March 2013 CEC Audit re "Significant Doubts"
COMPLIANCE ENERGY CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
MARCH 31, 2013
(Unaudited - Expressed in thousands of Canadian Dollars, unless otherwise stated)
1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS
Compliance Energy Corporation (the "Company") is incorporated under the laws of the Province of British Columbia, Canada, and its principal business activity is the exploration and development of resource properties. The address of the Company’s head office is 550 – 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6.
The Company is an exploration and development company working on resource properties it has staked or acquired, principally on Vancouver Island. The Company defers all acquisition, exploration and development costs related to the properties on which it is conducting exploration and predevelopment. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of its resource properties, and future profitable production, or alternatively, upon the Company’s ability to dispose of its resource properties on a profitable basis.
These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses from inception and does not currently have any revenue generating operations. The Company has an accumulated deficit of $6,990 as at March 31, 2013 and incurred an operating loss of $241 for the three months ended March 31, 2013. The Company’s ability to continue as a going concern is dependent upon its ability in the future to achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities when they become due. External financing, predominantly by the issuance of equity to the public, may be sought to finance the operations of the Company however there can be no certainty that such funds will be available at terms acceptable to the Company. These conditions indicate the existence of material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern.