BrewBilt Brewing Co - Quarter Report: 2013 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

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

For the quarterly period ended September 30, 2013

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

For the transition period from ______ to _______

Commission File Number 000-53276

GRID PETROLEUM CORP.

(Name of small business issuer in its charter)

Nevada		30-0690324
(State of incorporation)		(I.R.S. Employer Identification No.)

999 18^th Street, Suite 3000, Denver, CO 80202

(Address of principal executive offices)

303-952-7658

(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[X] No [  ]

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

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

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

As of September 30, 2013, there were 1,368,864,259shares of the registrant’s $0.001 par value common stock issued and outstanding.

_____________________________________________________________________________________________

1

_____________________________________________________________________________________________

GRID PETROLEUM CORP.*

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	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 4.	CONTROLS AND PROCEDURES	17
PART II.OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	18
ITEM 1A.	RISK FACTORS	18
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	18
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	18
ITEM 4.	MINE SAFETY DISCLOSURES	18
ITEM 5.	OTHER INFORMATION	18
ITEM 6.	EXHIBITS	18

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q 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 Grid Petroleum Corp. (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.

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*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,"”GRPR,” "our," "us," the "Company," refers to Grid Petroleum Corp.

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PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

GRID PETROLEUM CORP.

(AnExploration Stage Company)

Condensed Consolidated Financial Statements

(Expressed in US dollars)

September 30, 2013 (unaudited)

Financial Statement Index

Condensed Consolidated Balance Sheets (unaudited)

F-1

Condensed Consolidated Statements of Operations (unaudited)

F-2

Condensed Consolidated Statements of Cash Flows (unaudited)

F-3

Notes to the Consolidated Financial Statements (unaudited)

F-4

4

F-1

F-2

F-3

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

Grid Petroleum Corp. (the “Company”) was incorporated in the State of Nevada with the name Sunberta Resources Inc. on November 15, 2006. The Company moved through the exploration stage and the Exploration Stage and is currently in the exploration stage once more. Its principal business is the acquisition and exploration of mineral claims and oil & gas properties.

 

On November 16, 2006, the Company acquired all the issued and outstanding shares of Sunberta Resources Inc. (“Sunberta Alberta”) an inactive corporation incorporated in the province of Alberta, Canada on September 19, 2006. The consideration for the acquisition of Sunberta Alberta was 2,000 shares (on a post-split basis) of the Company.

 

In January, 2007, Sunberta Alberta acquired seven placer claim tenures on southern Vancouver Island, British Columbia, Canada. During the year ended March 31, 2009, the Company abandoned three of the placer claim tenures and decided to abandon the remaining four properties. Between May 31, 2009 and June 14, 2009, the remaining four placer claim tenures expired. The carrying cost of the properties was written off and the operations associated with the properties were treated in the financial statements as discontinued operations in the year ended March 31, 2009. The Company entered the Exploration Stage on March 31, 2009, to seek other opportunities. See also note 2.

 

On November 18, 2009, the Company changed its name to Grid Petroleum Corp.

 

The Company’s activities to December 31, 2009, were carried on in Alberta and British Columbia, Canada. In February, 2010, operations were carried on in England. In mid-2010 the Company began to focus on its mineral properties in the United States, and activities of the Company thenceforth were controlled from the United States.

 

On May 14, 2010, the Company acquired from the CEO for nominal consideration all the issued shares of Grid Petroleum Ltd. (“Grid UK”), a company incorporated in January 27, 2010, under the laws of England. The purpose of Grid UK is to maintain bank accounts in the UK as nominee for the Company. Grid UK does not have any assets, liabilities or operations of its own.

 

On January 20, 2011, the Company entered into a Share Exchange Agreement (the “Agreement”) with a Nevada corporation, Joaquin Basin Resources Inc., (“Seller”), and its stockholders, (“Selling Shareholders”). Pursuant to the provisions of the Agreement, the Company issued to the Selling Shareholders (i) 62,000,000 shares of Company common stock and (ii) 2,076,324 shares of convertible preferred stock, in exchange for the transfer and delivery to the Company by the Selling Shareholders of the 62,000,000 shares of common stock issued by the Seller, which were all of the issued and outstanding securities of the Seller. As a result of the related transaction on February 1, 2011, the Seller became a wholly owned subsidiary of the Company. The issue of preferred stock was delayed until February 2012. None of the parties to the Agreement is a related person.

On May 23, 2012, we executed an agreement to acquire a 10% percent working interest, 7.5% net revenue interest, from a third party interest holder of the Garcia #3 well in Jim Wells County, Texas. The Company agreed to purchase the working interest for $300,000, payable in preferred stock which is convertible into 0.001 shares of the Company’s common stock for each share of preferred stock. As of this date, the preferred shares have not been issued and accordingly, no accounting recognition has been given in connection with the transaction.

Principles of Consolidation

 

The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, Sunberta Alberta, Grid Petroleum Ltd. (“Grid UK”) and Joaquin Basin Resources, Inc. All significant inter-company balances and transactions are eliminated.

Cash and Cash Equivalents

 

F-4

As of September 30, 2013, the Company had $404 in cash. Cash equivalents comprise certain highly liquid instruments with an original maturity of three months or less when purchased. As of September 30, 2013 and 2012, the Company did not have any cash equivalents.

 

Mineral Properties and Exploration Expenses

 

Mineral properties purchased are capitalized and carried at cost. Exploration and development cost are charged to operations as incurred until such time that proven or probable ore reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from reserves equals or exceeds the cost deferred. The deferred cost will be amortized using the unit-of-production method when a property reaches commercial production.

 

Oil and Gas Properties and Exploration Expenses

 

Oil and gas property acquisition costs are capitalized and carried at cost. Exploration and development costs are accounted for on the successful-efforts method, whereby the costs related to successful projects are capitalized and all costs incurred as a result of unsuccessful projects are expensed when it is determined that the exploration efforts on that property are unsuccessful. The Company will periodically analyze exploration efforts, once exploration on its oil and gas properties has commenced, to determine which projects have been unsuccessful in establishing proved reserves. The costs of unsuccessful projects will be expensed.

 

Impairment of Long-Lived Assets

 

The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operating cash flows in accordance with ASC No. 144, Property, Plant and Equipment. If impairment is deemed to exist, it will be written down to its fair value. Fair value is generally determined using a discounted cash flow analysis. As of September 30, 2013, the Company does not believe any adjustment for impairment is required.

 

Asset Retirement Obligations

 

The Company has adopted FASB Accounting Standards Codification Topic (“ASC”) No. 410, Asset Retirement and Environmental Obligations which requires that the fair value of liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC No. 410 requires a liability to be recorded for the present value of the estimated site restoration costs with a corresponding increase to the carrying amount of the related long-lived asset. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. The Company has not incurred any asset retirement obligations as of September 30, 2013.

Advertising Expenses

 

Advertising costs are expensed as incurred.

 

Use of Estimates

 

The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles of 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 revenues and expenses during the reporting period.

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

Loss Per Share

 

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the forward stock split affected on

F-5

January 14, 2008 (see Note 12.) Diluted earnings (loss) per share is equal to the basic per share for the years ended March 31, 2013, 2012, and 2011. Common stock equivalents are not included in the loss per share since they are anti-dilutive.

 

Fair Value of Financial Instruments

 

The carrying value of cash, notes payable, and accounts at September 30, 2013 and 2012 reflected in these financial statements approximates their fair value due to the short-term maturity of these financial instruments.

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Comprehensive Income

 

The Company has adopted ASC No. 220, Comprehensive Income. Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities.

  

Exploration Stage

 

The Company entered the exploration stage upon its inception. The Company exited the exploration stage and entered the Exploration Stage on March 31, 2009 when the Company’s mineral claims tenures in British Columbia were abandoned and the Company started seeking new business. The Company exited the Exploration Stage and entered a new exploration stage on March 31, 2010 after the Company acquired oil and gas properties in Wyoming. In January 2011, the Company acquired oil and gas properties in California and started planning to explore the properties.

 

Recent Accounting Pronouncements

 

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have a material impact on its results of operations or financial position.

Reclassification

Certain prior year amounts have been reclassified to conform with the current year presentation.

 

2. GOING CONCERN

 

These consolidated financial statements have been prepared on a going-concern basis which assumes the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future.

 

The Company has experienced substantial losses since its inception and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to

meet its commitments as they become payable, including the completion of acquisitions, exploration and development of oil and gas properties and projects, is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

 

The Company does not have sufficient cash to fund its desired exploration for the next twelve months. The Company has arranged financing as described in Note 7 and intends to draw upon this financing arrangement to

F-6

fund exploration, production and administration. This financing may be insufficient to fund expenditures or other cash requirements required to find, develop and exploit oil and reserves to the point of profitable operations. There can be no assurance the Company will be successful in finding oil and gas reserves. The Company plans to seek additional financing if necessary in private or public equity offering to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

 

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

3. OIL AND GAS PROPERTIES

 

The Company has oil and gas properties in California.

 

On January 20, 2011, the Company purchased, through its subsidiary Joaquin Basin Resources Inc., a 50% working interest (37% net revenue interest) in a mineral lease on 4,000 acres in Kings and Fresno counties in California. The lease was initially recorded at the cost of issuing 62,000,000 common shares.  On January 20, 2012, 2,076,000 shares of convertible preferred stock were issued in concluding the Joaquin Basin purchase agreement. The cost of the issue, $4,152,000, was based on the value of preferred stock as if converted to common stock. The total cost, $7,026,666, was supported bya volumetric analysis.

 

The Company received a reserve report from an independent petroleum geologist as of March 31, 2013, which utilized the following assumptions:20% working interest (14% net revenue) supported by a “P10” factor, a 10% recovery rate, value for oil of $50 per barrel, resulting in an approximate value to the Company of $8,200,000, an amount in excess of the $7,112,000 recorded on the accompanying balance sheets.

 

On November 21, 2011, a portion of the interest in the lease was swapped for a future “carry” of exploration costs and administration of the lease. Grid’s 50% working interest (37.5% net revenue interest) was reduced to 30% and 14% respectively. The co-lessee, is the obligor under the agreement. Future exploration costs include the operating “carry” costs of the lease and drilling costs of the first well, named “First Farmin Well.” The exploration costs were valued based on the percentage reduction in net revenue interest. A reduction of $4,825,334 in the value of the Joaquin Basin property was recorded.

 

Impairment of the California properties from their recorded acquisition values was considered at September 30, 2013 and 2012. Management considered that there were no changes in circumstances that would warrant impairment from the estimated values indicated by independently prepared geological reports.

The Company has oil and gas properties in Wyoming which it does not wish to develop and, accordingly, has recorded an impairment in the amount of $85,334 at March 31, 2013.

In connection with an Amendment to an Asset Purchase Agreement dated November 21, 2011, the Company recorded rights to future exploration costs in the amount of $4,825,334 on its balance sheet as of March 31, 2012. The Company recorded a full impairment as of March 31, 2013.

Oil and gas properties are summarized as follow as of September 30, 2013:

			Proved
Unconventional Acreage		$	7,026,666

 

5. NOTE PAYABLE

 

Notes payable Comprised as the following:

 

				September 30,		March 31,
				2013		2013
	Asher Note #4			13,000		-
	Asher Note #11			400		27,500
	Asher Note #12			17,100		47,500
	Asher Note #13			27,500		-
	Asher Note #14			32,500		-
	Vista Capital			-		7,280
	Special Situations			21,491		61,491
	Direct Capital #1			70,671		70,671
	Syndication Capital #1			5,000		105,000
	Syndication Capital #2			14,072		-
	Syndication Capital #3			11,000		-
	Syndication Capital #4			11,000		-
	Syndication Capital #5			11,000		-
	Gel Properties #1			38,910		-
	Gel Properties #2			50,000		-
	Gel Properties #3			100,000		-
	Xploration			169,000		269,000
				$           592,644		$    588,442
		Debt discount		(22,095)		-
		Accrued interest		13,848		6,719
				$           584,397		$    595,161

Asher Note #4

On April 4, 2013, the Company arranged a debt swap under which a Special Situations Fund note for $40,000 was transferred to Asher Enterprises.  The promissory note is unsecured, bears interest at 8% per annum.  During the six month period ending September 30, 2013, the Company accrued $5,560 (six month period ended September 30, 2012 - $nil) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 58% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On June 30, 2013, the Company recorded a derivative liability of $66,774 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013 the Company issued an aggregate of 91,143,767 common shares upon the conversion of principal amount of $27,000.  The derivative liability amounting to $37,291 was re-classified to additional paid in capital.

As of September 30, 2013, accrued interest of $5,560 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $21,574 (September 30, 2012 - $nil) was recorded.

Asher Note #11

On November 2, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $27,500.  The promissory note is unsecured, bears interest at 8% per annum, and matured on August 6, 2013.  During the six month period ended September 30, 2013, the Company accrued $1,466 (six month period ended September 30, 2012 - $nil) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 58% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

F-8

On May 2, 2013, the Company recorded an initial derivative liability of $29,050 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a loss of $41,889 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period, and debt discount of $29,050 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

During the six month period ended September 30, 2013 the Company issued an aggregate of 163,501,318 common shares upon the conversion of principal amount of $27,100 and interest of $1,100.  The derivative liability amounting to $70,313 was re-classified to additional paid in capital.

As of September 30, 2013, accrued interest of $366 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $626 (September 30, 2012 - $nil) was recorded.

Asher Note #12

On February 25, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $47,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 25, 2013.  During the six month period ended September 30, 2013 the Company accrued $2,162 (six month period ended September 30, 2012 - $nil) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

On August 23, 2013, the Company recorded an initial derivative liability of $119,186 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a gain of $37,354 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period, and debt discount of $37,169 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

During the six month period ended September 30, 2013 the Company issued an aggregate of 104,827,354 common shares upon the conversion of principal amount of $30,400.  The derivative liability amounting to $51,006 was re-classified to additional paid in capital.

As of September 30, 2013, accrued interest of $2,162 (September 30, 2012 - $nil), debt discount of $10,331 (September 30, 2012 - $nil) and a derivative liability of $30,826 (September 30, 2012 - $nil) was recorded.

Asher Note #13

On June 16, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $27,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 17, 2014.  During the six month period ended September 30, 2013 the Company accrued $657 (six month period ended September 30, 2012 - $nil) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

Asher Note #14

On August 2, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $32,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on May 5, 2014.  During the six month period ended September 30, 2013 the Company accrued $420 (six month period ended September 30, 2012 - $nil) in interest expense.

F-9

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

Vista Capital Note

On June 11, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $30,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on December 15, 2012.  During the six month period ended September 30, 2013 the Company accrued $857 (six month period ended September 30, 2012 - $500) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 65% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

On December 9, 2012, the Company recorded an initial derivative liability of $27,207 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

On January 15, 2013, the Company credited the principal balance $10,000 and recorded a debit to penalties and fines due to loss of DTC eligibility.

During the six month period ended September 30, 2013, the Company recorded a loss of $5,853 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period.

During the six month period ended September 30, 2013 the Company issued an aggregate of 59,720,000 common shares upon the conversion of principal amount of $7,280 and $2,400 interest.  The derivative liability amounting to $18,325 was re-classified to additional paid in capital.

As of September 30, 2013, accrued interest of $nil (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $nil (September 30, 2012 - $nil) was recorded.

Special Situations Fund One Note.

On March 12, 2012, the Company arranged a debt swap under which an Asher Enterprises note for $40,000 was swapped to Special Situations Fund One for the Asher note plus $21,491, total $61,491.

On April 4, 2013, the Company transferred a $40,000 note to Asher Enterprises.  In addition, $3,200 in accrued interest was transferred to Asher Enterprises.  During the six month period ended September 30, 2013, the Company accrued $951 (six month period ended September 30, 2012 - $2,460) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company.  The conversion price is 55% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

On September 9, 2012, the Company recorded a derivative liability of $71,218, being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a loss of $44,961 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period.

As of September 30, 2013, accrued interest of $2,671 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $35,664 (September 30, 2012 - $nil) was recorded.

F-10

Direct Capital Note

On December 31, 2012, the Company entered into a debt settlement agreement with Direct Capital Group, Inc., whereby the Company exchange $70,671 in total outstanding debt into Convertible Preferred Shares of theCompany. Each of the Convertible Preferred shares will convert into common shares of the Company with the conversion price being the lesser of $0.001 or shall equal the variable conversion price (the “Variable Conversion Price”). The Variable Conversion Price shall mean 50% multiplied by the market price (the “Market Price”). The

Market Price means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading day period ending on the latest complete Trading Day prior to the Conversion Date. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 31, 2012, the Company recorded an initial derivative liability of $94,326 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a loss of $31,615 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period.

As of September 30, 2013, accrued interest of $nil (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $130,189 (September 30, 2012 - $nil) was recorded.

Xploration Inc. Note

On December 31, 2012, the Company entered into a debt settlement agreement with Xploration Incorporated, whereby the Company exchanges $269,000 in total outstanding debt into Convertible Preferred Shares of the Company. Each of the Convertible Preferred shares will convert into common shares of the Company with the conversion price being the lesser of $0.001 or shall equal the variable conversion price (the “Variable Conversion Price”). The Variable Conversion Price shall mean 50% multiplied by the market price (the “Market Price”). The Market Price means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading day period ending on the latest complete Trading Day prior to the Conversion Date. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 31, 2012, the Company recorded an initial derivative liability of $359,040 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

On August 21, 2013, the Company transferred $100,000 of the note to Gel Properties, LLC.  

During the six month period ended September 30, 2013, the Company recorded a loss of $216,335 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period.

On September 30, 2013, the Company credited the derivative liability $256,727 to account for the transfer of $100,000.

As of September 30, 2013, accrued interest of $nil (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $334,816 (September 30, 2012 - $nil) was recorded.

Syndication Capital Note #1 

On December 31, 2012, the Company entered into a debt settlement agreement with Syndication Capital, whereby the Company exchanges $105,000 in total outstanding debt into Convertible Preferred Shares of the Company. Each of the Convertible Preferred shares will convert into common shares of the Company with the conversion price being the lesser of $0.001 or shall equal the variable conversion price (the “Variable Conversion Price”). The Variable Conversion Price shall mean 50% multiplied by the market price (the “Market Price”). The Market Price means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading day period ending on the latest complete Trading Day prior to the Conversion Date. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

F-11

On December 31, 2012, the Company recorded an initial derivative liability of $140,146 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

On August 4, 2013, the Company transferred $100,000 of the note to Gel Properties, LLC.  

During the six month period ended September 30, 2013, the Company recorded a loss of $316,059 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period.

On September 30, 2013, the Company credited the derivative liability $453,305 to account for the transfer of $100,000.

As of September 30, 2013, accrued interest of $nil (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $9,211 (September 30, 2012 - $nil) was recorded.

Syndication Capital Note #2

On July 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $14,072.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  The Conversion Price shall mean par $.001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended September 30, 2013, the Company accrued $188 (September 30, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the six month period ended September 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $9,851 (September 30, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital and debt discount of $3,248 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

As of September 30, 2013, accrued interest of $188 (September 30, 2012 - $nil), debt discount of $6,603 (September 30, 2012 - $nil) was recorded.

Syndication Capital Note #3

On July 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  The Conversion Price shall mean par $.001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended September 30, 2013, the Company accrued $147 (September 30, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the six month period ended September 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $7,700 (September 30, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital and debt discount of $2,539 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

F-12

As of September 30, 2013, accrued interest of $147 (September 30, 2012 - $nil), debt discount of $5,161 (September 30, 2012 - $nil) was recorded.

Syndication Capital Note #4

On August 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014.  The Conversion Price shall mean par $.001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended September 30, 2013, the Company accrued $72 (September 30, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the six month period ended September 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $nil (September 30, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital and debt discount of $nil (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

As of September 30, 2013, accrued interest of $72 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) was recorded.

Gel Properties, LLC Note #1

On August 5, 2013, the Company arranged a debt swap under which a Syndication Capital note for $100,000 was transferred to Gel Properties.  The promissory note is unsecured, bears interest at 6% per annum and matures on August 5, 2014.  During the six month period ending September 30, 2013, the Company accrued $512 (six month period ended September 30, 2012 - $nil) in interest expense.

On June 30, 2013, the Company recorded a derivative liability of $207,630 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a gain of $36,049 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period and debt discount of $100,000 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

During the six month period ended September 30, 2013 the Company issued an aggregate of 270,600,000 common shares upon the conversion of principal amount of $61,090.  The derivative liability amounting to $102,745 was re-classified to additional paid in capital.

As of September 30, 2013, accrued interest of $512 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $68,836 (September 30, 2012 - $nil) was recorded.

Gel Properties, LLC Note #2

On August 8, 2013, the Company issued a convertible promissory note to Gel Properties, LLC.  Under the terms of the note, the Company has borrowed a total of $50,000 from Gel Properties, LLC, which accrues interest at an annual rate of 6% and has a maturity date of August 8, 2015.  The note also contains customary events of default.  During the six month period ended September 30, 2013, the Company accrued $436 (six month period ended September 30, 2012 - $nil) in interest expense.

F-13

As of September 30, 2013, accrued interest of $464 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $nil (September 30, 2012 - $nil) was recorded.

Gel Properties, LLC Note #3

On August 21, 2013, the Company arranged a debt swap under which an Xploration note for $100,000 was transferred to Gel Properties.  The promissory note is unsecured, bears interest at 6% per annum and matures on August 21, 2014.  During the six month period ending September 30, 2013, the Company accrued $658 (six month period ended September 30, 2012 - $nil) in interest expense.

On June 30, 2013, the Company recorded a derivative liability of $195,260 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the six month period ended September 30, 2013, the Company recorded a gain of $18,349 (six month period ended September 30, 2012 - $nil) due to the change in value of the derivative liability during the period and debt discount of $100,000 (six month period ended September 30, 2012 - $nil) was accreted to the statement of operations.

As of September 30, 2013, accrued interest of $658 (September 30, 2012 - $nil), debt discount of $nil (September 30, 2012 - $nil) and a derivative liability of $176,911 (September 30, 2012 - $nil) was recorded.

6. DERIVATIVE LIABILITIES

The Company issued financial instruments in the form of convertible notes with embedded conversion features.  The convertible notes payable have conversion rates which are indexed to the market value of the Company’s common stock price.

During the six month period ending September 30, 2013, $125,770 (September 30, 2012 - $92,600) of convertible notes payable were converted into common stock of the Company.

These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP. The valuation assumptions are classified within Level 3 inputs.

The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above:

		September 30,
		2013
Balance, beginning of year		$               713,306
Initial recognition of derivative liability		551,126
Fair value change in derivative liability		(176,099)
Conversion of derivative liability to APIC
Asher Note #4		(37,291)
Asher Note #11		(70,313)
Asher Note #12		(51,006)
Vista Capital		(18,325)
Gel Properties Note #1		(102,745)
Balance as of September 30, 2013		$               808,653

7. SECURITIES PURCHASE AGREEMENT

 

On April 23, 2010, the Company entered into an agreement with an investor whereby the investor committed to purchase up to $5,000,000 of units, consisting of shares of the Company’s common stock and share purchase warrants, until April 22, 2013. The Company may draw on the facility from time to time, as and when it determines

F-14

appropriate in accordance with the terms and conditions of the agreement. Each advance shall be in an aggregate amount of not more than $1,000,000 and in integral multiples of $100,000. The Company will use the advances to fund operating expenses, acquisitions, and exploration and general corporate activities. The investor also has an option to subscribe up to a further $2,500,000.

 

Each unit consists of one share of the Company’s common stock and one share purchase warrant. The unit price will be the price to the higher of either: (a) $0.75; or (b) 90% of the volume weighted average of the closing price of common stock, for the five banking days immediately preceding the date of the notice of advance. Each warrant shall entitle the investor to purchase one additional share of common stock at an exercise price equal to 150% of the unit price at which the unit containing the warrant being exercised was issued.

 

The Company issued 401,067 shares under the agreement during the fiscal year ended March 31, 2011, realizing $400,000.  This option expired as of April 22, 2013.

8. RELATED PARTY TRANSACTIONS

 

Related party transaction is not disclosed elsewhere in the consolidated financial statements are as follows:

On March 8, 2010, the Company entered an employment agreement with the newly-appointed President, James Powell. Pursuant to the terms of the agreement, the President will receive a base salary of $5,000 per month. The employment agreement will continue indefinitely subject to termination by either party without cause on 30 days’ notice.

On March 8, 2010, the Company entered an employment agreement with the newly-appointed Chairman of the Board, Tim DeHerrera. Pursuant to terms of the terms of the agreement, Mr. DeHerrera will receive a base salary of $8,000 per month with an incremental rise of $500 per quarter until an amount of $10,000 per month is achieved.

The employment agreement will continue indefinitely subject to termination by either party without cause on 30 days’ notice.

Mr. DeHerrera agreed to acquire 6,000,000 shares of the former CEO’s shares at $0.02 per share. The new CEO’s shares were be held in escrow in the form of eight certificates each representing 750,000 shares which were released between April 30, 2010 and March 5, 2012 (a minimum of twenty-one months from the first release date).

 

On December 2, 2011, pursuant to an employment and consulting agreement, Mr. DeHerrera was issued 12,000,000 restricted common shares.

On May 23, 2012, pursuant to an employment consulting agreement, Mr. Powell was issued 2,500,000 common shares.

During the six month period ending September 30, 2013, $15,000 in consulting fees was recorded for Mr. Powell increasing the amount due to $105,000.

During the six month period ending September 30, 2013, $60,000 in consulting fees and $609 in cash advances was recorded for Mr. DeHerra increasing the amount due to $188,459.

 

The Company is indebted to its officers as follow:

	September 30,
	2013		2012
James Powell-President	$ 105,000		$ 63,375
Tim DeHerra-Chairman of the Board	188,459		128,850
	$ 293,459		$ 192,225

 

The amounts consist of unpaid salary and advances made on behalf of the Company.  The loans carry no interest, are unsecured, are due on demand and have no maturity.

F-15

 

11. PREFERRED STOCK

 

On January 25, 2011 the Company filed an amendment to its Nevada Certificate of Designation to create two new series of preferred stock:

 

A.

Preferred Series A - par value $0.001 - 10,000,000 shares authorized

B.

Preferred Series B  - par value $0.001 – 10,000,000 shares authorized

The preferred stock may be converted at will to common stock in the ratio of 0.005 preferred share to one common share.

 

On January 31, 2012, 2,076,000 shares of Preferred Series A stock were issued in completion of the agreement signed January 20, 2011, wherein the Company acquired100% of the outstanding common stock of Joaquin Basin Resources, Inc., owner of an oil & gas property. There being no market for the shares, they were valued at the prevailing market price of $0.01 for the number of post-conversion shares of common stock. The value, $4,152,000, was assigned to the cost of the Joaquin Basin oil & gas property.

On January 31, 2012, 111,000 shares of Series A Preferred Stock were converted to 22,200,000 shares of common stock at the conversion ratio of .005 preferred to 1 common. The securities exchanged had equal value, resulting in no gain or loss on the transaction.

 

As of March 31, 2012, 10,000,000 Series A preferred shares and 10,000,000 Series B preferred shares of par value $0.001 were authorized, of which 1,965,000 Series A were issued and outstanding, (nil as of March 31, 2011).

On April 23, 2012, 80,000 shares of Series A Preferred Stock were converted to 16,000,000 shares of common stock at the conversion ratio of .005 preferred to 1 common. The securities exchanged had equal value, resulting in no gain or loss on the transaction.

 

On August 14, 2012, 328,000 shares of Series A Preferred Stock were converted to 65,600,000 shares of common stock at the conversion ratio of .005 preferred to 1 common, according to the attributes of the preferred stock. The securities exchanged had equal value, resulting in no gain or loss on the transaction.

 

On October 12, 2012, 125,000 shares of Series A Preferred Stock were converted into 25,000,000 shares of common stock at the conversion ratio of .005 preferred to 1 common. The securities exchanged had equal value, resulting in no gain or loss on the transaction.

As of March 31, 2013, 10,000,000 Series A preferred shares and 10,000,000 Series B preferred shares of par value $0.001 were authorized, of which 1,432,000 Series A shares were issued and outstanding, (1,965,000 shares as of March 31, 2012).

On September 20, 2013, 112,500 Series A preferred shares were converted to 112,500,000 shares of common stock.

As of September 30, 2013, 10,000,000 Series A preferred shares and 10,000,000 Series B preferred shares of par value $0.001 were authorized, of which 1,320,000 Series A shares were issued and outstanding, (1,557,000 shares as of September 30, 2012).

12. COMMON STOCK

 

Effective January 14, 2008, the Company split its common stock on a twenty-for-one basis. All shareholders as of the record date of January 14, 2008 receive twenty shares of common stock in exchange for each one common share of their currently issued common stock. The authorized, issued and per share information presented is on a post-split basis. On January 14, 2008, the Company’s total paid-in capital was less than the product of the par value per share multiplied by the number of post-split shares outstanding. As a result, the shareholders may have an obligation to make up the shortfall of $7,735 should the shortfall not be otherwise eliminated.

 

On March 9, 2010, the Company issued 1,250,000 shares pursuant to a subscription at a price of $0.40 per share for total proceeds of $500,000.

F-16

 

On April 5, 2010, the Company cancelled 18,002,000 shares surrendered for cancellation by the former CEO and majority shareholder of the Company pursuant to an agreement effective March 17, 2010 (Note 8).

 

On May 14 and September 28, 2010, 134,420 and 266,667 shares, respectively, were issued at $0.48 pursuant to a Securities Purchase Agreement. $400,000 cash was realized.

 

Pursuant to consulting agreements with two advisors, common stock was issued for services:

 

Date Issued			Shares				Price Per Share				Expense
September 30, 2010			50,000			$	0.82				Consulting $40,950
October 18, 2010			50,000			$	0.39				Consulting $19,500
November 15, 2010			150,000 s			$	0.39				Consulting $58,500

 

On January 3, 2011, 6,000,000 shares of restricted common stock were issued for services at $0.02 per share; wherebyan expense of $93,000 was recorded.

 

On February 1, 2011, 1,300,000 shares of common stock were issued at $0.05 per share in retirement of debt of $63,471. The loss on the transaction was de minimus.

 

On February 1, 2011, 62,000,000 shares of common stock were issued at $0.12 per share in exchange for stock of a subsidiary, acquiring an oil and gas property of $7,368,900. See Note 1.

On August 18, 2011, 500,000 shares of common stock were issued at $0.10 per share for consulting. An expense of $15,000 was recorded.

 

Between August 29 and September 21, 2011, 9,406,149 common shares were issued at $0.01, $0.02 and $0.03 per share in elimination of $55,000 notes payable. A loss of $32,814 was recorded.

 

Between November 28 and December 8, 2011, 11,295,545 common shares were issued at $0.10, $0.006 and $0.008 per share in elimination of $55,000 notes payable. A loss of $32,814 was recorded.

 

On December 2, 2011, 12,000,000 shares were issued for consulting at $0.008 per share. An expense of $96,000 was recorded.

On January 1, 2012, 3,198,528 shares were returned to Treasury and cancelled in a preliminary transaction further to a consulting agreement.

 

Between January 1 and February 8, 2012, 12,815,862 common shares were issued at $0.008, $0.009 and $0.010 per share in elimination of $115,000 notes payable. A loss of $2,803 was recorded.

 

On February 2, 2012, 1,684,427 shares of common stock were issued at $0.01 per share for consulting. An expense of $16,845 was recorded.

 

On January 31, 2012, 22,200,000 shares of common stock were issued at $0.01 per share in converting 111,000 shares of Series A preferred stock to common stock. The value of the common stock equated to that of the preferred stock, resulting in no gain or loss on the transaction.

 

As of March 31, 2012, 1,500,000,000 common shares of par value $0.001 were authorized, of which 201,944,542 were issued and outstanding, (135,241,087 as of March 31, 2011).

F-17

On April 23, 2012, 16,000,000 shares of common stock were issued in an exchange for 80,000 of Series A Preferred Stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

 

On May 17, 2012, 1,514,101 shares of common stock were issued for consulting valued at the closing price on the day of $0.01 per share. An expense of $15,141 was recorded.

 

On May 23, 2012, 2,500,000 shares of common stock were issued for consulting pursuant to an employment agreement, valued at the closing price on the day of $0.01. An expense of $25,000 was recorded.

 

On June 11, 2012, 1,000,000 shares of common stock were issued at the closing price of $0.01 pursuant to a loan agreement with Vista Capital Investments. An expense of $10,000 was recorded.

 

Between July 12 and September 18, 2012, 25,715,010 shares of common stock were issued in the elimination of debt at the uniform price of $0.01. An expense of $164,550 was recorded.

 

On August 14, 2012, 65,600,000 shares of common stock were issued in an exchange for 328,000 of Series A Preferred Stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

 

On October 12, 2012, 125,000 shares of Series A Preferred Stock were converted into 25,000,000 shares of common stock at the conversion ratio of .005 preferred to 1 common.   The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

From October 1, 2012 to December 31, 2012, the holders of a convertible notes converted a total of $92,600 of principal and interest into 49,508,657 shares of our common stock.

From January 1, 2013 to March 31, 2013, the holders of a convertible notes converted a total of $97,920 of principal and interest into 177,789,278 shares of our common stock.

On September 20, 2013, 112,500 Series A preferred shares were converted to 112,500,000 shares of common stock.

From April 1, 2013 to September 30, 2013, the holders of a convertible notes converted a total of $125,770 of principal into 689,792,671 shares of our common stock.

13. INCOME TAXES

The Company accounts for income taxes under FASB Codification Topic 740-6, Accounting for Uncertainty in Income Taxes, which requires the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. During the six month period ended September 30, 2013, we had a net operating loss carry forwards of $(1,949,692) and a deferred tax asset of $662,895 using the statutory rate of 34%. The net operating loss carry forwards may be recognized in future periods, not to exceed 20 years.

	September 30,
	2013		2012
Operating loss for the six months ended September 30	$      (1,949,692)		$           (336,066)
Average statutory tax rate	34%		34%
Expected income tax provisions	$         (662,895)		$           (114,262)
Unrecognized tax loses	(662,895)		(114,262)
Income tax expense	$                      -		$                        -

 

F-18

F-19

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

Working Capital

	September 30, 2013 $	March 31, 2013 $
Current Assets	404	573
Current Liabilities	1,691,529	1,552,432
Working Capital (Deficit)	(1,691,125)	(1,551,859)

Cash Flows

	September 30, 2013 $			September 30, 2012 $
Cash Flows from (used in) Operating Activities	(1,245,209)	(301,017)
Cash Flows from (used in) Financing Activities	1,245,040			440,151
Cash Flows from (used in) Investing Activities	---		---
Net Increase (decrease) in Cash During Period	(169)		(25,416)

Results for the Quarter Ended September 30, 2013 Compared to the Quarter Ended September 30, 2012

Operating Revenues

The Company’s revenues for the three months ended September 30, 2013 and September 30, 2012 were $Niland $Nil, respectively.

Cost of Revenues

The Company’s cost of revenues for the three months ended September 30, 2013 and September 30, 2012 were $Niland $Nil, respectively.

Gross Profit

The Company’s gross profit for the three months ended September 30, 2013 and September 30, 2012 was$Niland $ Nil respectively.

General and Administrative Expenses

4

General and administrative expenses for the three months ended September 30, 2013 and September 30, 2012 were $112,735and $136,310, respectively.  General and administrative expenses consisted primarily of consulting fees, officer compensation, interest expense and professional fees.  The decrease was primarily attributable to a decrease in consulting fees and administrative expenses appropriate for normal operations.

Net Loss

Net loss for the three months ended September 30, 2013 was $(609,986) compared with a net loss of $(136,310) for the three months ended September 30, 2012.  The increased loss is due to normal operating expenses and an increase in convertible note interest.

Results for the Six Months Ended September 30, 2013 Compared to the Six Months Ended September 30, 2012

Operating Revenues

The Company’s revenues for the six months ended September 30, 2013 and September 30, 2012 were $Nil and $Nil, respectively.

Cost of Revenues

The Company’s cost of revenues for the six months ended September 30, 2013 and September 30, 2012 were $Nil and $Nil, respectively.

Gross Profit

The Company’s gross profit for the six months ended September 30, 2013 and September 30, 2012 was $Nil and $Nil, respectively.

General and Administrative Expenses

General and administrative expenses for the six months ended September 30, 2013 and September 30, 2012 were $194,581 and $336,066, respectively.  General and administrative expenses consisted primarily of consulting fees, officer compensation, interest expense and professional fees.  The decrease was primarily attributable to a decrease in consulting fees appropriate for normal operations.

Net Loss

Net loss for the six months ended September 30, 2013was $(1,949,692) compared with a net loss of $(336,066) for the Six months ended September 30, 2012.  The increased loss is due to normal operating expenses and an increase in convertible note interest.

Results for the Period from March 31, 2009 (inception of Exploration Stage) Through September 30, 2013

Operating Revenues

The Company’s revenues for the period from March 31, 2009 (inception of Exploration Stage) through September 30, 2013 were $Nil.

Cost of Revenues

The Company’s cost of revenues for the period from March 31, 2009 (inception of Exploration Stage) through September 30, 2013 were $Nil.

Gross Profit

The Company’s gross profit for the period from March 31, 2009 (inception of Exploration Stage) through September 30, 2013 was $ Nil.

5

General and Administrative Expenses

General and administrative expenses for the period from March 31, 2009 (inception of Exploration Stage) through September 30, 2013 were $7,259,574.  General and administrative expenses consist primarily of consulting fees, officer compensation, management fees, administrative expenses, interest expense and professional fees appropriate for being a public company.

Net Loss

Net loss for the period from March 31, 2009 (inception of Exploration Stage) through September 30, 2013was $(9,380,817).

Liquidity and Capital Resources

As of September 30, 2013, the Company had a cash balance and asset total of $404 and $7,044,245 respectively, compared with $Nil and $11,937,334 of cash and total assets, respectively, as of September 30, 2012. The increase in cash was due to normal operating activities and the decrease in total assets was due to the decrease in value of the oil and gas properties.

As of September 30, 2013, the Company had total liabilities of $1,691,529 compared with $698,076 as of September 30, 2012. The increase in total liabilities was attributed to the increase in notes payable, derivative liabilities and shareholder loans, although there was a decrease in accounts payable.

The overall working capital decreased from $(698,076) deficit at September 30, 2012 to $(1,691,125) at September 30, 2013.

Cashflow from Operating Activities

During the six months ended September 30, 2013, cash used in operating activities was $(1,245,209) compared to $(301,017)for the six months ended September 30, 2012.

Cashflow from Investing Activities

During the six months ended September 30, 2013 cash used in investing activities was $Nil compared to $Nil for the six months ended September 30, 2012.

Cashflow from Financing Activities

During the six months ended September 30, 2013, cash provided by financing activity was $1,245,040 compared to $440,151for the six months ended September 30, 2012.

Quarterly Developments

On July 31, 2013, the Company, entered into a Project Purchase Agreement (the “Purchase Agreement”) with Xploration, Inc., a Nevada corporation (“Xploration”) to acquire a twenty five percent (25%) working interest (WI) and a fourteen percent (14%) net royalty interest (“NRI”) in five hundred sixteen (516) acres in the Coalinga California area identified as the Jacolitos Project. Xploration will keep a 2% NRI.  

Pursuant to the terms and conditions of the Purchase Agreement, the Company, shall acquire the Jacolitos Project Property through a purchase agreement that reserves an net royalty interest of 2% for Xploration, for a total purchase price of One Hundred Thousand Dollars ($100,000) (the “Purchase Price”).  The Purchase Price for the 25% WI and the 14% NRI in the Jacolitos Project is one preferred share of preferred stock having a value of $100,000 converting at par value, 0.001, per common share (the “Preferred Share”).  The Xploration will be able to vote the underlying common stock without conversion.  Xploration will not be able to convert more than 9.9% of the Company’s issued and outstanding shares.  The Preferred Share will be issued upon the demand of Xploration.

6

On August 2, 2013, the Company increased the authorized share capital of the Company from One Billion Five Hundred (1,500,000,000) shares authorized to Two Billion Five Hundred (2,500,000,000) shares authorized, par value $0.001.

Subsequent Developments

None

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

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.

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.

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 the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the 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's rules and forms and that such information is accumulated and communicated to our sole officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our sole officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2013. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended March 31, 2013, that was filed with the SEC on July 15, 2013 the sole officer concluded that our disclosure controls and procedures are ineffective.

Changes in Internal Control over Financial Reporting

We have not yet implemented any of the recommended changes to internal control over financial reporting listed in our Annual Report on Form 10-K for the year ended March 31, 2012. As such, there were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended September 30, 2013 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

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

Our Annual Report on Form 10-K for the fiscal year ended March 31, 2012 includes a detailed discussion of our risk factors.

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

1.Quarterly Issuances:

From July 1, 2013 until September 30, 2013, the holders of convertible notes converted a total of $117,700of principal and $3,500 interest into 553,633,424 shares of our common stock.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

2. Subsequent Issuances:

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From October 1, 2013 until October 10, 2013,the holders of convertible notes converted a total of $15,500 of principal and interest into 99,333,334 shares of our common stock.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Item 4.01.Changes in Registrant’s Certifying Accountant.

 

(a)           Previous independent registered public accounting firm

 

(i)	On October 21, 2013, Anton & Chia LLP (the “Former Accountant”) resigned as the independent registered public accounting firm of the Company.

 

(ii)	The Company’s Board of Directors participated in and approved the decision to accept the Former Accountant’s resignation.

 

(iii)

The reports of Former Accountant on the Company’s consolidated unaudited financial statements for the audit as of March 31, 2013, and for the interim period through June 30, 2013, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Company’s ability to continue as a going concern.

 

(iv)

The Company has provided the Former Accountant with a copy of the disclosures it is making in response to this Item.  The Company has requested the Former Accountant to furnish a letter addressed to the Commission stating whether it agrees with the statements made by the Company and, if not, stating the respects in which it does not agree.  The Company has filed the letter furnished by the Former Accountant as an exhibit to its Current Report on Form 8-K filed with the SEC on October 25, 2013.

 

(b)           New independent registered public accounting firm

 

As of the date this report, the registrant has engaged a new independent accountant, W. T. Uniack & Co., CPA’s, P.C.

ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit	Filing
3.1	Articles of Incorporation	Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
3.1a	Amended Articles of Incorporation	Filed with the SEC on November 11, 2009, on our Current Report on Form 8-K.
3.2	Bylaws	Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
10.1	Loan Agreement, by and between the Company and Kelly Sundberg, dated December 18, 2006	Filed with the SEC on June 8, 2007 as part of our Registration of Securities on Form SB-2.
10.2	Loan Agreement, by and between the Company and Green Shoe, Inc., dated March 26, 2008	Filed with the SEC on March 28, 2008 as part of our Current Report on Form 8-K.
10.3	Employment Agreement, by and between the Company and Paul Watts, dated January 31, 2010	Filed with the SEC on March 9, 2010 as part of our Current Report on Form 8-K.
10.4	Asset Purchase and Sale Agreement, by and between the Company and Murrayfield Limited, dated March 11, 2010	Filed with the SEC on March 23, 2010 as part of our Current Report on Form 8-K.
10.5	Share Issuance Agreement, by and between the Company and Premier Global Corp, dated April 23, 2010	Filed with the SEC on April 28, 2010 as part of our Current Report on Form 8-K.
10.6	Separation Agreement, by and amongst the Company and Kelly Sundberg, Stephen Ronaldson and Paul Watts, dated December 3, 2010	Filed with the SEC on December 7, 2010 as part of our Current Report on Form 8-K/A.
10.7	Share Exchange Agreement, by and between the Company and Joaquin Basin Resources Inc., dated January 20, 2011	Filed with the SEC on January 25, 2011 as part of our Current Report on Form 8-K.
10.8	Agreement for the Sale and Assignment and Affirmation of Obligation, by and amongst the Company, Green Shoe, LLC, and Syndication Capital, LLC, dated January 28, 2011	Filed with the SEC on February 4, 2011 as part of our Current Report on Form 8-K.
10.9	Form of Securities Purchase Agreement, by and between the Company and Buyer, dated February 24, 2011	Filed with the SEC on March 10, 2011 as part of our Current Report on Form 8-K.
10.10	Form of Convertible Promissory Note, by and between the Company and Holder, dated February 24, 2011	Filed with the SEC on March 10, 2011 as part of our Current Report on Form 8-K.
10.11	Form of Securities Purchase Agreement, by and between the Company and Buyer, dated May 13, 2011	Filed with the SEC on June 13, 2011 as part of our Current Report on Form 8-K.
10.12	Form of Convertible Promissory Note, by and between the Company and Holder, dated May 13, 2011	Filed with the SEC on June 13, 2011 as part of our Current Report on Form 8-K.
10.13	Transfer of Asset by and between, Xploration Inc., and Joaquin Basin Resources, dated January 20, 2011	Filed with the SEC on November 23, 2011 as part of our Current Report on Form 8-K.
10.14	Mineral Rights Purchase Amendment, by and between Xploration Inc. and Joaquin Basin Resources, dated November 21, 2011	Filed with the SEC on November 23, 2011 as part of our Current Report on Form 8-K
10.15	Contract Agreement, by and between the Company and James Powell, dated October 24, 2011	Filed with the SEC on February 9, 2012, as part of our Quarterly Report on Form 10-Q.
10.16	Employment/Consulting Agreement, by and between the Company and Tim DeHerrera, dated December 2, 2011	Filed with the SEC on February 9, 2012, as part of our Quarterly Report on Form 10-Q.
10.17	Debt Settlement Agreement, by and between the Company and Syndication Capital, dated December 31, 2012	Filed with the SEC on February 19, 2013, as part of our Quarterly Report on Form 10-Q.
10.18	Debt Settlement Agreement, by and between the Company and Direct Capital Group, Inc., dated December 31, 2012	Filed with the SEC on February 19, 2013, as part of our Quarterly Report on Form 10-Q.
10.19	Debt Settlement Agreement, by and between the Company and Xploration Incorporated, dated December 31, 2012	Filed with the SEC on February 19, 2013, as part of our Quarterly Report on Form 10-Q.
10.20	Purchase Agreement by and between the Company and Xploration Incorporated, dated July 31, 2013	Filed with the SEC on August 5, 2013, as part of our Current Report on Form 8-K.
16.1	Representative Letter from Schumaker & Associates, Inc.	Filed with the SEC on January 21, 2011 as part of Current Report on Form 8-K.
16.2	Representative Letter from John Kinross-Kennedy	Filed with the SEC on February 19, 2013, as part of our Quarterly Report on Form 10-Q.
16.3	Representative Letter from Anton & Chia LLP.	Filed with the SEC on October 25, 2013, as part of our Current Report on Form 8-K.
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	Certification of CEO and CFO 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

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		GRID PETROLEUM CORP.
Dated: November19, 2013		/s/ James Powell
		JAMES POWELL
		Its: President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Dated: November 19, 2013	/s/ Tim DeHerrera
	By: Tim DeHerrera Its: Chairman and Director

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