698 | ) | (90,332 | ) | ||||
Purchase of other equipment
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(2,300 | ) | - | |||||
Cash used in investing activities
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(25,998 | ) | (90,332 | ) | ||||
FINANCING ACTIVITIES
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Proceeds from sales of stock
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238,000 | 257,500 | ||||||
Stock dividend
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- | (875 | ) | |||||
Cash from financing activities
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238,000 | 256,625 | ||||||
Decrease in cash
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(45,623 | ) | (22,776 | ) | ||||
Cash at beginning of quarter
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106,850 | 88,742 | ||||||
Cash at end of quarter
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$ | 61,227 | $ | 65,966 | ||||
Supplemental Disclosure of Cash Flow Information
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Non-Cash Investing and Financing Activities:
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Oil & gas properties
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$ | 5,910,000 | $ | - | ||||
Preferred Stock
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(5,910 | ) | - | |||||
Additional Paid-in Capital
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(5,904,090 | ) | - | |||||
$ | - | $ | - |
Subsidiary Name | Organization Date |
Petron Energy II Pipeline, Inc. | April 2008 |
Petron Energy II Well Service, Inc. | July 2008 |
Petron Energy LLP | June 2007 |
1.
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Quarterly Issuances:
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2.
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Subsequent Issuances:
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Quarterly Events
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On February 17, 2012 the Company filed with the Securities and Exchange Commission reporting it had entered into a Plan of Reorganization and Asset Purchase Agreement (“Agreement”) on February 09, 2012, between Petron Energy II, Inc. (the “Company”) and ONE Energy International Corp, (“OEI”) a Nevada Corporation, and its Affiliate Companies. Under the terms of the Agreement, the Company will acquire all of the assets of OEI and its affiliates in exchange for 5,910,000 shares of the Company’s Series B Convertible Preferred stock.
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Subsequent Events
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NONE
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3.1
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Articles of Incorporation (Filed as Exhibit 3.1 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on July 10, 2009)
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3.2
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Bylaws of the Company (Filed as Exhibit 3.2 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on July 10, 2009)
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31.01
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31.02
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32.01
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32.02
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Date: May 21, 2012
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/s/ Floyd L. Smith
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Date: May 21, 2012
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/s/ Floyd L. Smith
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Date: May 21, 2012
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/s/ Floyd L. Smith
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Date: May 21, 2012
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/s/ Floyd L. Smith
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ASSET IMPAIRMENT
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3 Months Ended |
---|---|
Mar. 31, 2012
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|
Notes to Financial Statements | |
ASSET IMPAIRMENT |
3. ASSET IMPAIRMENT The Company assesses assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
The oil and gas properties acquired from One Energy pursuant to the Asset Purchase Agreement were purchased for 5,910,000 shares of Series B Preferred Stock with a deemed value of $1.00 per share. The Company believes that with enhanced recovery techniques, this value will be realized in the future, but currently there are no immediate plans to develop the properties. The Company obtained a reserve report that showed the net present value of the properties as they exist now to be $344,000. In addition to the issuance of the preferred stock, the Company has incurred approximately $337,000 of costs that had been capitalized related to these assets. Due to the unknown timing of the implementation of enhanced recovery techniques and the uncertainty that these techniques will be successful, management has decided to record an impairment of $5,903,000. |
U?@V>*[J1!VE-%)B.H$JM,1K5U2<3JYYCH`:IM7(^`J55Y-@E,.
M^_)2R_,Y&513TJH$*N>S+R^N'6;-P&M*<'OA94'OIZ7@(1/BB@DOY@O<`H(U
MZ4]4<``"%`4+$[D]?P<(?PJV]YP.G13[(4C>+HA(G@/V_FQ.XRD/+XBV2,Y^
MF"9OL?%\(7_ZAVZF?^4'3(#+!=&A/[GC ;471I+*J841P)<&WV(7X..0A4$PO=84,JF$+6"#G$=R)_-YG 1. INCORPORATION
AND NATURE OF OPERATIONS Petron Energy
II, Inc. (Petron or the Company) was formerly known as Petron Energy Special Corp. and was incorporated
in June 2007 under the laws of the State of Texas; and, on April 2011, was reincorporated in the state of Nevada. Pursuant to
a Plan of Merger, the parent company, Petron Energy Special Corp. was merged into its wholly owned subsidiary, Petron Energy II,
Inc. The surviving entity was Petron Energy II, Inc. The effective date of the Plan of Merger was January 3, 2012. The Company
is engaged primarily in the acquisition, development, production, exploration for and the sale of oil, gas and gas liquids in
the United States. As of December 31, 2011 the Company is operating in the states of Texas and Oklahoma. In addition, the Company
operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists of
approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its oil
and gas products primarily to a domestic pipeline and to another oil company. "+ text.join( " " + text[p] + " ' + raw + ' 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned subsidiaries: Subsidiary Name Organization Date Petron Energy II Pipeline, Inc. April 2008 Petron Energy II Well Service, Inc. July 2008 Petron Energy LLP June 2007 The accompanying consolidated financial statements
have been prepared in accordance with generally accepted accounting principles of the United States. All intercompany transactions
and account balances have been eliminated in consolidation. Going concern uncertainty These financial statements have been prepared
in accordance with accounting principles generally accepted in the United States applicable to a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has
incurred a net loss of $6,552,438 for the quarter ended March 31, 2012 (2011 - $479,671) and at March 31, 2012 had an accumulated
deficit of $18,047,598 (2011 $8,847,090). While the Company has recognized revenues from operations, the revenues generated
are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain
its existing operations at this time. Managements plan is to raise equity and/or debt financing as required but there is
no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters
cannot be predicted at this time. These financial statements do not include
any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that might result from the outcome of this uncertainty. Advertising Costs The Company expenses advertising costs
as these are incurred. 5#F-(*<2G>D96%Y?J
M9JO>-L]>N5_+/)MZD$4!#&!HB/]/`WLYZA1BAEB$P$9OE)YYT:0A2!HWD9=,
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M[EOM6ZUCWUE-Z_IG#E%#")#6."24J^4EB<5BXWJGGR\ZO='K7?
3 Months Ended
Notes to Financial Statements
INCORPORATION AND NATURE OF OPERATIONS
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3 Months Ended
Notes to Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of Financial Position [Abstract]
Common stock, par value
$ 0.001
$ 0.001
Common stock, authorized
1,000,000,000
1,000,000,000
Common stock, issued
112,787,511
110,727,511
Common stock, outstanding
112,787,511
110,727,511
Preferred stock, par value
$ 0.001
$ 0.001
Preferred stock, authorized shares
9,999,000
9,999,000
Preferred stock, issued shares
0
0
Preferred stock, outstanding shares
0
0
Preferred Stock Series A, par value
$ 0.001
$ 0.001
Preferred Stock Series A, authorized shares
1,000
1,000
Preferred Stock Series A, issued shares
1,000
1,000
Preferred Stock Series A, outstanding shares
1,000
1,000
3 Months Ended
Document And Entity Information
Entity Registrant Name
Petron Energy II, Inc.
Entity Central Index Key
0001467434
Document Type
10-Q
Document Period End Date
Mar. 31,
2012
Amendment Flag
false
Current Fiscal Year End Date
--12-31
Is Entity a Well-known Seasoned Issuer?
No
Is Entity a Voluntary Filer?
No
Is Entity's Reporting Status Current?
Yes
Entity Filer Category
Smaller Reporting Company
Entity Common Stock, Shares Outstanding
112,787,511
Document Fiscal Period Focus
Q1
Document Fiscal Year Focus
2012
3 Months Ended
Revenues
Oil & Gas Sales
$ 81,731
$ 41,495
Pipeline Revenue
8,903
1,064
Total Revenue
90,634
43,009
Costs and Expenses
Cost of Revenue
84,486
59,358
Depletion, Depreciation and Amortization
58,224
27,967
General and Adminstrative
597,362
435,355
Impairment
5,903,000
0
Total Expenses
6,643,072
522,680
Loss from Operations Before Impairment and Income Taxes
(6,552,438)
(479,671)
Net Loss
(6,552,438)
(479,671)
Stock Dividends
0
(875)
Net Loss Available to Common Stockholders
$ (6,552,438)
$ (480,546)
Loss per share--basic and diluted
$ (0.06)
$ (0.01)
Weighted average number of shares--basic and diluted
112,147,511
83,880,266