0001477932-13-003805.txt : 20130815 0001477932-13-003805.hdr.sgml : 20130815 20130815161353 ACCESSION NUMBER: 0001477932-13-003805 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20130630 FILED AS OF DATE: 20130815 DATE AS OF CHANGE: 20130815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: American Exploration Corp CENTRAL INDEX KEY: 0001388486 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 980518266 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-52542 FILM NUMBER: 131042393 BUSINESS ADDRESS: STREET 1: 520 5TH AVE SW STREET 2: SUITE 2600 CITY: CALGARY STATE: A0 ZIP: T2P 3R7 BUSINESS PHONE: 403-233-8484 MAIL ADDRESS: STREET 1: 520 5TH AVE SW STREET 2: SUITE 2600 CITY: CALGARY STATE: A0 ZIP: T2P 3R7 FORMER COMPANY: FORMER CONFORMED NAME: MINHAS ENERGY CONSULTANTS, INC. DATE OF NAME CHANGE: 20070131 10-Q 1 aexp_10q.htm FORM 10-Q aexp_10q.htm


U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

Mark One

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

For the quarterly period ended June 30, 2013

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

For the transition period from _______ to _______

Commission File No. 333-141060

American Exploration Corporation
(Name of small business issuer in its charter)
 
Nevada
 
98-0518266
(State or other jurisdiction of
 incorporation or organization)
 
(I.R.S. Employer
Identification No.)

700 6th Avenue SW, Suite 1520
Calgary, Alberta
Canada T2P 0T8
(Address of principal executive offices)
 
(403) 233-8484
(Issuer’s telephone number)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Name of each exchange on which registered:
None
   
     
Securities registered pursuant to Section 12(g) of the Act:
 
 
Common Stock, $0.001
   
(Title of Class)
   

Indicate by checkmark whether the issuer: (1) has 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 o

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 229.405 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 o   No x

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Class
 
Outstanding as of August 15, 2013
Common Stock, $0.001
 
120,273,333



 
 

 

 AMERICAN EXPLORATION CORPORATION
(An Exploration Stage Company)
BALANCE SHEETS
 (Unaudited)

   
June 30,
2013
 
December 31,
2012
 
ASSETS
         
           
Current Assets
         
Cash and cash equivalents
 
$
4,341
   
$
4,458
 
Total Assets
 
$
4,341
   
$
4,458
 
                 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
Current Liabilities
               
Accounts payable and accrued liabilities
 
$
64,354
   
$
41,289
 
Accounts payable – related parties
   
627,766
     
511,662
 
Short-term notes payable
   
184,978
     
185,000
 
Short-term notes payable – related parties
   
147,790
     
148,225
 
Convertible notes – related party
   
95,000
     
100,310
 
Advances from officer and Spotlight
   
61,936
     
29,972
 
Total Liabilities
   
1,181,824
     
1,016,458
 
                 
Commitments and contingencies
               
                 
Stockholders’ Deficit
               
Common stock, $0.001 par value, 2,100,000,000 shares authorized:
               
60,273,333 shares issued and outstanding
   
60,273
     
60,273
 
Additional paid-in capital
   
6,785,043
     
6,646,657
 
Accumulated other comprehensive income
   
862
     
(3,244)
 
Accumulated deficit during exploration stage
   
(8,023,661)
     
(7,715,686)
 
Total Stockholders’ Deficit
   
(1,177,483)
     
(1,012,000)
 
                 
Total Liabilities and Stockholders’ Deficit
 
$
4,341
   
$
4,458
 

The accompanying notes are an integral part of these unaudited financial statements.
 
 
2

 
 
AMERICAN EXPLORATION CORPORATION
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Three and Six Months Ended June 30, 2013 and 2012
and For the Period from Inception (May 11, 2006) to June 30, 2013
(Unaudited)

               
Period from Inception
 
   
Three Months Ended June 30,
   
Six Months Ended June 30,
   
(May 11, 2006) to
 
   
2013
   
2012
   
2013
   
2012
   
June 30, 2013
 
                               
Revenue
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                         
Operating expenses
                                       
   General and administrative
   
158,252
     
151,481
     
291,235
     
296,161
     
4,260,051
 
   Depreciation and amortization
   
-
     
-
     
-
     
-
     
11,277
 
   Impairment of oil & gas properties
   
-
     
-
     
-
     
-
     
3,771,001
 
   Total operating expenses
   
158,252
     
151,481
     
291,235
     
296,161
     
8,042,329
 
                                         
   Loss from operations
   
(158,252)
     
(151,481)
     
(291,235)
     
(296,161)
     
(8,042,329)
 
                                         
Other income (expense)
                                       
   Interest expense
   
(8,299)
     
(7,842)
     
(16,740)
     
(13,720)
     
(153,971)
 
   Loss on sale of assets
   
-
     
-
     
-
     
-
     
(1,161)
 
   Other income
   
-
     
-
     
-
     
-
     
173,800
 
Total other income (expense)
   
(8,299)
     
(7,842)
     
(16,740)
     
(13,720)
     
18,668
 
                                         
Net loss
 
$
(166,551)
     
(159,323)
     
(307,975)
     
(309,881)
     
(8,023,661)
 
                                         
Other comprehensive income
                                       
Gain on foreign currency translation
   
8,429
     
1,625
     
4,106
     
34
     
862
 
Total comprehensive loss
 
$
(158,122)
   
$
(157,698)
   
$
(303,869)
   
$
(309,847)
   
$
(8,022,799)
 
                                         
Net loss per common share – basic and diluted
 
$
(0.00
)
 
$
(0.00)
   
$
(0.01
)
 
$
(0.01
)
       
                                         
Weighted average common shares outstanding - basic and diluted
   
60,273,333
     
60,273,333
     
60,273,333
     
60,273,333
         

The accompanying notes are an integral part of these unaudited financial statements.
 
 
3

 
 
AMERICAN EXPLORATION CORPORATION
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2013 and 2012
and For the Period from Inception (May 11, 2006) to June 30, 2013
(Unaudited)
 
   
Six Months Ended June 30,
   
Inception
 (May 11, 2006) to
 
   
2013
   
2012
   
June 30, 2013
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
                   
Net loss
 
$
(307,975)
   
$
(309,881
)
 
$
(8,023,661
)
Adjustments to reconcile net loss to net cash used by operating activities:
                       
   Depreciation and amortization expense
   
-
     
-
     
11,277
 
   Amortization of debt discount
   
-
     
-
     
60,945
 
   Share-based compensation
   
138,386
     
138,386
     
2,051,371
 
   Impairment of oil & gas properties
   
-
     
-
     
3,771,001
 
   Loss on sale of assets
   
-
     
-
     
1,161
 
   Changes in operating assets and liabilities:
   
 
     
 
         
        Accounts payable and accrued liabilities
   
47,931
     
31,277
     
89,055
 
        Accounts payable - related parties
   
115,223
     
96,116
     
626,718
 
Net cash used in operating activities
   
(6,435)
     
(44,102
)
   
(1,412,133
)
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
   Website
   
-
     
-
     
(10,000
)
   Acquisition of unproved oil and gas properties
   
-
     
-
     
(1,108,551
)
Net cash used in investing activities
   
-
     
-
     
(1,118,551
)
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
   Proceeds from issuance of common stock and warrants
   
-
        -      
2,063,250
 
   Proceeds from notes payable
   
-
     
30,000
     
185,000
 
   Proceeds from advances from officer and Spotlight
   
7,050
     
1,800
     
189,831
 
   Proceeds from issuance of convertible debt -  related parties
   
-
     
-
     
95,227
 
Net cash provided by financing activities
   
7,050
     
31,800
     
2,533,308
 
                         
Effect of exchange rate changes on cash
   
(732)
     
2,217
     
1,717
 
                         
Increase (decrease) in cash during the period
   
615
     
(10,085
)
   
2,624
 
Cash, beginning of the period
   
4,458
     
16,513
     
-
 
                         
Cash, end of the period
 
$
4,341
   
$
6,428
   
$
4,341
 
                         
Supplemental cash flow information:
                       
Taxes paid
 
$
-
   
$
-
   
$
-
 
Interest paid
 
$
-
   
$
-
   
$
-
 
                         
NON-CASH INVESTING AND FINANCING TRANSACTIONS
                       
Common stock issued for oil and gas property
 
$
-
   
$
-
   
$
2,664,750
 
Cancellation of loan from director
 
$
-
   
$
-
   
$
5,000
 
Cancellation of shares
 
$
-
   
$
-
   
$
86,139
 
Reclassification from payables to advances for the amount paid by Spotlight
 
$
27,953
   
$
-
   
$
27,953
 
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
4

 
 
 AMERICAN EXPLORATION CORPORATION
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements of American Exploration Corporation (the “Company” or “American”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been included in the accompanying unaudited financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the audited financial statements and footnotes that are included as part of the Company’s Form 10-K for the year ended December 31, 2012.

The Company was originally incorporated under the laws of the state of Nevada on May 11, 2006. The Company’s current focus is oil and gas exploration and development. The Company has limited operations, is considered an exploration stage company, and has had no revenues from operations to date.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include those regarding the recoverability of the Company’s unevaluated oil and gas properties and valuation of option and warrant transactions.

Reclassification

Certain amounts for prior periods have been reclassified to conform to the current period presentation.

Income (Loss) per Common Share

Basic net loss per common share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants or the assumed conversion of convertible debt instruments, using the treasury stock and “if converted” method. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.

For the six months ended June 30, 2013 and 2012, the dilutive effect of options to purchase 3,900,000 and 3,900,000 shares of common stock and warrants to purchase Nil and Nil shares of common stock, respectively, were excluded from the diluted earnings per share calculation because their effect would have been anti-dilutive.
 
 
5

 
 
Oil and Gas Properties, Full Cost Method

The Company has elected to use the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells, including directly related overhead costs and related asset retirement costs, are capitalized.

Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities, are capitalized as oil and gas property costs on a country by country basis. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. The Company assesses the realizability of unproved properties on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of the Company to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

In applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the “estimated present value” of its proved reserves. The estimated present value of proved reserves is based upon future net revenues (after consideration of current economic and operating conditions at the end of the period) discounted at a 10 percent interest rate, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense.

As of June 30, 2013, the Company had no proved properties and the exploratory well on the Company’s properties has previously been fully impaired pending future development.

Foreign Exchange and Currency Translation

For the periods presented, the Company maintained cash accounts in Canadian and U.S. dollars, and incurred certain expenses denominated in Canadian dollars. The Company's functional and reporting currency is the U.S. dollar. Transactions denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect on the date of the transactions. Assets and liabilities are translated using exchange rates at the end of each period. Exchange gains or losses on transactions are included in earnings. Adjustments resulting from the translation process are reported in a separate component of other comprehensive income and are not included in the determination of the results of operations.

Comprehensive Income

Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for stock and stock options based on the grant date fair value of the awards. The Company determines the fair value of stock option grants using the Black-Scholes option pricing model. The Company determines the fair value of shares of non-vested stock (also commonly referred to as restricted stock) based on the last quoted price of our stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates, if historical forfeiture rates are available. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, if any, are recognized as an addition to paid-in capital.
 
 
6

 
 
Subsequent Events

The Company evaluated all material subsequent events from June 30, 2013 through the date of the issuance of these consolidated financial statements for disclosure consideration.

Recent Accounting Pronouncements

There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows.

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred net losses for the period from inception to June 30, 2013 of $8,023,661 and has negative working capital of $1,177,483 at June 30, 2013; and is currently in default on certain outstanding debt obligations. Accordingly, there is substantial doubt as to the ability of the Company to continue as a going concern. The Company intends to fund initial operations through equity financing or debt arrangements.

The ability of the Company to emerge from the exploration stage is dependent upon the Company’s successful efforts to raise sufficient capital and then attain profitable operations. There can be no assurances, however, that management’s expectations of future revenues will be realized.

NOTE 3. SPOTLIGHT MERGER AGREEMENT

On February 12, 2013, the Company entered into a merger agreement (the “Spotlight Merger Agreement”) with Spotlight Innovation LLC, a limited liability company based in the State of Iowa ("Spotlight"). Completion of the merger is dependent upon certain conditions which have not been met as of June 30, 2013. In accordance with the terms and provisions of the Spotlight Merger Agreement, all of the issued and outstanding membership interests of Spotlight (the "Membership Interests") will be converted into the right to receive an aggregate of 7,500,000 fully paid and non-assessable shares of its restricted common stock on a post reverse split basis. Certain conditions were contemplated to be satisfied prior to closing of the Spotlight Merger Agreement which include, but are not limited to, the following: (i) Spotlight shall have completed and be satisfied with its due diligence review of the Company; (ii) the Company shall have received financing in an amount of at least $237,500 on terms approved by our Board of Directors, which shall be utilized to pay off certain of our liabilities; (iii) the Company shall have completed a 100:1 reverse stock split of our common stock; (iv) the Company shall have amended its certificate of incorporation to change its name to Spotlight Innovation, Inc.; (v) the Company shall have received approval from a majority of its shareholders of the Merger Agreement and the transactions contemplated therein; (vi) the current Board of Directors shall appoint Cris Grunewald as the sole member of the Board of Directors and the President/Chief Executive Officer and Secretary and a person to be designated by Spotlight as the Treasurer/Chief Financial Officer; and (vii) the Company’s current officers and directors shall resign upon closing of the transactions contemplated in the Merger Agreement. The contemplated stock split of 100:1 was subsequently amended post-reporting period to a ratio of 500:1.

There is no guarantee the transaction contemplated in the Spotlight Merger Agreement will close, and if it does, when it will close, or that the operations of Spotlight will be successful.

If the merger is completed, the Company will change its business plan to Spotlight’s business plan. Spotlight was founded to identify, validate and finance healthcare-focused companies founded for the purpose of commercializing intellectual property developed by major centers of academia in the United States. Spotlight provides strategic partners the opportunity to participate in the financing of a preferred search for, acquisition of, and/or funding of companies holding licenses for the commercialization of intellectual property developed by academic institutions. The principals of Spotlight have been involved in all stages of the commercialization of healthcare intellectual property over the last eight years.
 
 
7

 

NOTE 4. RELATED PARTY TRANSACTIONS

Accounts Payable – Related Parties

As of June 30, 2013, the Company owed an aggregate of $555,250 of compensation to its CEO and CFO.

Short-term Notes Payable – Directors

As of June 30, 2013, former directors of the Company had outstanding loans to the Company of $87,790 that were used to pay operating expenses of the Company. Average interest of 10% per annum has been accrued to the lenders and the loans are due upon demand. All of these loans are unsecured and no interest has been paid to date. Accrued interest as of June 30, 2013, was $35,335.

Convertible Note – Related Party

A 5% unsecured convertible debenture, due January 13, 2010, was also issued by the Company to a related party on October 13, 2009 for CDN $100,000 (USD $95,000). The unpaid principal amount can be converted at the option of the holder, into common stock at the price of $0.50 per share. The convertible note was not redeemed or converted at the maturity date, is currently in default and is still accruing interest. Accrued interest as of June 30, 2013 was $17,617.

Short-term Notes Payable - Mainland Resources

In September 2010, the Company borrowed $60,000 from Mainland Resources to pay the Company’s operating costs during the merger period. The note bears interest at 12% and was due on December 31, 2010. The Company entered into multiple extensions of the note during the period the Company was contemplating its merger with Mainland. On December 21, 2011, the Company and Mainland Resources entered into a new promissory note (the “New Promissory Note”), which superseded and replaced the Original Promissory Note. The New Promissory Note evidenced the Corporation’s current obligation to pay to Mainland Resources $79,200, comprised of $60,000 in principal and $19,200 in accrued interest. The New Promissory Note is due on demand and bears interest at 12% per annum. As of June 30, 2013, through the date of this filing, the Company has not received a demand notice from Mainland Resources for payment of this note payable.

Advances from Officer and Spotlight

As of June 30, 2013, the Company’s CEO has made total advances to the Company of $23,433. The Company also owes $38,503 in advances to Spotlight.

As of June 30, 2013, through the date of this filing, the Company has not received a demand notice from any of the related party lenders noted above for payment of these notes payable.
 
 
8

 

NOTE 5. NOTES PAYABLE

From June 2010 to December 2011, the Company entered the following notes with the same unrelated third party:
 
   
Date
 
Stated
   
Original
       
   
Of
 
Interest
   
Principal
 
Due
   
   
Note
 
Rate
   
Amount
 
Date
 
Default
Promissory Note
                 
#1  
06/02/10
   
5
%
 
$
50,000
 
On Demand
 
No
#2  
02/04/11
   
5
%
   
30,000
 
On Demand
 
No
#3  
05/04/11
   
5
%
   
35,000
 
On Demand
 
No
#4  
08/11/11
   
10
%
   
20,000
 
On Demand
 
No
#5  
12/05/11
   
10
%
   
20,000
 
On Demand
 
No

On April 28, 2012, the Company borrowed $30,000 pursuant to a note payable agreement with another unrelated third party. The note is due on demand and accrues interest at 10% per annum.

As of June 30, 2013, and through the date of this filing, the Company has not received a demand notice from the lender noted above for payment of principal or interest of these notes payable.

NOTE 6. INCOME TAXES

Deferred income taxes are provided on a liability method whereby deferred tax assets and liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities as well as operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income.

At June 30, 2013, the Company’s deferred tax assets consist primarily of net operating loss carry forwards. For the six months ended June 30, 2013, the material reconciling items between the tax benefit computed at the statutory rate and the actual benefit recognized in the financial statements consisted of expenses related to share-based compensation and the change in the valuation allowance during the applicable period. At June 30, 2013, the Company has recorded a 100% valuation allowance as management believes it is likely that any deferred tax assets will not be realized.

As of June 30, 2013 and December 31, 2012, the Company has a net operating loss carry forward of approximately $5.8 million and $5.7 million, respectively, which will expire between years 2026 and 2032. Due to the change in ownership provisions of the Tax Reform Act of 1986, the Company’s net operating loss carry forwards could be subject to annual limitations should a change in ownership occur.

NOTE 7. EQUITY TRANSACTIONS

Common Stock:

The Company did not have any common stock activities during the six months ended June 30, 2013 and 2012.
 
 
9

 

Stock Option:

In September 2009, the Company adopted the 2009 Stock Option Plan (“2009 Plan”). The 2009 Plan allows the Company to issue options to officers, directors and employees, as well as consultants, to purchase up to 7,000,000 shares of common stock.

During September 2009, the following options were granted:

·
1,000,000 options to the Company’s Chief Executive Officer, who is also a director of the Company.
·
1,150,000 options to three Directors of the Company
·
150,000 options to the Company’s Chief Financial Officer
·
400,000 options to three consultants to the Company
 
All the options granted have an exercise price of $0.80 per share and a 10 year life. With the exception of 50,000 options granted to a consultant that vested immediately, one third of the options granted vested at the date of grant, with the remainder vesting in equal parts in September 2012 and September 2015.

The Company recognized stock-based compensation expense of $138,386 related to these options during the six-month periods ended June 30, 2013 and 2012.

On March 14, 2011, 100,000 options with an exercise price of $0.13 per share, a ten year life and immediate vesting were granted to two directors of the Company. The fair value of the options granted was $14,928, or $0.15 per share, and was calculated in accordance with the Black-Scholes valuation model based on the following assumptions: (a) risk free interest rate 3.36%, (b) expected volatility of 173.17% (c) expected life of 5 years, and (d) zero expected future dividends. These options vested immediately and $14,928 of share-based compensation was recognized during the six months ended June 30, 2011 related to this option grant.

On April 20, 2011, 800,000 options were granted to two directors, 150,000 options were granted to the Chief Financial Officer, and 150,000 options were granted to legal counsel of the Company. These options had an exercise price of $0.09 per share, a ten year life and vested immediately. The fair value of the options granted was $99,231, or $0.01 per share, and was calculated in accordance with the Black-Scholes valuation model based on the following assumptions: (a) risk free interest rate 3.43%, (b) expected volatility of 171.00% (c) expected life of 5 years, and (d) zero expected future dividends. These options vested immediately.

The options qualify as ‘plain vanilla’ under the accounting literature and therefore, the expected life has been calculated pursuant to the provisions of Staff Accounting Bulletin No. 107.

A summary of stock option activity for the three months ended June 30 2013 is presented below:

   
Options
   
Weighted-Average Exercise Price
   
Aggregate
Intrinsic Value
 
Outstanding at January 1, 2012
   
3,900,000
   
$
0.58
   
$
-
 
Granted
   
-
     
-
     
-
 
Exercised
   
-
     
-
     
-
 
Expired
   
-
     
-
     
-
 
Outstanding at June 30, 2013
   
3,900,000
   
$
0.58
   
$
-
 
Exercisable at June 30, 2013
   
3,016,667
   
$
0.52
   
$
-
 

The Company recognized total stock-based compensation expense of $138,386 related to these options during the six months ended June 30, 2013. As of June 30, 2013, the total unrecognized stock-based compensation expense related to non-vested stock options was $622,741. The unrecognized stock-based compensation is expected to be ratably amortized to expense over a weighted average period of 2.21 years. The weighted average remaining contractual term of the outstanding options and exercisable options at June 30, 2013 is 6.71 years.
 
 
10

 

Stock Warrant:

There were no stock warrant activities during the three months ended June 30, 2013 and 2012. As of June 30, 2013, there were no stock warrants outstanding.

NOTE 8. SUBSEQUENT EVENTS

On July 8, 2013, the Company executed a stock purchase agreement (the “Stock Purchase Agreement”) with Orange Investments for aggregate proceeds of $129,000.  The proceeds were placed by Orange Investments in escrow on July 1, 2013 for the purchase of 60,000,000 shares of our restricted common stock at a per share price of $0.00215 (“Purchase Price”). Should the market price of the 60,000,000 shares of common stock in six (6) months be less than $0.00215, based on the 5 day weighted average trading price per share times 50% (the “Future Price”), the Company shall pay to Orange Investments, the difference in the Purchase Price and the Future Price, with shares at the then current 5 day weighted average trading price per share times 50%.

On July 24, 2013, Cristopher Grunewald was appointed President of American Exploration Corp. Steve Harding resigned his position as the President of the Company as of July 24, 2013, but continues in the capacity of Chief Executive Officer and a member of the Board of Directors.

 
11

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

American Exploration Corporation was incorporated under the laws of the State of Nevada on May 11, 2006 under the name of Minhas Energy Consultants, Inc. Previously, we were engaged in the business of providing professional engineering consulting services to the oil and gas industry, including clients such as petroleum and natural gas companies, oilfield service companies, utilities and manufacturing companies with petroleum and/or natural gas interests and government agencies. After the effective date of March 14, 2007 of our registration statement filed with the Securities and Exchange Commission on March 5, 2007, we commenced trading on the Over-the-Counter Bulletin Board.

On August 6, 2008, with the approval of our Board of Directors, we merged with our subsidiary, American Exploration Corporation, and amended our Articles of Incorporation to change our name to “American Exploration Corporation.” We currently are a natural resource exploration and production company engaged in the acquisition, exploration and development of oil and gas properties in the United States and within North America. Effective at the opening for trading on August 19, 2008, our trading symbol for our shares traded on the Over-the-Counter Bulletin Board changed to “AEXP.OB.”

Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "American Exploration," refers to American Exploration Corporation.

CURRENT BUSINESS OPERATIONS

We have been an exploration stage company engaged in the acquisition, exploration and development of oil and gas properties in North America, primarily in the United States. Our primary focus was the acquisition of mineral leases located in Mississippi. However, we anticipate changing our business operations as described below (see Section entitled “Spotlight Merger Agreement”), which shall include commercialization of healthcare intellectual property.

Spotlight Merger Agreement

On February 12, 2013, we entered into a merger agreement (the “Spotlight Merger Agreement”) with Spotlight Innovation LLC, a limited liability company based in the State of Iowa ("Spotlight"). Completion of the merger is dependent upon certain conditions which have not been met as of June 30, 2013. In accordance with the terms and provisions of the Spotlight Merger Agreement, all of the issued and outstanding membership interests of Spotlight (the "Membership Interests") will be converted into the right to receive an aggregate of 7,500,000 fully paid and non-assessable shares of our restricted common stock on a post reverse split basis. Certain conditions were contemplated to be satisfied prior to closing of the Spotlight Merger Agreement which include, but are not limited to, the following: (i) Spotlight shall have completed and be satisfied with its due diligence review of us; (ii) we shall have received financing in an amount of at least $237,500 on terms approved by our Board of Directors, which shall be utilized to pay off certain of our liabilities; (iii) we shall have completed a 100:1 reverse stock split of our common stock; (iv) we shall have amended our certificate of incorporation to change our name to Spotlight Innovation, Inc.; (v) we shall have received approval from a majority of our shareholders of the Merger Agreement and the transactions contemplated therein; (vi) the current Board of Directors shall appoint Cris Grunewald as the sole member of the Board of Directors and the President/Chief Executive Officer and Secretary and a person to be designated by Spotlight as the Treasurer/Chief Financial Officer; and (vii) our current officers and directors shall resign upon closing of the transactions contemplated in the Merger Agreement. The contemplated stock split of 100:1 was subsequently amended post-reporting period to a ratio of 500:1.

There is no guarantee the transaction contemplated in the Spotlight Merger Agreement will close, and if it does, when it will close, or that the operations of Spotlight will be successful.
 
 
12

 

If the merger is completed, we will change our business plan to Spotlight’s business plan. Spotlight was founded to identify, validate and finance healthcare-focused companies founded for the purpose of commercializing intellectual property developed by major centers of academia in the United States. Spotlight provides strategic partners the opportunity to participate in the financing of a preferred search for, acquisition of, and/or funding of companies holding licenses for the commericalization of intellectual property developed by academic institutions. The principals of Spotlight have been involved in all stages of the commercialization of healthcare intellectual property over the last eight years.

Stock Purchase Agreement

On July 8, 2013, our Board of Directors authorized the execution of that certain stock purchase agreement (the “Stock Purchase Agreement”) with Orange Investments Ltd, a Bahamian limited liability company ("Orange Investments"). In accordance with the terms and provisions of the Stock Purchase Agreement, we agreed to sell to Orange Investments up to an aggregate of 60,000,000 shares of our restricted common stock at a purchase price based on the five (5) day weighted average trading price per share times 50% as quoted by the OTC Markets (the "Purchase Price").  In further accordance of the terms and provisions of the Stock Purchase Agreement, once the cash for the Purchase Price is placed in an escrow account by Orange Investments, certificates evidencing the shares of common stock of the Company would be delivered to Orange Investments. As of July 2, 2013, an aggregate of $129,000.00 had been placed by Orange Investments in escrow for the purchase of 60,000,000 shares of common stock of the Company at a per share price of $0.00215.  In the event the price of the purchase shares of common stock in six months is less than the Purchase Price, we shall be obligated to make up the difference in the price with shares of our common stock at the then current five day weighted average trading price per share times 50%.

Information Statement on Form 14C

On August 1, 2013, we filed an Information Statement on Form 14(c) with the Securities and Exchange Commission, which will be furnished to all holders of our common stock as of July 22, 2013, in connection with the action taken by written consent of holders of a majority of the outstanding voting power of the Company to authorize the following: (i) ratification of the Spotlight Merger Agreement; (ii) ratification of the appointment of Cristopher Grunewald as a member of the Board of Directors and as the President of the Company; (iii) ratification of an amendment to the articles of incorporation (the "Name Change Amendment") to change our name from "American Exploration Corporation" to "Spotlight Innovation Inc."; (iv) ratification of an amendment to the articles of incorporation (the "Authorized Capital Amendment") to increase the total authorized capital from 2,100,000,000 shares of common stock, par value $0.001, to 4,000,000,000 shares of common stock, par value $0.001 (the "Increase in Authorized Capital"); (v) ratification of an amendment to the articles of incorporation to authorize 5,000,000 shares of preferred stock, including two new series of preferred stock, and blank check preferred stock (the “Preferred Stock Amendment”) and (vi) ratification of a reverse stock split of one for five hundred (1:500) of our shares of common stock (the "Reverse Stock Split").

The names of the shareholders of record who hold in the aggregate a majority of our total issued and outstanding common stock and who signed the written consent of stockholders are: (i) Orange Investments Ltd. holding of record 60,000,000 shares of common stock (49.8%); (ii) Steve Harding holding of record 2,150,000 shares of common stock (1.8%); (iii) Brian Manko holding of record 300,000 shares of common stock (.2%); and (iv) Devinder Randhawa holding of record 3,200,000 shares of common stock (2.7%).

These actions were approved by written consent on July 22, 201,3 by our Board of Directors and a majority of holders of our voting capital stock, in accordance with Nevada Revised Statutes. Our directors and majority of the shareholders of our outstanding capital stock, as of the record date of July 22, 2013, have approved the Merger Agreement, the Name Change Amendment, the Authorized Capital Amendment, the Preferred Stock Amendment, the Reverse Split and ratified the appointment of Cristopher Grunewald as determined were in the best interests of our Company and shareholders.
 
Once the Information Statement has been reviewed by the Securities Exchange Commission, it will be distributed to our shareholders of record shortly thereafter.
 
 
13

 

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Quarterly Report. Our reviewed financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

We are an exploration stage company and have not generated any revenue to date. We have incurred recurring losses since inception. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We believe we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Six Month Period Ended June 30, 2013 Compared to Six Month Period Ended June 30, 2012.

Our net loss for the six month period ended June 30, 2013 was $307,975 compared to a net loss of $309,881 during the six month period ended June 30, 2012, a decrease of $1,906. We generated no revenue for the six month periods ended June 30, 2013 and June 30, 2012, respectively.

During the six month period ended June 30, 2013, we incurred operating expenses of $291,235 compared to $296,161 incurred during the six month period ended June 30, 2012, a decrease of $4,926. During the six month period ended June 30, 2013, general and administrative expenses consisted of professional fees of $46,311 (2012: $48,467), which included legal, auditor, edgarizing and transfer agent fees, stock based compensation of $138,386 (2012: $138,386) and salary expense of $106,500 (2012: $106,500). Operating expenses decreased during the six month period ended June 30, 2013 generally due to reduced corporate activity.

Loss from operations for the six month period ended June 30, 2013 was $291,235 compared to loss from operations of $296,161 during the six month period ended June 30, 2012.

During the six month period ended June 30, 2013, we incurred interest expense of $16,740 (2012: $13,720). The increase in interest expense was a direct result of the increase in borrowings compared to prior year.

Our net loss and loss per share during the six month period ended June 30, 2013 was $307,975 or $0.01 per share compared to a net loss and loss per share of $309,881 or $0.01 per share during the six month period ended June 30, 2012. The weighted average number of shares outstanding was 60,273,333 for the six months ended June 30, 2013 and 2012.

Three Month Period Ended June 30, 2013 Compared to Three Month Period Ended June 30, 2012.

Our net loss for the three month period ended June 30, 2013 was $166,551 compared to a net loss of $159,323 during the three month period ended June 30, 2012, an increase of $7,228. We generated no revenue for the three month periods ended June 30, 2013 and June 30, 2012, respectively.

During the three month period ended June 30, 2013, we incurred operating expenses of $158,252 compared to $151,481 incurred during the three month period ended June 30, 2012, an increase of $6,771. During the three month period ended June 30, 2013, general and administrative expenses consisted of professional fees of $35,792 (2012: $28,599), which included legal, auditor, edgarizing and transfer agent fees, stock based compensation of $69,193 (2012: $69,193) and salary expense of $53,250 (2012: $53,250).
 
 
14

 

Loss from operations for the three month period ended June 30, 2013 was $166,551 compared to loss from operations of $159,323 during the three month period ended June 30, 2012

Operating expenses increased during the three month period ended June 30, 2013 generally due to increased corporate activity relating to the Spotlight Merger Agreement and associated Information Statement on Form 14(c).

During the three month period ended June 30, 2013, we incurred interest expense of $8,299 (2012: $7,842). The increase in interest expense was a direct result of the increase in borrowings compared to prior year.

Our net loss and loss per share during the three month period ended June 30, 2013 was $166,551 or $0.00 per share compared to a net loss and loss per share of $159,323 or $0.00 per share during the three month period ended June 30, 2012. The weighted average number of shares outstanding was 60,273,333 for the three months ended June 30, 2013 and 2012.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2013, our current assets were $4,341 and our current liabilities were $1,181,824, which resulted in a working capital deficit of $1,177,483. As of June 30, 2013, current assets were comprised of $4,341 in cash and cash equivalents and current liabilities were comprised of: (i) $64,354 in accounts payable and accrued liabilities; (ii) $627,766 in accounts payable–related parties; (iii) $184,978 in short-term notes payable; (iv) $147,790 in short-term notes payable – related parties; (v) $95,000 in convertible notes – short term; (vi) $23,433 in advances from officer; and (vii) $38,503 in advance from Spotlight.

As of June 30, 2013, our total assets were $4,341 comprised of current assets compares to $4,458 at December 31, 2012.

As of June 30, 2013, our total liabilities were $1,181,824 comprised entirely of current liabilities. The increase in liabilities during the six month period ended June 30, 2013 from fiscal year ended December 31, 2012 was primarily due to the increase in accounts payable – related parties for accrued salaries to our CEO and CFO.

Stockholders’ deficit increased from $1,012,000 as of December 31, 2012 to $1,102,124 as of June 30, 2013.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities due to a lack of a source of revenues. For the six month period ended June 30, 2013, net cash flows used in operating activities was $6,435 compared to $44,102 used during the six month period ended June 30, 2012. Net cash flows used in operating activities consisted primarily of a net loss of $307,975 (2012: $309,881), which was offset by $138,386 (2012: $138,386) in share-based compensation, $47,931 (2012: $31,277 in change in accounts payable and accrued liabilities and $115,223 (2012: $96,116) in change in accounts payable - related parties.

Cash Flows from Investing Activities

For the six month periods ended June 30, 2013 and 2012, net cash flows related to investing activities was $0.
 
 
15

 

Cash Flows from Financing Activities

We have financed our operations primarily from debt or the issuance of equity instruments. For the six month periods ended June 30, 2013 and 2012, net cash flows provided from financing activities was $7,050 (which consisted of $7,050 advance from Spotlight) and $31,800 (which consisted of $30,000 in proceeds from notes payable and $1,800 in proceeds from advance from officer),  respectively.

PLAN OF OPERATION AND FUNDING

A substantial portion of the six month period ended June 30, 2013 was dedicated to negotiating the Spotlight Merger Agreement and drafting and filing the Information Statement. In the event the Spotlight Merger Agreement is consummated, the business plan will change to that of Spotlight and possible further advances from related parties and the sale of securities will be required to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In the event the Spotlight Merger Agreement is consummated and in connection with our future business plan, management anticipates additional increases in operating expenses and capital expenditures relating to commencing and structuring new business operations. We would finance these expenses with further issuances of equity securities and debt issuances. We expect we would need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities could result in dilution to our current shareholders. Further, such securities may have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

GOING CONCERN

There is substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

ITEM III. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”). In the event we acquire any properties outside of the United States, the fluctuation of exchange rates may have positive or negative impacts on our results of operations.

Interest Rate

Interest rates in the United States are generally stable. Any potential future loans will relate mainly to acquisition of properties and will be mainly short-term. However, our debt may be likely to rise in connection with expansion and if interest rates were to rise at the same time, this could have a significant impact on our operating and financing activities. We have not entered into derivative contracts either to hedge existing risks for speculative purposes.
 
 
16

 
 
ITEM IV. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of June 30, 2013 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We identified a material weakness in our internal control over financial reporting primarily attributable to limited accounting and SEC reporting expertise within the Company. Due to our exploration stage, we have limited financial ability to remedy this staffing deficiency at this time; however, we will add additional accounting and SEC reporting expertise in the future as funds permit.

CHANGES IN INTERNAL CONTROLS

No significant changes were implemented in our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Cristopher Grunewald was appointed President of the Company, post-reporting period.

AUDIT COMMITTEE

Our Board of Directors has not established an audit committee. The respective role of an audit committee has been conducted by our Board of Directors. In the event the Spotlight Merger Agreement is consummated, we intend to establish an audit committee during the fiscal year 2013. When established, the audit committee's primary function will be to provide advice with respect to our financial matters and to assist our Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.
 
 
17

 

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

ITEM IA. RISK FACTORS

No report required

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

On July 8, 2013, our Board of Directors authorized the execution of the Stock Purchase Agreement with Orange Investments pursuant to which an aggregate of $129,000 had been placed by Orange Investments in escrow for the purchase of 60,000,000 shares of our restricted common stock at a per share price of $0.00215. Therefore, on July 2, 2013, our Board of Directors authorized the issuance of 60,000,000 shares of common stock to Orange Investments. The shares were issued pursuant to an exemption from registration under Regulation S under the Securities Act of 1933, as amended. The shares were issued in private transaction to Orange Investments. Orange Investments had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to their respective acquisitions of our securities Orange Investments was aware that the shares of common stock offered had not been registered under the Securities Act or under any state securities laws and could not be re-offered or re-sold without registration with the SEC or without an applicable exemption from the registration requirements. Orange Investments understood the economic risk of an investment in our securities. Neither we nor any person acting on its behalf offered or sold the securities by any form of general solicitation or general advertising.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No report required.

ITEM 4. MINE SAFETY DISCLOSURES

No report required.

ITEM 5. OTHER INFORMATION

No report required.
 
 
18

 

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report.

EXHIBIT NO.   DOCUMENT
     
3.1   Articles of Incorporation (1)
3.1.2   Articles of Incorporation as amended.
3.1.3   Articles of Merger between Minhas Energy Consultants and American Energy Corp. (2)
3.2   Bylaws (1)
10.1   Option Agreement between American Energy Corporation and Westrock Land Corporation dated October 2008. (3)
10.2   5% Convertible Debenture dated October 13, 2009 between American Exploration Corporation and DMS Ltd. (4)
10.3   Stock Option Plan of American Exploration Corporation dated September 14, 2009. (5)
10.4   Merger Agreement and Plan of Merger dated March __, 2010 between American Exploration Corporation and Mainland Resources Inc.
10.5   Merger Agreement dated February 15, 2013 between American Exploration Corp. and Spotlight Innovations LLC. (8)
10.6   Stock Purchase Agreement dated May 16, 2013 between American Exploration Corporation and Orange Investments Ltd. (9)
16. 1   Letter from Moore & Associates dated August 11, 2009. (6)
16. 2   Letter from Seale & Beers, CPAs dated November 2, 2009. (7)
31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act.
31.2   Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act.
32.1   Certification of Chief Executive Officer and Chief Financial Officer Under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS **
 
XBRL Instance Document
101.SCH **
 
XBRL Taxonomy Extension Schema Document
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

(1) Incorporated by reference from our Registration Statement on Form SB-2 filed with the Commission on March 5, 2006.
(2) Incorporated by reference from our Current Report on Form 8-K filed with the Commission on August 8, 2008.
(3) Incorporated by reference from our Current Report on Form 8-K filed with the Commission on November 6, 2008 and our Amendment No. 1 to Current Report filed with the Commission on January 25, 2009.
(4) Incorporated by reference from Form Current Report on Form 8-K filed with the Commission on October 19, 2009.
(5) Incorporated by reference from Quarterly Report on Form 10-Q filed with the Commission on November 20, 2009.
(6) Incorporated by reference from Current Report on Form 8-K filed with the Commission on August 17, 2009.
(7) Incorporation by referenced from Current Report on Form 8-K filed with the Commission November 4, 2009.
(8) Incorporation by reference from Current Report on Form 8-K filed with the Commission February 15, 2013.
(9) Incorporation by reference from Current Report on form 8-K filed with the Commission July 10, 2013.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 
19

 

AMERICAN EXPLORATION CORPORATION
 
SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
AMERICAN EXPLORATION CORPORATION
 
       
Dated: August 15, 2013
By:
/s/ STEVE HARDING
 
   
Steve Harding, Chief Executive Officer
 
       
       
Dated: August 15, 2013
By:
/s/ BRIAN MANKO
 
   
Brian Manko, Chief Financial Officer
 
 
 
20

EX-31.1 2 aexp_ex311.htm CERTIFICATION aexp_ex311.htm
EXHIBIT 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT OF 1934
RULE 13a-14(a) OR 15d-14(a)
 
I, Steve Harding, Chief Executive Officer, certify that:
 
1.
I have reviewed this Form 10-Q for American Exploration Corporation ;
 
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 our supervision, to ensure that material information relating to the registrant 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.
 
 
 
American Exploration Corporation
 
       
Date: August 15, 2013
By:
/s/ Steve Harding
 
   
Steve Harding
 
   
Chief Executive Officer
 
EX-31.2 3 aexp_ex312.htm CERTIFICATION aexp_ex312.htm
EXHIBIT 31.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT OF 1934
RULE 13a-14(a) OR 15d-14(a)
 
I, Brian Manko, Chief Financial Officer and Principal Accounting Officer, certify that:
 
1.
I have reviewed this Form 10-Q for American Exploration Corporation ;
 
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 our supervision, to ensure that material information relating to the registrant 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.
 
 
 
American Exploration Corporation
 
       
Date: August 15, 2013
By:
/s/ Brian Manko
 
   
Brian Manko
 
   
Chief Financial Officer, Principal Accounting Officer
 
EX-32.1 4 aexp_ex321.htm CERTIFICATION aexp_ex321.htm
EXHIBIT 32.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
The undersigned, Steve Harding, the Chief Executive Officer and Brian Manko, Chief Financial Officer of American Exploration Corporation, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on Form 10-Q of American Exploration Corporation for the quarterly period ended June 30, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of American Exploration Corporation.
 
Date: August 15, 2013
 
/s/ "Steve Harding"
 
Steve Harding
 
Chief Executive Officer
 
 
/s/ "Brian Manko"
 
Brian Manko
 
Chief Financial Officer, Principal Accounting Officer
 
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to American Resources Corporation and will be retained by American Resources Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
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Excess tax benefits, if any, are recognized as an addition to paid-in capital.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Subsequent Events</i></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluated all material subsequent events from June 30, 2013 through the date of the issuance of these consolidated financial statements for disclosure consideration.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company&#146;s operations, financial position or cash flows.</p>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity.No definition available.false0falseBASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIESUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://americanenergygroup.com/role/BasisOfPresentationAndSignificantAccountingPolicies12 XML 13 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Notes to Financial Statements    
Dilutive effect of options to purchase 3,900,000 3,900,000
XML 14 R4.htm IDEA: XBRL DOCUMENT v2.4.0.8
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
3 Months Ended 6 Months Ended 86 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Consolidated Statements Of Operations          
Revenue               
Operating expenses          
General and administrative 158,252 151,481 291,235 296,161 4,260,051
Depreciation and amortization             11,277
Impairment of oil and gas properties             3,771,001
Total operating expenses 158,252 151,481 291,235 296,161 8,042,329
Loss from operations (158,252) (151,481) (291,235) (296,161) (8,042,329)
Other Income (expense)          
Interest expense (8,299) (7,842) (16,740) (13,720) (153,971)
Loss on sale of assets             (1,161)
Other income             173,800
Total other income (expense) (8,299) (7,842) (16,740) (13,720) 18,668
Net loss (166,551) (159,323) (307,975) (309,881) (8,023,661)
Other comprehensive income          
Gain on foreign currency translation 8,429 1,625 4,106 34 862
Total comprehensive loss (158,122) (157,698) (303,869) (309,847) (8,022,799)
Net loss per common share - basic and diluted $ 0.00 $ 0 $ (0.01) $ (0.01)  
Weighted average common shares outstanding - basic and diluted $ 60,273,333 $ 60,273,333 $ 60,273,333 $ 60,273,333  
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NOTES PAYABLE
6 Months Ended
Jun. 30, 2013
Notes to Financial Statements  
Note 5 - NOTES PAYABLE

From June 2010 to December 2011, the Company entered the following notes with the same unrelated third party:

 

    Date   Stated     Original        
    Of   Interest     Principal   Due    
    Note   Rate     Amount   Date   Default
Promissory Note                  
#1   06/02/10     5 %   $ 50,000   On Demand   No
#2   02/04/11