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NEWC > SEC Filings for NEWC > Form 10-Q on 20-May-2013All Recent SEC Filings

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Form 10-Q for NEW COLOMBIA RESOURCES INC


20-May-2013

Quarterly Report


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

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements that we make in this report. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. This report contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this report and include statements regarding our intent, belief, or current expectations with respect to many things. Some of these things are:

trends affecting our financial condition or results of operations for our limited history;

our business and growth strategies;

our technology;

the internet; and

our financing plans.

We caution readers that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. In fact, actual results most likely will differ materially from those projected in the forward-looking statements as a result of various factors. Some factors that could adversely affect actual results and performance include:

our limited operating history;

our lack of sales to date;

our future requirements for additional capital funding;

the failure of our technology and products to perform as specified;

the discontinuance of growth in the use of the internet;

our failure to integrate certain acquired businesses with our business;

the enactment of new adverse government regulations; and

the development of better technology and products by others.

You should carefully consider and evaluate all of these factors. In addition, we do not undertake to update forward-looking statements after we file this report with the Securities and Exchange Commission, even if new information, future events or other circumstances have made them incorrect or misleading.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management's expectations. Factors that could cause differences include, but are not limited to, expected market demand for our products, as well as general conditions of the internet security marketplace.

The Company has moved into the coal industry in Colombia. Due to the rising prices of oil worldwide, we feel that this industry is beneficial to our Company and our strategy to move forward, while drawing attention from the public to invest in a promising industry and Company.

We are a development stage enterprise. To-date, we have incurred significant losses from operations, and at March 31, 2013, had an accumulated deficit of approximately $25 million. At March 31, 2013, we had $150 of cash and cash equivalents. In 2003, 2004 and 2005, we raised an aggregate of approximately $3,943,000 in financing to fund our operations. Until such time when we generate sufficient revenues from operations, we will continue to be dependent on raising substantial amounts of additional capital through any one of a combination of debt or equity offerings. There is no assurance that we will be able to raise additional capital when necessary.

Results of Operations

The Three Months Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012

Revenue was $0 for the three months ended March 31, 2013 and 2012.

General and administrative expenses decreased to $67,538 for the three months ended March 31, 2013 from $372,816 for the three months ended March 31, 2012 due to a concerted effort to cut costs.


Net loss increased to $309,757 for the three months ended March 31, 2013 from $380,428 for the three months ended March 31, 2012 due primarily to loss on settlement of debt.

Liquidity and Capital Resources

Our cash and cash equivalents balance at March 31, 2013 was $150 as compared to $0 at December 31, 2012.

Cash flows provided by operating activities was $150 for the three months ended March 31, 2013 as compared to cash flows used in operating activities of $36,470 for the three months ended March 31, 2012.

Cash flows used in investing activities was $0 for the three months ended March 31, 2013 and 2012.

Cash flows provided by financing activities was $0 for the three months ended March 31, 2013 as compared to $37,500 for the three months ended March 31, 2012.

On July 12, 2012, the Company signed a convertible loan agreement with Asher Enterprises, Inc. ("Asher"), in which Asher loaned $27,500 at 8% interest, which is convertible into common stock of the Company. The loan was convertible after 180 days from the date of issuance at 55% of the average lowest three-day trading price of common stock during the 15 days preceding the date of conversion. The note was unsecured and set to mature on April 16, 2013. Loan proceeds amounting to $2,500 were paid directly to service providers. On January 8, 2013, the loan became convertible and a related derivative liability was recorded. On January 15, 2013, the principal and accrued interest balances, which amounted to a total of $28,585, were paid by a third party on behalf of an officer of the Company. In addition, the third party made a penalty payment amounting to $13,750 for the early extinguishment of the loan. The total of these payment amounts is not owed to the officer by the Company, and was considered a contribution to capital. The Company had no liability as of March 31, 2013 or as of December 31, 2012 related to the aforementioned payments.

On October 25, 2012, the Company issued an unsecured convertible promissory note to a third party in the amount of $10,000. The note accrues interest at the rate of 10% per annum and has a maturity date of October 25, 2013. The principal amount of the note and accrued interest are convertible after 180 days from the date of issuance at 60% of the average lowest three-day trading price of common stock during the 15 days preceding the date of conversion. At March 31, 2013, the principal balance of the note was $10,000 and accrued interest was $428. At December 31, 2012, the principal balance of the note was $10,000 and accrued interest was $184.

On October 30, 2012, the Company issued an unsecured convertible promissory note to a third party in the amount of $35,000. The note accrues interest at the rate of 10 (ten) percentage points per annum above the Prime Rate and has a maturity date of October 30, 2014. During the periods ended March 31, 2013 and December 31, 2012, the Prime Rate was 3.25% and the note accrued interest at the rate of 13.25% per annum. The lender shall only have the right to convert the principal amount of the note concurrently with the Company effecting a public sale, spin-off, or other similar disposition of the shares of its common stock. The Company evaluated the conversion options under FASB ASC Topic 815 - 40 for derivative treatment and determined that the conversion options are required to be accounted for as a derivative upon one of the aforementioned transactions occurring. As none of these transactions had occurred as of the period ended March 31, 2013, and as per FASB ASC Topic 470 - 20, the derivative instrument need not be accounted for as of March 31, 2013. At March 31, 2013, the principal balance of the note was $35,000 and accrued interest was $1,930. At December 31, 2012, the principal balance of the note was $35,000 and accrued interest was $799.

We presently do not have any available credit, bank financing, or other external sources of liquidity, other than the aforementioned notes. Due to our historical operating losses, our operations have not been a source of liquidity. In order to obtain capital, we may need to sell additional shares of our common stock or debt securities, or borrow funds from private lenders or banking institutions. There can be no assurance that we will be successful in obtaining additional funding in the amounts or on terms acceptable to us, if at all. If we are unable to raise additional funding as necessary, we may have to suspend our operations temporarily or cease operations entirely.

During the three months ended March 31, 2013, we did not generate any revenue. Because we have been unable to generate cash flows sufficient to support our operations, we have been dependent on debt and equity financing. In addition to negative cash flows from operations, we have experienced recurring net losses, and have an accumulated deficit of approximately $25 million. These factors raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our revenues and future profitability are substantially dependent on our ability to:

raise substantial amounts of additional capital through any one of a combination of debt offerings or equity offerings, if necessary; and

continue to grow our business through acquisitions.


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