AXIS ENERGY CORPORATION. (formerly Floodsmart, Inc) (An Exploration Stage Company) BALANCE SHEETS

Transcription

1 AXIS ENERGY CORPORATION. (formerly Floodsmart, Inc) BALANCE SHEETS December 31, December 31, ASSETS CURRENT ASSETS Cash $ 418,449 $ 527,396 Prepaid expenses 2,500 - Total Current Assets 420, ,396 OTHER ASSETS Oil property data 80,000 - TOTAL ASSETS $ 500,949 $ 527,396 LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 3,254 $ 3,960 Loans payable, related party - Note 6 11,106 11,106 Total Current Liabilities 14,360 15,066 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Preference stock, 10,000,000 shares authorized, $0.01 par value, none outstanding - Note 3 Common stock, 75,000,000 shares authorized, $0.001 par value; 41,663,600 and 41,022,600 shares issued and outstanding, respectively - Note 4 41,664 41,023 Additional paid-in capital 763, ,467 Subscriptions received - 268,500 Deficit accumulated during exploration stage (318,976) (254,660) TOTAL STOCKHOLDERS' EQUITY 486, ,330 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 500,949 $ 527,396 The accompanying notes are an integral part of these financial statements.

2 AXIS ENERGY CORPORATION (Formerly Floodsmart, Inc) STATEMENTS OF OPERATIONS Period from June 10, 1998 (Inception of Year Ended Year Ended Exploration Stage) December 31, December 31, Through December REVENUES $ - $ - $ - EXPENSES Amortization Audit and accounting 1,000 1,000 22,171 Consulting fees - - 8,700 Eploration cost 25,000-25,000 Legal fees 10,000-30,725 Management fees 2,500-36,100 Office 2,703 2,621 14,224 Transfer agent fees 4,181 3,757 22,540 Travel 18,932 7,195 26,127 TOTAL EXPENSES 64,316 14, ,876 LOSS FROM OPERATIONS (64,316) (14,573) (185,876) OTHER INCOME (EXPENSE) Loss on disposal of mineral property - - (3,400) Loss on writeoff of advances - - (129,700) LOSS FROM OPERATIONS (64,316) (14,573) (318,976) INCOME TAXES NET LOSS $ (64,316) $ (14,573) $ (318,976) NET LOSS PER SHARE, BASIC AND DILUTED: $ (0.00) $ (0.00) WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED 41,101,811 53,255,477 The accompanying notes are an integral part of these financial statements.

3 Accumulated Total Common Stock Additional Deficit During Stockholders' Number Paid-in Subscriptions Exploration Equity of Shares Amount Capital Received Stage (Deficit) Issuance of stock for debt at $0.1 per share, net 187,600 $ 188 $ 13,212 $ - $ - $ 13,400 Issuance of stock for debt at $0.1 per share, net 302, , ,545 Net loss (20,603) (20,603) Balance, December 31, , ,455 - (20,603) 12,342 Issuance of stock for cash at $ , , ,000 Net loss for year ending December 31, (18,564) (18,564) Balance, December 31, ,090,000 1,090 37,855 - (39,167) (222) Issuance of stock for cash at $.01 2,704,500 2,705 24, ,045 Net loss for year ending December 31, (28,426) (28,426) Balance, December 31, ,794,500 3,795 62,195 - (67,593) (1,603) Issuance of stock for cash at $ , ,530 1,700 Net loss for year ending December 31, (11,238) (11,238) Balance, December 31, ,964,500 3,965 63,725 - (78,831) (11,141) Cash received for common shares , ,800 Net loss for year ending December 31, (135,686) (135,686) Balance, December 31, ,964,500 3,965 63, ,800 (214,517) (8,027) Issuance of stock for cash at $5 per share 27, ,772 (138,800) - - Cash received for common shares ,000-22,000 Net loss for year ending December 31, (20,422) (20,422) Balance, December 31, ,992,260 3, ,497 22,000 (234,939) (6,449) Stock dividend, 4 for 1 15,969,040 15,969 (15,969) Net loss for the year ending December 31, (3,141) (3,141) Balance, December 31, ,961,300 19, ,528 22,000 (238,080) (9,590) Issuance of stock for cash at $0.088 per share 250, ,750 (22,000) - - Issued for services 10,000,000 10,000 (10,000) Stock dividend - 1 for 1 30,211,300 30,211 (30,211) Net loss for year ending December 31, (2,007) (2,007) Balance, December 31, ,422,600 60, ,067 - (240,087) (11,597) Issuance of stock for cash - $0.50 per share, net 600, , ,000 Shares cancelled (20,000,000) (20,000) 20,000 - Subscription - common shares , ,500 Net loss for year ending December 31, (14,573) (14,573) Balance, December 31, ,022,600 61, , ,500 (254,660) 512,330 Issuance of stock for cash - $0.50 per share, net 641, ,434 (268,500) - 38,575 Net loss for the year ending (64,316) (64,316) Balance, 41,663,600 $ 61,664 $ 763,901 $ - $ (318,976) $ 486,589 The accompanying notes are an integral part of these financial statements. AXIS ENERGY CORPORATION (Formerly Floodsmart, Inc) STATEMENT OF STOCKHOLDERS' EQUITY

4 AXIS ENERGY CORPORATION (Formerly Floodsmart, Inc) STATEMENTS OF CASH FLOWS Period from June 10, 1998 (Inception of Year Ended Year Ended Exploration Stage) December 31, December 31, To CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (64,316) $ (14,573) $ (318,976) Adjustments to reconcile net loss to net cash used by operating activities: Amortization Write-off of mineral property - - 3,400 Write-off of advances ,700 (64,316) (14,573) (185,587) Decrease (increase) in: Prepaid expenses (2,500) - (2,500) Accounts payable (706) 780 3,254 Net cash (used) by operating activities (67,522) (13,793) (184,833) INVESTING ACTIVITIES Oil exporation data (80,000) - (80,000) Reorganization advances - - (129,700) Mineral property acquisition cost - - (3,400) Organization costs - - (289) Cash used in investing activities (80,000) - (213,389) FINANCING ACTIVITIES Capital stock issued 307, , ,565 Capital stock subscribed (268,500) 268,500 - Due to related party - 3,900 11,106 Cash from financing activities 38, , ,671 NET INCREASE (DECREASE) IN CASH (108,947) 757, ,449 Cash at beginning of the year 527, Cash, at end of year $ 418,449 $ 527,396 $ 418,449 The accompanying notes are an integral part of these financial statements.

5 NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS Axis Energy Corporation, formerly known as Floodsmart, Inc. (hereinafter "the Company") was incorporated in June 10 of 1998 under the laws of the State of Nevada primarily for the purpose of acquiring and developing resource properties. The Company conducts operations primarily from its offices in Vancouver, British Columbia, Canada. The Company had an option at incorporation to acquire a resource property in British Columbia, but after a period of exploration, the property was abandoned in the year ended December 31, Since then, the Company has examined various opportunities but has not as yet made a commitment to any project. The Company s year-end is December 31. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding the Company s financial statements. The financial statements and notes are representations of the Company s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Accounting Method The Company uses the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America. Going Concern As shown in the financial statements, the Company incurred a net loss of $64,316 for the year ended and has an accumulated deficit of $318,976 since inception of the Company. The Company currently has no operating mining properties, has no revenues, and limited cash resources. These factors indicate that the Company may be unable to continue in existence. The financial statements do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue existence. The Company is actively seeking additional capital and management believes that new properties can ultimately be developed to enable the Company to continue its operations. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in its endeavors. See Note 1. 5

6 The Company s management believes that it will be able to generate sufficient cash from public or private debt or equity financing for the Company to continue to operate based on current expense projections. Basic and Diluted Loss Per Share Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and diluted loss per share are the same, as inclusion of common stock equivalents would be anti-dilutive. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. Concentration of Risk The Company maintains its cash accounts in primarily one commercial bank in Vancouver, British Columbia, Canada. The Company s business checking account, which is maintained in United States dollars, is not insured according to federal regulations. Derivative Instruments The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (hereinafter SFAS No. 133 ), as amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities Deferral of the Effective Date of FASB No. 133, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes. At and 2006, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities. 6

7 Estimates The preparat*ion 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Exploration Stage The Company began its exploration stage on June 10, 1998 at which time it commenced the exploration of its British Columbia property which was subsequently abandoned. Oil and Gas Property The Company follows the full cost method of accounting for oil and gas operations whereby all costs associated with the acquisition, exploration and development of oil and gas properties will be capitalized in cost centers on a country-by-country basis. Such costs include property acquisition costs, geological and geophysical studies, carrying charges on non-producing properties and costs of drilling both productive and non-productive wells. Depletion will be calculated for producing properties by using the unit-of-production method based on proved reserves before royalties, as determined by management of the Company or independent consultants. Sales of oil and gas properties will be accounted for as adjustments of capitalized costs, without any gain or loss recognized, unless such adjustments significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. Costs of abandoned oil and gas properties will be accounted for as adjustments of capitalized cost and written off to expense. A ceiling test will be applied to each cost center by comparing the net capitalized costs to the present value of the estimated future net revenue from production of proved reserves, based on commodity prices in effect as at the Company s year-end and based on current operating costs, discounted by 10%, less the effects of future costs to develop and produce the proved reserves, plus the costs of unproved properties net of impairment, and less the effects of income taxes. Any excess capitalized costs are written off to operations. Unproved properties will be assessed for impairment on an annual basis by applying factors that rely on historical experience. In general, the Company may write-off any unproved property under one or more of the following conditions: i) there are no firm plans for further drilling on the unproved property; ii) negative results were obtained from studies of unproved property; ii) negative results were obtained from studies conducted in the vicinity of the unproved property; or iv) the remaining term of the unproved property does not allow sufficient time for further studies or drilling. 7

8 This policy is prospective in nature as the Company does not currently have any oil and gas property interest. Fair Value of Financial Instruments The carrying amounts for cash, accounts payable and loans payable approximate their fair value. Foreign Currency Translation Assets and liabilities of the Company s foreign operations are translated into U.S. dollars at the period-end exchange rates, and revenue and expenses are translated at the average exchange rates during the period. Exchange rate differences arising on translation and realized gains and losses from foreign currency transactions are reflected in the results of operations. Impaired Asset Policy In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (hereinafter SFAS No. 144 ). SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of. This standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. SFAS No. 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. The Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. As of December 31, 2006 and 2005, no impairment was deemed necessary. Provision for Taxes Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (hereinafter SFAS No. 109 ). Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the more likely than not standard imposed by SFAS No. 109 to allow recognition of such an asset. At, the Company had net deferred tax assets calculated at an expected rate of 34% of approximately $97,827 principally arising from net operating loss carry forward of approximately $280,000 for income tax purposes, which expire in the years 2008 through As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been recorded. The significant components of the deferred tax asset at and December 31, 2006 were as follows: 8

9 December 31, December 31, Net operating loss carry forward $ 279,809 $ 234,057 Deferred tax asset $ 95,135 $ 79,580 Deferred tax asset valuation allowance $ (95,135) $(79,580) Net deferred tax asset $ - $ - The change in the allowance account from December 31, 2005 to December 31, 2006 was $15,555. Segment Information The Company follows SFAS 131, "Disclosures about Segments of an Enterprise and Related Information." Certain information is disclosed, per SFAS 131, based on the way management organizes financial information for making operating decisions and assessing performance. The Company currently operates in a single business segment and will evaluate additional segment disclosure requirements as it expands its operations. Stock Based Compensation In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, Accounting for Stock Based Compensations (SFAS No. 123). This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity s equity instruments or that may be settled by the issuance of those equity instruments. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans. The Company has no stock based compensation for the fiscal years and 2006 respectively. In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (hereinafter SFAS No. 148 ). SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirements of SFAS No. 123 to require 9

10 prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The provisions of the statement are effective for financial statements for fiscal years ending after December 15, As the Company accounts for stock-based compensation using the intrinsic value method prescribed in APB No. 25, Accounting for Stock Issued to Employees, the adoption of SFAS No. 148 has had no material impact on the Company s financial condition or results of operations. Recent Accounting Pronouncements In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity s first fiscal year that begins after November 15, Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, Fair Value Measurements. The adoption of this statement is not expected to have a material effect on the Company's financial statements. In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ( SFAS ) No. 141(R), "Business Combinations. SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, an any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but does not expect it to have a material effect. 10

11 In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ( SFAS ) No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect. NOTE 3 PREFERRED STOCK The Company s directors authorized 10,000,000 preferred shares with a par value of $0.01. The preferred shares will have rights and preferences set from time to time by the Board of Directors. As of and 2006, the Company has no shares issued and outstanding. NOTE 4 COMMON STOCK The Company is authorized to issue 75,000,000 shares of $0.001 par value common stock. All shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. On February 18, 2000, the Company declared a forward stock split of 1.4 shares for 1. On February 15, 2003, the Company declared a reverse split of 10 share to 1 share. These financial statements give retroactive effect to those stock splits. During the year ending December 31, 2006, 600,000 shares of common stock were issued through a private placement at $0.50 per share for net cash of $270,000, after payment of commission. During the fiscal year ending December 31, 2006, the Company also received $268,500 in share subscriptions. During the year ending, the Company received a further $52,000 in share subscriptions. The Company issued 641,000 at $.50 per shares for a net cash of $307,075, after payment of commission. NOTE 5 WARRANTS On February 16, 2007, the Company reserved 5,000,000 shares of the Company s common stock for two year warrants, exercisable at $1.00 per share. In addition, 500,000 warrants were granted to directors and officers of the Company. 11

12 NOTE 6 - RELATED PARTY TRANSACTIONS At, Due to Related Party amounted to $11,106 (2006: $11,106). This represents advances made by a director of the Company and these amounts are unsecured, noninterest bearing, and have no specific terms of repayment. 12