0001554795-13-000011.txt : 20130107 0001554795-13-000011.hdr.sgml : 20130107 20130107101047 ACCESSION NUMBER: 0001554795-13-000011 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20130107 DATE AS OF CHANGE: 20130107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Petron Energy II, Inc. CENTRAL INDEX KEY: 0001467434 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 263121630 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-160517 FILM NUMBER: 13514024 BUSINESS ADDRESS: STREET 1: 4300 QUINLAN PARK ROAD STREET 2: SUITE 105 CITY: AUSTIN STATE: TX ZIP: 78732 BUSINESS PHONE: 512-585-5511 MAIL ADDRESS: STREET 1: 4300 QUINLAN PARK ROAD STREET 2: SUITE 105 CITY: AUSTIN STATE: TX ZIP: 78732 FORMER COMPANY: FORMER CONFORMED NAME: Restaurant Concepts of America Inc. DATE OF NAME CHANGE: 20090630 10-Q/A 1 peii0104form10qa930.htm FORM 10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1

☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 333-160517

PETRON ENERGY II, INC.

(Exact name of registrant as specified in its charter)

Nevada		26-3121630
(State of incorporation)		(I.R.S. Employer Identification No.)

17950 Preston Road, Suite 960

Dallas, Texas 75252

(Address of principal executive offices)

(972) 272-8190

(Registrant’s telephone number)

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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 (Not required)

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 ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☑ No

As of September 30, 2012, there were 117,869,899 shares of the registrant’s $0.001 par value common stock issued and outstanding.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A (this “First Amendment”) amends Petron Energy II, Inc.’s Quarterly Report on Form 10-Q (the “Original Filing”) originally filed on November 13, 2012 with the Securities and Exchange Commission (the “Commission”). We are filing this First Amendment for the purpose of responding to certain comments received from the Staff of the Securities and Exchange Commission. For convenience and ease of reference, the Company is filing First Amendment in its entirety with all applicable changes and unless otherwise stated, all information contained in this amendment is as of November 13, 2012, the filing date of the Original Filing. Except as stated herein, this First Amendment does not reflect events or transactions occurring after such filing date or modify or update those disclosures in the Original Filing that may have been affected by events or transactions occurring subsequent to such filing date.

PETRON ENERGY II, INC.

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	11
ITEM 4.	CONTROLS AND PROCEDURES	11

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	11
ITEM 1A.	RISK FACTORS	11
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	12
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	12
ITEM 4.	[MINE SAFETY DISCLOSURES]	12
ITEM 5.	OTHER INFORMATION	12
ITEM 6.	EXHIBITS	13

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Petron Energy II, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "PEII" refers to Petron Energy II, Inc.

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INDEX	F-1
Consolidated Balance Sheet as of September 30, 2012, unaudited and Audited Consolidated Balance Sheet as of December 31, 2011.	F-2
Unaudited Consolidated Statement of Operations for the Three Months and Nine Months Ended September 30, 2012, and 2011.	F-3
Unaudited Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2012, and 2011.	F-4
Unaudited Notes to Condensed Consolidated Financial Statements.	F-5

F – 1

PETRON ENERGY II, INC.

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

	September 30,	December 31,
	2012	2011
	(unaudited)	(audited)
ASSETS
Current Assets

Cash	$ 23,421	$ 106,850
Accounts Receivable--Oil & gas sales	23,762	53,466
Total Current Assets	47,183	160,316

Pipeline, net of accumulated depreciation of $228,689
and $179,289 respectively	759,311	808,711
Producing Oil & Gas Properties, net of accumulated depletion
of $700,795 and $628,795, respectively	1,583,992	1,433,068
Other Depreciable Equipment, net of accumulated
depreciation of $53,112 and $31,339, respectively	166,301	180,264
Other Assets	31,575	31,575

TOTAL ASSETS	$ 2,588,362	$ 2,613,934

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities

Cash Overdraft	$ 66,433	$ -
Accounts Payable--Trade	727,262	443,114
Accounts Payable--Related Party	342	50,617
Accrued Liabilities	166,164	72,158
Notes Payable--current	63,000	-
Total Current Liabilities	1,023,201	565,889

Asset Retirement Obligation	25,540	25,540
Common Stock Issuance Liability	5,904,090	-

TOTAL LIABILITIES	6,952,831	591,429

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, 10,000,000 shares authorized, 5,911,000 designated as follows:
Preferred Stock Series B, $0.001 par value,
5,910,000 issued and outstanding	5,910	-
Preferred Stock Series A, $0.001 par value, 1,000
issued and outstanding	1	1
Common Stock, $0.001 par value, 1,000,000,000 shares authorized,
117,869,899 and 110,727,511 issued and outstanding, respectively	117,869	110,727
Additional Paid-In Capital	14,362,279	13,406,937
Accumulated Deficit	(18,850,528)	(11,495,160)
Total Stockholders' Equity (Deficit)	(4,364,469)	2,022,505

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 2,588,362	$ 2,613,934

The accompanying notes are an integral part of these financial statements.

F – 2

PETRON ENERGY II, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	Quarter Ended September 30,		Period of Nine Months Ended September 30,
	2012	2011	2012	2011

Revenues

Oil & Gas Sales	$ 72,690	$ 43,917	$ 250,715	$ 85,862
Pipeline Revenue	6,118	2,577	23,669	3,641
Total Revenue	78,808	46,494	274,384	89,503

Costs and Expenses

Cost of Revenue	42,287	144,032	189,266	203,390
Depletion, Depreciation and Amortization	50,725	42,633	143,174	70,600
Impairment	-	-	5,903,000	-
General and Administrative	310,221	1,031,245	1,388,514	1,466,600
Total Expenses	403,233	1,217,910	7,623,954	1,740,590

Loss from Operations Before Income Taxes	(324,425)	(1,171,416)	(7,349,570)	(1,651,087)

Interest	5,798	-	5,798	-
Income Taxes	-	-	-	-

Net Loss	$ (330,223)	$ (1,171,416)	$ (7,355,368)	$ (1,651,087)


Loss per share--basic and diluted	($0.003)	($0.013)	($0.064)	($0.019)
Weighted average number of shares--basic and diluted	116,339,587	92,976,752	114,347,341	87,757,049

The accompanying notes are an integral part of these financial statements.

F – 3

PETRON ENERGY II, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Period of Nine Months Ended September 30,
	2012	2011

OPERATING ACTIVITIES
Net Loss	($7,355,368)	($1,651,962)
Adjustments to reconcile net loss to
cash used by operating activities:
Depletion and depreciation	143,174	70,600
Impairment	5,903,000	-
Common stock issued for services	149,483	-
Change in other asset and liabilities:
Decrease in oil & gas receivables	29,704	144
Increase in accounts payable	284,267	198,235
Increase in accrued liabilities	43,612	14,046
Cash used in operating activities	(802,128)	(1,368,937)

INVESTING ACTIVITIES
Investment in oil & gas properties	(215,923)	(258,820)
Pipeline investment	0	0
Purchase of other equipment	(7,810)	(4,021)
Cash used in investing activities	(223,733)	(262,841)

FINANCING ACTIVITIES
Cash overdraft	66,433	-
Proceeds from sales of common stock	813,000	1,440,892
Proceeds from note payable	63,000	-
Capitalized costs from reverse merger	-	281,333
Cash from financing activities	942,433	1,722,225

Increase in cash	(83,429)	90,446
Cash at beginning of the period	106,850	88,742

Cash at end of the period	$ 23,421	$ 179,188


Supplemental Disclosure of Cash Flow Information
Non-Cash Investing and Financing Activities:
Oil & gas properties	$ 5,910,000	$ -
Preferred Stock	(5,910)	-
Additional Paid-in Capital	(5,904,090)	-

	$ -	$ -

The accompanying notes are an integral part of these financial statements.

F – 4

PETRON ENERGY II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PERIOD ENDING SEPTEMBER 30, 2012 AND 2011

(Unaudited)

NOTE 1 - INCORPORATION AND NATURE OF OPERATIONS

Petron Energy II, Inc. (“Petron Energy” or the “Company”) was formerly known as Restaurant Concepts of America, Inc. 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.

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.

NOTE 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

The interim consolidated financial statements as of September 30, 2012, and 2011, have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2011. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented.

The consolidated statements of operations reflect the results of operations of the Company for the three and nine month periods ended September 30, 2012, and 2011, and the statements of cash flows reflect the activity for the nine month periods ended September 30, 2012, and 2011. Operating results for the nine month period ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

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 $7,355,368 for the nine months ended September 30, 2012, (2011 - $1,651,087) and at September 30, 2012, had an accumulated deficit of $18,850,528 (2011 – $11,495,160). 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. Management’s 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.

NOTE 3 - ASSET IMPAIRMENT

On August 8, 2011, the Company entered into an “Asset Purchase Agreement” with ONE Energy Capital Corp. (“ONE Energy”). The Company purchased producing oil and gas wells owned by ONE Energy by issuing 5,910,000 shares of the Company’s Series B Preferred Stock. ONE Energy has the right to convert such Series B Preferred Shares into the number of common shares having a total value of $5,910,000 based on the trading price of the Company’s common stock on the date of such conversion. The purchase transaction was completed and the convertible preferred shares issued on February 9, 2012. Upon completion of the purchase the Company recorded the $5,910 par value of the preferred shares and a common stock issuance liability of $5,904,090 which will be recognize as additional paid-in capital at the time the preferred shares are converted to common stock.

The Company’s investment in the ONE Energy properties was as follows:

Cash payment to ONE Energy	$	106,000
Other cost associated with purchase		119,000
Preferred stock conversion value		5,910,000
Total investment	$	6,135,000

This investment was reviewed by management to determine if there was impairment. The facts considered by management in the impairment review included among other items the following:

•

During the three year period ended December 31, 2011 the operating expenses of the purchased wells exceeded revenues by approximately $500,000.

•

ONE Energy’s reserve report related to the well sold estimated the discounted cash inflows of $132,000.

•

The Company had a reserve report for these wells prepared as of March 31, 2012 reported discounted cash inflows of $232,000.

Management concluded that an impairment had occurred and that the investment in the purchased wells should be reduced to $232,000 at March 31, 2012, resulting in an impairment charge of $5,903,000.

Note 4 - CONVERTIBLE DEBT

On July 26, 2012, the Company borrowed $63,000 pursuant to a convertible debt agreement. The maturity date of the note is April 30, 2013, and it bears interest at 8% per year. After 180 days from the date of the note, at the option of the holder, the debt can be converted to the Company’s common stock at an exercise price that is 58% of the market price of the common stock at the date of conversion.

F-5

[End Notes to Financial Statements]

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Results of Operations

For the Three Month Period Ended September 30, 2012, versus September 30, 2011

Revenue for the period ended September 30, 2012, was $78,808 compared to $46,494 for the period ended September 30, 2011. This was an increase of $32,314.

Net loss for the period ended September 30, 2012, was $330,223 compared to $1,171,416 net loss for the period ended September 30, 2011.

General and Administrative costs for the period ended September 30, 2012, were $310,221 compared to $1,031,245 for the period ended September 30, 2011.

Liquidity and Capital Resources

As of September 30, 2012, the total liabilities were $1,048,741, excluding the common stock issuance liability, compared to $591,429 for the period ended December 31, 2011, and the Company’s assets were $2,588,362 compared to $2,613,934 for the period ended December 31, 2011.

Cash Requirements

Our cash on hand as of September 30, 2012, was $23,421 compared to $106,850 for the period ended December 31, 2011. For the period ended September 30, 2012, and at September 30, 2012, the Company had an accumulated deficit of $18,850,528 as compared to $11,495,160 in 2011. 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. Management’s 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.

For the Nine Month Period Ended September 30, 2012, versus September 30, 2011

Revenue for the period ended September 30, 2012, was $274,384 compared to $89,503 for the period ended September 30, 2011. This was increase of $184,881.

Net loss for the period ended September 30, 2012, was $7,355,368 compared to $1,651,087 net loss for the period ended September 30, 2011.

General and Administrative costs for the period ended September 30, 2012, were $1,388,514 compared to $1,466,600 for the period ended September 30, 2011.

Liquidity and Capital Resources

As of September 30, 2012, the total liabilities were $1,048,741, excluding gthe common stock issuance liability, compared to $591,429 for the period ended December 31, 2011, and the Company’s assets were $2,588,362 compared to $2,613,934 for the period ended December 31, 2011.

Cash Requirements

Our cash on hand as of September 30, 2012, was $23,421 compared to $106,850 for the period ended December 31, 2011. The Company has incurred a net loss of $7,355,368 for the period ended September 30, 2012, compared to a net loss of $1,651,087 for the period ended September 30, 2011, and at September 30, 2012, had an accumulated deficit of $18,850,528 as compared to $11,495,160 in 2011. 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. Management’s 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.

Off-Balance Sheet Arrangements

We have no significant 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 are material to stockholders.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in Note 2 of the notes to our financial statements. In general, management's estimates are based on historical experience, information from third party professionals, and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The adoption of these accounting standards had the following impact on the Company’s statements of income and financial condition:

The FASB established the FASB Accounting Standards Codification (“Codification”) as the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements issued for interim and annual periods ending after September 15, 2009. The codification has changed the manner in which U.S. GAAP guidance is referenced, but did not have an impact on the consolidated financial position, results of operations or cash flows of the Company

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements.” This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Accounting Standards Codification (“ASC”) 820. ASU 2010-06 amends ASC 820 to now require: (1) a reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, ASU 2010-06 clarifies the requirements of existing disclosures. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early application is permitted. The Company will comply with the additional disclosures required by this guidance upon its adoption in January 2010.

Also in January 2010, the FASB issued Accounting Standards Update No. 2010-03, “Extractive Activities—Oil and Gas—Oil and Gas Reserve Estimation and Disclosures.” This ASU amends the “Extractive Industries—Oil and Gas” Topic of the Codification to align the oil and gas reserve estimation and disclosure requirements in this Topic with the SEC’s Release No. 33-8995, “Modernization of Oil and Gas Reporting Requirements (Final Rule),” discussed below. The amendments are effective for annual reporting periods ending on or after December 31, 2009, and the adoption of these provisions on December 31, 2009, did not have a material impact on our consolidated financial statements.

On December 31, 2008, the Securities and Exchange Commission, referred to in this report as the SEC, issued Release No. 33-8995, “Modernization of Oil and Gas Reporting Requirements (Final Rule),” which revises the disclosures required by oil and gas companies. The SEC disclosure requirements for oil and gas companies have been updated to include expanded disclosure for oil and gas activities, and certain definitions have also been changed that will impact the determination of oil and gas reserve quantities. The provisions of this final rule are effective for registration statements filed on or after January 1, 2010, and for annual reports for fiscal years ending on or after December 31, 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934, as amended (“Exchange Act”) Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report (the "Evaluation Date"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were not effective as previously disclosed on our Annual Report on Form 10-K

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.	Quarterly Issuances:

We did not issue any unregistered securities other than as previously disclosed.

2.	Subsequent Issuances:

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

ITEM 4. MINE SAFETY DISCLOSURES

NONE

ITEM 5. OTHER INFORMATION

Quarterly Events

Subsequent Events

ITEM 6. EXHIBITS

Exhibit
Number	Description of Exhibit	Filing
3.01	Certificate of Incorporation	Filed with the SEC on Form S-1 Registration Statement July 07, 2009
3.01a	Certificate of Incorporation	Filed with the SEC on Form 8-K February 17, 2012
3.02	By-Laws of the Company	Filed with the SEC on Form S-1 Registration Statement July 07, 2009
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

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

SIGNATURES

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

PETRON ENERGY II, INC.

Dated: January 4, 2013

/s/ Floyd L. Smith

By: Floyd L. Smith

Its: CEO and CFO, President, Treasurer and Director

In accordance with 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.

Dated: January 4, 2013

/s/ Floyd L. Smith

By: Floyd L. Smith

Chief Executive Officer

Principal Accounting Officer and

Chief Financial Officer,

President, Treasurer and Director

Dated: January 4, 2013

/s/ David Knepper

By: David Knepper

Director

EX-31.01 2 peii0104form10qa930ex3101.htm EXHIBIT 31.01

Exhibit 31.01

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Floyd L. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Petron Energy II, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 4, 2013	/s/ Floyd L. Smith
	By: Floyd L. Smith
	Its: Principal Executive
	Officer

EX-31.02 3 peii0104form10qa930ex3102.htm EXHIBIT 31.02

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

I, Floyd L. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Petron Energy II, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 4, 2013 /s/ Floyd L. Smith

By: Floyd L. Smith

Its: Principal Financial

Officer

EX-32.01 4 peii0104form10qa930ex3201.htm EXHIBIT 32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Petron Energy II, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Floyd L. Smith, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Floyd L. Smith

By: Floyd L. Smith

Chief Executive Officer

Dated: January 4, 2013

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02 5 peii0104form10qa930ex3202.htm EXHIBIT 32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Floyd L. Smith

By: Floyd L. Smith

Chief Financial Officer

Dated: January 4, 2013

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NOTE 1 - INCORPORATION AND NATURE OF OPERATIONS Petron Energy II, Inc. (Petron Energy or the Company) was formerly known as Restaurant Concepts of America, Inc. 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.   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.

NOTE 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: <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="background-color: #CCEEFF"> <td style="width: 50%; border-bottom: black 1.5pt solid"> Subsidiary Name     </td> <td style="width: 50%; border-bottom: black 1.5pt solid"> Organization Date</td></tr> <tr style="background-color: white"> <td> Petron Energy II Pipeline, Inc.  </td> <td> April 2008</td></tr> <tr style="background-color: #CCEEFF"> <td> Petron Energy II Well Service, Inc. </td> <td> July 2008</td></tr> </table>   The interim consolidated financial statements as of September 30, 2012, and 2011, have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements for the year ended December 31, 2011. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented.   The consolidated statements of operations reflect the results of operations of the Company for the three and nine month periods ended September 30, 2012, and 2011, and the statements of cash flows reflect the activity for the nine month periods ended September 30, 2012, and 2011. Operating results for the nine month period ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

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 $7,355,368 for the nine months ended September 30, 2012, (2011 - $1,651,087) and at September 30, 2012, had an accumulated deficit of $18,850,528 (2011 $11,495,160). 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.

NOTE 3 - ASSET IMPAIRMENT	 On August 8, 2011, the Company entered into an Asset Purchase Agreement with ONE Energy Capital Corp. (ONE Energy). The Company purchased producing oil and gas wells owned by ONE Energy by issuing 5,910,000 shares of the Companys Series B Preferred Stock. ONE Energy has the right to convert such Series B Preferred Shares into the number of common shares having a total value of $5,910,000 based on the trading price of the Companys common stock on the date of such conversion. The purchase transaction was completed and the convertible preferred shares issued on February 9, 2012. Upon completion of the purchase the Company recorded the $5,910 par value of the preferred shares and a common stock issuance liability of $5,904,090 which will be recognize as additional paid-in capital at the time the preferred shares are converted to common stock.   The Companys investment in the ONE Energy properties was as follows:   <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">Cash payment to ONE Energy </td> <td colspan="2" style="font: 10pt Times New Roman, Times, Serif; text-align: right">$</td> <td style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: right">106,000</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="font: 10pt Times New Roman, Times, Serif">Other cost associated with purchase </td> <td colspan="2" style="font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right"> </td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: right">119,000</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="font: 10pt Times New Roman, Times, Serif">Preferred stock conversion value </td> <td style="border-bottom: black 1pt solid; font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right"> </td> <td style="border-bottom: black 1pt solid; font: 11pt Calibri, Helvetica, Sans-Serif; text-align: right"> </td> <td style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">5,910,000</td></tr> <tr style="background-color: white"> <td style="vertical-align: bottom; padding-left: 33.75pt; font: 10pt Times New Roman, Times, Serif">Total investment </td> <td colspan="2" style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">$</td> <td style="vertical-align: bottom; border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">6,135,000</td></tr> <tr> <td> </td> <td> </td> <td> </td> <td> </td></tr> </table>   This investment was reviewed by management to determine if there was impairment. The facts considered by management in the impairment review included among other items the following:   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Arial, Helvetica, Sans-Serif"></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">During the three year period ended December 31, 2011 the operating expenses of the purchased wells exceeded revenues by approximately $500,000.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Arial, Helvetica, Sans-Serif"></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">ONE Energys reserve report related to the well sold estimated the discounted cash inflows of $132,000.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px; font: 12pt Arial, Helvetica, Sans-Serif"></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">The Company had a reserve report for these wells prepared as of March 31, 2012 reported discounted cash inflows of $232,000.</td></tr> </table>   Management concluded that an impairment had occurred and that the investment in the purchased wells should be reduced to $232,000 at March 31, 2012, resulting in an impairment charge of $5,903,000.

Note 4 - CONVERTIBLE DEBT   On July 26, 2012, the Company borrowed $63,000 pursuant to a convertible debt agreement. The maturity date of the note is April 30, 2013, and it bears interest at 8% per year. After 180 days from the date of the note, at the option of the holder, the debt can be converted to the Companys common stock at an exercise price that is 58% of the market price of the common stock at the date of conversion.

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Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Amendment Description Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current Assets Cash Accounts Receivable--Oil & gas sales Total Current Assets Pipeline, net of accumulated depreciation of $228,689 and $179,289, respectively Producing Oil & Gas Properties, net of accumulated depletion of $700,795 and $628,795, respectively Other Depreciable Equipment, net of accumulated depreciation of $53,112 and $31,339 respectively Other Assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Cash Overdraft Accounts Payable--Trade Accounts Payable--Related Party Accrued Liabilities Notes Payable--current Total Current Liabilities Asset Retirement Obligation Common Stock Issuance Liability TOTAL LIABILITIES STOCKHOLDERS' EQUITY Preferred Stock Series B, $0.001 par value, 10,000,000 shares authorized, 5,910,000 issued and outstanding Preferred Stock Series A, $0.001 par value, 10,000,000 shares authorized, 1,000 issued and outstanding Common Stock, $0.001 par value, 1,000,000,000 shares authorized, 117,869,899 and 110,727,511 issued and outstanding, respectively Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY Statement [Table] Statement [Line Items] Accumulated depreciation of Pipeline Accumulated depletion of Producing Oil and Gas Properties Other Depreciable Equipment, net of accumulated depreciation Preferred stock, par value Preferred stock, authorized Preferred stock, issued Preferred stock, outstanding Common stock, par value Common stock, authorized Common stock, issued Common stock, outstanding Income Statement [Abstract] Revenues Oil & Gas Sales Pipeline Revenue Total Revenue Costs and Expenses Cost of Revenue Depletion, Depreciation and Amortization Impairment General and Adminstrative Total Expenses Loss from Operations Before Impairment and Income Taxes Interest Income Taxes Net Loss Loss per share--basic and diluted Weighted average number of shares--basic and diluted Statement of Cash Flows [Abstract] OPERATING ACTIVITIES Net Loss Adjustments to reconcile net loss to cash used by operating activitites: Depletion and depreciation Common stock issued for services Change in other asset and liabilities: Decrease in oil & gas receivables Increase in accounts payable Increase in accrued liabilities Cash used in operating activities INVESTING ACTIVITIES Investment in oil & gas properties Pipeline investment Purchase of other equipment Cash used in investing activities FINANCING ACTIVITIES Cash overdraft Proceeds from sales of common stock Proceeds from note payable Capitalized costs from reverse merger Cash from financing activities Increase in cash Cash at beginning of the period Cash at end of the period Supplemental Disclosure of Cash Flow Information Non-Cash Investing and Financing Activities: Oil & gas properties Preferred Stock Additional Paid-in Capital Total Non-Cash Investing and Financing Activities Organization, Consolidation and Presentation of Financial Statements [Abstract] INCORPORATION AND NATURE OF OPERATIONS Accounting Policies [Abstract] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going concern uncertainty Goodwill and Intangible Assets Disclosure [Abstract] ASSET IMPAIRMENT Debt Disclosure [Abstract] CONVERTIBLE DEBT Pipeline Net Of Accumulated Depreciation. 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ASSET IMPAIRMENT

3 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

ASSET IMPAIRMENT

NOTE 3 - ASSET IMPAIRMENT

The Company’s investment in the ONE Energy properties was as follows:

Cash payment to ONE Energy	$	106,000
Other cost associated with purchase		119,000
Preferred stock conversion value		5,910,000
Total investment	$	6,135,000

This investment was reviewed by management to determine if there was impairment. The facts considered by management in the impairment review included among other items the following:

•

During the three year period ended December 31, 2011 the operating expenses of the purchased wells exceeded revenues by approximately $500,000.

•

ONE Energy’s reserve report related to the well sold estimated the discounted cash inflows of $132,000.

•

The Company had a reserve report for these wells prepared as of March 31, 2012 reported discounted cash inflows of $232,000.

Management concluded that an impairment had occurred and that the investment in the purchased wells should be reduced to $232,000 at March 31, 2012, resulting in an impairment charge of $5,903,000.

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Going concern uncertainty	3 Months Ended
Sep. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Going concern uncertainty	*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 $7,355,368 for the nine months ended September 30, 2012, (2011 - $1,651,087) and at September 30, 2012, had an accumulated deficit of $18,850,528 (2011 – $11,495,160). 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. Management’s 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.

Going concern uncertainty

3 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going concern uncertainty

Going concern uncertainty

- Definition

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

+ References+ Details

XML 16 R2.htm IDEA: XBRL DOCUMENT

CONSOLIDATED BALANCE SHEET (Unaudited) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets
Cash	$ 23,421	$ 106,850
Accounts Receivable--Oil & gas sales	23,762	53,466
Total Current Assets	47,183	160,316
Pipeline, net of accumulated depreciation of $228,689 and $179,289, respectively	759,311	808,711
Producing Oil & Gas Properties, net of accumulated depletion of $700,795 and $628,795, respectively	1,583,992	1,433,068
Other Depreciable Equipment, net of accumulated depreciation of $53,112 and $31,339 respectively	166,301	180,264
Other Assets	31,575	31,575
TOTAL ASSETS	2,588,362	2,613,934
Current Liabilities
Cash Overdraft	66,433
Accounts Payable--Trade	727,262	443,114
Accounts Payable--Related Party	342	50,617
Accrued Liabilities	166,164	72,158
Notes Payable--current	63,000
Total Current Liabilities	1,023,201	565,889
Asset Retirement Obligation	25,540	25,540
Common Stock Issuance Liability	5,904,090
TOTAL LIABILITIES	6,952,831	591,429
STOCKHOLDERS' EQUITY
Preferred Stock Series B, $0.001 par value, 10,000,000 shares authorized, 5,910,000 issued and outstanding	5,910
Preferred Stock Series A, $0.001 par value, 10,000,000 shares authorized, 1,000 issued and outstanding	1	1
Common Stock, $0.001 par value, 1,000,000,000 shares authorized, 117,869,899 and 110,727,511 issued and outstanding, respectively	117,869	110,727
Additional Paid-In Capital	14,362,279	13,406,937
Accumulated Deficit	(18,850,528)	(11,495,160)
Total Stockholders' Equity	(4,364,469)	2,022,505
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,588,362	$ 2,613,934

XML 17 R6.htm IDEA: XBRL DOCUMENT

INCORPORATION AND NATURE OF OPERATIONS

3 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

INCORPORATION AND NATURE OF OPERATIONS

NOTE 1 - INCORPORATION AND NATURE OF OPERATIONS

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 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

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details

XML 20 R3.htm IDEA: XBRL DOCUMENT

CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Accumulated depreciation of Pipeline	$ 228,689	$ 179,289
Accumulated depletion of Producing Oil and Gas Properties	700,795	628,795
Other Depreciable Equipment, net of accumulated depreciation	$ 53,112	$ 31,339
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	1,000,000,000	1,000,000,000
Common stock, issued	117,869,899	110,727,511
Common stock, outstanding	117,869,899	110,727,511
Preferred Stock, Series A
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, issued	1,000	1,000
Preferred stock, outstanding	1,000	1,000
Preferred Stock, Series B
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, issued	5,910,000
Preferred stock, outstanding	5,910,000

XML 21 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information	3 Months Ended
Document and Entity Information	Sep. 30, 2012
Document And Entity Information
Entity Registrant Name	Petron Energy II, Inc.
Entity Central Index Key	0001467434
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	true
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?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	117,869,899
Amendment Description	This Amendment No. 1 on Form 10-Q/A (this “First Amendment”) amends Petron Energy II, Inc.’s Quarterly Report on Form 10-Q (the “Original Filing”) originally filed on November 13, 2012 with the Securities and Exchange Commission (the “Commission”). We are
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (USD $)
3 Months Ended 9 Months Ended

Sep. 30, 2012

Sep. 30, 2011

Sep. 30, 2012

Sep. 30, 2011

Revenues

Oil & Gas Sales $ 72,690 $ 43,917 $ 250,715 $ 85,862

Pipeline Revenue 6,118 2,577 23,669 3,641

Total Revenue 78,808 46,494 274,384 89,503

Costs and Expenses

Cost of Revenue 42,287 144,032 189,266 203,390

Depletion, Depreciation and Amortization 50,725 42,633 143,174 70,600

Impairment 5,903,000

General and Adminstrative 310,221 1,031,245 1,388,514 1,466,600

Total Expenses 403,233 1,217,910 7,623,954 1,740,590

Loss from Operations Before Impairment and Income Taxes (324,425) (1,171,416) (7,349,570) (1,651,087)

Interest 5,798 5,798

Income Taxes

Net Loss $ (330,223) $ (1,171,416) $ (7,355,368) $ (1,651,087)

Loss per share--basic and diluted $ (0.003) $ (0.013) $ (0.064) $ (0.019)

Weighted average number of shares--basic and diluted 116,339,587 92,976,752 114,347,341 87,757,049

XML 24 R5.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
Net Loss	$ (7,355,368)	$ (1,651,962)
Adjustments to reconcile net loss to cash used by operating activitites:
Depletion and depreciation	143,174	70,600
Impairment	5,903,000
Common stock issued for services	149,483
Change in other asset and liabilities:
Decrease in oil & gas receivables	29,704	144
Increase in accounts payable	284,267	198,235
Increase in accrued liabilities	43,612	14,046
Cash used in operating activities	(802,128)	(1,368,937)
INVESTING ACTIVITIES
Investment in oil & gas properties	(215,923)	(258,820)
Pipeline investment	0	0
Purchase of other equipment	(7,810)	(4,021)
Cash used in investing activities	(223,733)	(262,841)
FINANCING ACTIVITIES
Cash overdraft	66,433
Proceeds from sales of common stock	813,000	1,440,892
Proceeds from note payable	63,000
Capitalized costs from reverse merger		281,333
Cash from financing activities	942,433	1,722,225
Increase in cash	(83,429)	90,446
Cash at beginning of the period	106,850	88,742
Cash at end of the period	23,421	179,188
Non-Cash Investing and Financing Activities:
Oil & gas properties	5,910,000
Preferred Stock	$ (5,910)
Additional Paid-in Capital	(5,904,090)
Total Non-Cash Investing and Financing Activities

XML 25 R10.htm IDEA: XBRL DOCUMENT

CONVERTIBLE DEBT

3 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

CONVERTIBLE DEBT

Note 4 - CONVERTIBLE DEBT

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details

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