UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



---





FORM
10-Q



---





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



For
the quarterly period ended September 30, 2013.



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



For
the transition period from __________ to __________.



Commission
File Number: 0-17204



---





INFINITY
ENERGY RESOURCES, INC.

(Exact
name of registrant as specified in its charter)

---



|Delaware                                                           |  | 20-3126427                              
|------------------------------------------------------------------ |  | ----------------------------------------
|(State
    or other jurisdiction of incorporation or organization) |  | (I.R.S.
    Employer Identification No.)



11900
College Blvd, Suite 310, Overland Park, KS 66210

(Address
of principal executive offices) (Zip Code)



(913)
948-9512

(Registrant’s
telephone number, including area code)



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 [X] No [  ]



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 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]



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



|Class                               |  | Outstanding
    at November 5, 2013
|----------------------------------- |  | -----------------------------------
|Common
    Stock, $0.0001 par value |  | 21,447,980                         


















TABLE
OF CONTENTS



|PART I Financial Information                                                                                    |  |    
|--------------------------------------------------------------------------------------------------------------- |  | ---
|Item
    1. Financial Statements                                                                                |  |    
|Consolidated Balance Sheets: September
    30, 2013 and December 31, 2012 (Unaudited)                           |  | F-1
|Consolidated Statements of Operations:
    Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)  |  | F-2
|Consolidated Statement of Changes in Stockholders’
    Equity: Nine Months Ended September 30, 2013 (Unaudited) |  | F-3
|Consolidated Statements of Cash Flows:
    Nine Months Ended September 30, 2013 and 2012 (Unaudited)            |  | F-4
|Notes
    to Consolidated Financial Statements                                                                  |  | F-5
|Item
    2. Management’s Discussion and Analysis of Financial Condition and Results of Operations               |  | 3  
|Item 3. Quantitative and Qualitative Disclosures
    About Market Risk                                          |  | 8  
|Item 4. Controls and Procedures                                                                                 |  | 8  
|                                                                                                                |  |    
|PART
    II Other Information                                                                                   |  |    
|Item
    1. Legal Proceedings                                                                                   |  | 9  
|Item
    2. Unregistered Sales of Equity Securities and Use of Proceeds                                         |  | 9  
|Item
    3. Defaults Upon Senior Securities                                                                     |  | 10 
|Item
    4. Mine Safety Disclosures                                                                             |  | 10 
|Item
    5. Other Information                                                                                   |  | 10 
|Item
    6. Exhibits                                                                                            |  | 10 
|Signatures                                                                                                      |  | 11 



2







PART
I



ITEM
1. FINANCIAL STATEMENTS





INFINITY
ENERGY RESOURCES, INC. AND SUBSIDIARIES

Consolidated
Balance Sheets

(Unaudited)



|                                                                                                                                                                                                                                                    |  | September 30, 2013 |              |   | December 31, 2012 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------------ | - | ----------------- | -
|ASSETS                                                                                                                                                                                                                                              |  |                    |              |   |                   |  
|Current assets                                                                                                                                                                                                                                      |  |                    |              |   |                   |  
|Cash and cash equivalents                                                                                                                                                                                                                           |  | $                  | 143          |   |                   | $
|Prepaid expenses                                                                                                                                                                                                                                    |  |                    | 28,916       |   |                   |  
|Total current assets                                                                                                                                                                                                                                |  |                    | 29,059       |   |                   |  
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|Oil and gas properties, using full cost accounting, net of accumulated
    depreciation, depletion, amortization and ceiling write-down:                                                                                                            |  |                    |              |   |                   |  
|Unproved                                                                                                                                                                                                                                            |  |                    | 4,739,011    |   |                   |  
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|Other asset – deposit                                                                                                                                                                                                                               |  |                    | -            |   |                   |  
|Total assets                                                                                                                                                                                                                                        |  | $                  | 4,768,070    |   |                   | $
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                                               |  |                    |              |   |                   |  
|Current liabilities                                                                                                                                                                                                                                 |  |                    |              |   |                   |  
|Accounts payable                                                                                                                                                                                                                                    |  | $                  | 947,497      |   |                   | $
|Accrued liabilities (including $762,407 and $767,407 due
    to related party at September 30, 2013 and December 31, 2012)                                                                                                                          |  |                    | 2,657,560    |   |                   |  
|Income tax liability                                                                                                                                                                                                                                |  |                    | 150,000      |   |                   |  
|Accrued interest and fees – bank and other                                                                                                                                                                                                          |  |                    | 184,163      |   |                   |  
|Officer indemnification                                                                                                                                                                                                                             |  |                    | 734,897      |   |                   |  
|Derivative liabilities                                                                                                                                                                                                                              |  |                    | -            |   |                   |  
|Current portion of asset retirement obligations                                                                                                                                                                                                     |  |                    | 432,027      |   |                   |  
|Line-of-credit with related party                                                                                                                                                                                                                   |  |                    | 21,025       |   |                   |  
|Note payable to related party, net of discount of $15,686
    at December 31, 2012                                                                                                                                                                  |  |                    | -            |   |                   |  
|Total current liabilities                                                                                                                                                                                                                           |  |                    | 5,127,169    |   |                   |  
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|Long-term liabilities                                                                                                                                                                                                                               |  |                    |              |   |                   |  
|Note payable, net of discount of $36,109 at December 31, 2012                                                                                                                                                                                       |  |                    | -            |   |                   |  
|Asset retirement obligations, less current portion                                                                                                                                                                                                  |  |                    | 616,802      |   |                   |  
|Total long-term liabilities                                                                                                                                                                                                                         |  |                    | 616,802      |   |                   |  
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|Total liabilities                                                                                                                                                                                                                                   |  |                    | 5,743,971    |   |                   |  
|                                                                                                                                                                                                                                                    |  |                    |              |   |                   |  
|Redeemable, convertible preferred stock, par value $.0001, 6% cumulative
    dividend, authorized 10,000,000 shares:                                                                                                                                |  |                    |              |   |                   |  
|Series A, 130,000 shares issued and outstanding at September
    30, 2013 and December 31, 2012, liquidation preference $13,000,000 plus undeclared dividends of $1,144,000 and $559,000 at
    September 30, 2013 and December 31, 2012            |  |                    | 13,606,792   |   |                   |  
|Series B (related party), 15,016 shares issued and outstanding
    at September 30, 2013 and December 31, 2012, liquidation preference $1,501,600 plus undeclared dividends of $132,141 and $64,569
    at September 30, 2013 and December 31, 2012 |  |                    | 1,568,146    |   |                   |  
|Commitments and contingencies (Note 6)                                                                                                                                                                                                              |  |                    |              |   |                   |  
|Stockholders’ deficit:                                                                                                                                                                                                                              |  |                    |              |   |                   |  
|Common stock, par value $.0001, authorized 75,000,000 shares,
    21,401,459 and 20,668,575 shares issued and outstanding at September 30, 2013 and December 31, 2012                                                                               |  |                    | 2,140        |   |                   |  
|Additional paid-in capital                                                                                                                                                                                                                          |  |                    | 90,070,102   |   |                   |  
|Accumulated deficit                                                                                                                                                                                                                                 |  |                    | (106,223,081 | ) |                   |  
|Total stockholders’ deficit                                                                                                                                                                                                                         |  |                    | (16,150,839  | ) |                   |  
|Total liabilities and stockholders’ deficit                                                                                                                                                                                                         |  | $                  | 4,768,070    |   |                   | $



See
notes to unaudited consolidated financial statements.



F-1











INFINITY ENERGY RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statements
of Operations

(Unaudited)





|                                                                                             |  | For the Three Months
    Ended |            |   | For the Nine Months
    Ended |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ----------------------------- | -
|                                                                                             |  | September 30,                  |            |   | September 30,                 |  
|                                                                                             |  | 2013                           |            |   | 2012                          |  
|Operating expenses                                                                           |  |                                |            |   |                               |  
|General and administrative expenses                                                          |  | $                              | 456,963    |   |                               | $
|Accretion expense                                                                            |  |                                | 23,078     |   |                               |  
|Total operating expenses                                                                     |  |                                | 480,041    |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Operating loss                                                                               |  |                                | (480,041   | ) |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Other income (expense):                                                                      |  |                                |            |   |                               |  
|Interest expense, net of capitalized interest                                                |  |                                | (17,175    | ) |                               |  
|Change in derivative fair value                                                              |  |                                | -          |   |                               |  
|Loss on conversion of note payable                                                           |  |                                | -          |   |                               |  
|Other income                                                                                 |  |                                | -          |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Total other income (expense)                                                                 |  |                                | (17,175    | ) |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Loss from continuing operations before income taxes                                          |  |                                | (497,216   | ) |                               |  
|Income tax benefit                                                                           |  |                                | 653,000    |   |                               |  
|Income (loss) from continuing operations                                                     |  |                                | 155,784    |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Loss of discontinued operation                                                               |  |                                | -          |   |                               |  
|Gain on sale of discontinued operation                                                       |  |                                | -          |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Net income (loss)                                                                            |  |                                | 155,784    |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Accrual of 6% dividend payable on Series A and B redeemable, convertible
    preferred stock |  |                                | (217,524   | ) |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Accretion of Series A and B redeemable, convertible preferred
    stock                      |  |                                | (577,737   | ) |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Income (loss) applicable to common shareholders                                              |  | $                              | (639,477   | ) |                               | $
|                                                                                             |  |                                |            |   |                               |  
|Basic and diluted net income
    (loss) per share:                                           |  |                                |            |   |                               |  
|Loss from continuing operations                                                              |  | $                              | (0.03      | ) |                               | $
|Loss from discontinued operation                                                             |  |                                | -          |   |                               |  
|Gain on sale of discontinued operation                                                       |  |                                | -          |   |                               |  
|                                                                                             |  |                                |            |   |                               |  
|Basic and diluted net income (loss) per share                                                |  | $                              | (0.03      | ) |                               | $
|                                                                                             |  |                                |            |   |                               |  
|Weighted average shares outstanding – basic and diluted                                      |  |                                | 21,334,591 |   |                               |  



See
notes to unaudited consolidated financial statements.



F-2









INFINITY ENERGY RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statement
of Changes in Stockholders’ Deficit

For the Nine Months Ended September 30,
2013

(Unaudited)



|                                                                                             |  |              |            |  |         |   |       | Additional  |  |   |               |   |  |         |             
|-------------------------------------------------------------------------------------------- |  | ------------ | ---------- |  | ------- | - | ----- | ----------- |  | - | ------------- | - |  | ------- | ------------
|                                                                                             |  | Common Stock |            |  | Paid-in |   |       | Accumulated |  |   | Stockholders’ |  
|                                                                                             |  | Shares       |            |  | Amount  |   |       | Capital     |  |   | Deficit       |   |  | Deficit |             
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Balance, December 31, 2012                                                                   |  |              | 20,668,575 |  |         | $ | 2,066 |             |  | $ | 88,843,628    |   |  | $       | (104,197,332
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Stock based compensation                                                                     |  |              | -          |  |         |   | -     |             |  |   | 1,476,383     |   |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Issuance of common stock purchase warrants                                                   |  |              | -          |  |         |   | -     |             |  |   | 32,734        |   |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Transition of derivative liability to equity                                                 |  |              | -          |  |         |   | -     |             |  |   | 764,982       |   |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Private placement of common stock and warrants                                               |  |              | 556,250    |  |         |   | 56    |             |  |   | 889,944       |   |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Issuance of common stock for services rendered                                               |  |              | 25,000     |  |         |   | 3     |             |  |   | 39,747        |   |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Issuance of common stock on conversion of notes                                              |  |              | 151,634    |  |         |   | 15    |             |  |   | 337,400       |   |  |         |             
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Accretion of Series A and B redeemable, convertible preferred
    stock                      |  |              | -          |  |         |   | -     |             |  |   | (1,662,144    | ) |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Accrual of 6% dividend payable on Series A and B redeemable,
    convertible preferred stock |  |              | -          |  |         |   | -     |             |  |   | (652,572      | ) |  |         | -           
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Net loss                                                                                     |  |              |            |  |         |   |       |             |  |   | -             |   |  |         | (2,025,749  
|                                                                                             |  |              |            |  |         |   |       |             |  |   |               |   |  |         |             
|Balance, September 30, 2013                                                                  |  |              | 21,401,459 |  |         | $ | 2,140 |             |  | $ | 90,070,102    |   |  | $       | (106,223,081



See
notes to unaudited consolidated financial statements.





F-3









INFINITY ENERGY RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statements
of Cash Flows

(Unaudited)



|                                                                                                                                                                         |  | For the Nine Months Ended |           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ----------
|                                                                                                                                                                         |  | September 30,             |           
|                                                                                                                                                                         |  | 2013                      |           
|Cash flows from operating activities                                                                                                                                     |  |                           |           
|Net income (loss)                                                                                                                                                        |  | $                         | (2,025,749
|Adjustments to reconcile net income (loss) to net cash used
    in operating activities:                                                                                 |  |                           |           
|Income tax benefit                                                                                                                                                       |  |                           | (653,000  
|Gain on sale of discontinued operation                                                                                                                                   |  |                           | -         
|Accretion of asset retirement obligations – continuing
    operations                                                                                                    |  |                           | 67,723    
|Accretion of asset retirement obligations – discontinued
    operations                                                                                                  |  |                           | -         
|Stock-based compensation                                                                                                                                                 |  |                           | 1,476,383 
|Common stock issued for services rendered                                                                                                                                |  |                           | 39,750    
|Change in fair value of derivative liability                                                                                                                             |  |                           | 24,410    
|Loss on conversion of note                                                                                                                                               |  |                           | 11,085    
|Amortization of debt discount and debt issuance cost, net
    of capitalized amounts of $77,616 in 2012                                                                  |  |                           | 735,942   
|Change in operating assets and liabilities                                                                                                                               |  |                           |           
|Decrease in prepaid expenses and other assets                                                                                                                            |  |                           | 8,131     
|Increase (decrease) in accounts payable and accrued liabilities                                                                                                          |  |                           | (190,070  
|Increase in current liabilities of discontinued operations                                                                                                               |  |                           | -         
|Net cash used in operating activities                                                                                                                                    |  |                           | (505,395  
|                                                                                                                                                                         |  |                           |           
|Cash flows from investing activities                                                                                                                                     |  |                           |           
|Investment in oil and gas properties                                                                                                                                     |  |                           | (313,208  
|Net cash used in investing activities                                                                                                                                    |  |                           | (313,208  
|                                                                                                                                                                         |  |                           |           
|Cash flows from financing activities                                                                                                                                     |  |                           |           
|Proceeds from private placement of common stock and warrants                                                                                                             |  |                           | 890,000   
|Proceeds from line-of-credit, net                                                                                                                                        |  |                           | 21,025    
|Repayment of note payable to related party                                                                                                                               |  |                           | (250,000  
|Proceeds from debt and subordinated note payable                                                                                                                         |  |                           | 825,000   
|Repayment of notes payable                                                                                                                                               |  |                           | (700,000  
|Net cash provided by financing activities                                                                                                                                |  |                           | 786,025   
|                                                                                                                                                                         |  |                           |           
|Net increase (decrease) in cash and cash equivalents                                                                                                                     |  |                           | (32,578   
|                                                                                                                                                                         |  |                           |           
|Cash and cash equivalents                                                                                                                                                |  |                           |           
|Beginning                                                                                                                                                                |  |                           | 32,721    
|End                                                                                                                                                                      |  | $                         | 143       
|                                                                                                                                                                         |  |                           |           
|Supplemental cash flow information:                                                                                                                                      |  |                           |           
|Cash paid for interest                                                                                                                                                   |  | $                         | 19,937    
|Cash paid for taxes                                                                                                                                                      |  | $                         | -         
|                                                                                                                                                                         |  |                           |           
|Supplemental noncash disclosures:                                                                                                                                        |  |                           |           
|Noncash capitalized overhead and interest                                                                                                                                |  | $                         | 12,500    
|Noncash transaction; debt, subordinated note payable and
    related accrued interest and other fees satisfied by issuance of common and Series A and B Preferred shares |  | $                         | -         
|Conversion of note and accrued interest to common stock                                                                                                                  |  | $                         | 326,330   
|Discount from warrant derivative                                                                                                                                         |  | $                         | 698,064   
|Transition of derivative liability to equity                                                                                                                             |  | $                         | 764,982   
|Accretion in fair value of redeemable preferred stock                                                                                                                    |  | $                         | 1,662,144 
|Preferred dividends accrued                                                                                                                                              |  | $                         | 652,572   
|Common stock purchase warrants issued for debt issuance
    costs                                                                                                        |  | $                         | 32,734    



See
notes to unaudited consolidated financial statements.



F-4







Note
1 — Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies



Unaudited
Interim Financial Information



Infinity
Energy Resources, Inc. and its subsidiaries (collectively, “we,” “ours,” “us,” “Infinity”
or the “Company”) has prepared the accompanying consolidated financial statements pursuant to the rules and regulations
of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial
statements are unaudited and, in our opinion, include all adjustments consisting of normal recurring adjustments and accruals
necessary for a fair presentation of our consolidated balance sheets, statements of operations, and cash flows for the periods
presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for
2013 due to various factors. Certain information and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance
with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and accompanying notes in Item 8, “Financial Statements and Supplementary Data,”
of our Annual Report on Form 10-K, filed with the SEC.



Nature
of Operations



We
are engaged in the exploration of potential oil and gas resources in the Perlas and Tyra concession blocks offshore Nicaragua
in the Caribbean Sea (the “Nicaraguan Concessions”). The Company sold its wholly-owned subsidiary, Infinity Oil and
Gas of Texas, Inc. in 2012 and continues to hold its wholly-owned subsidiary, Infinity Oil and Gas of Wyoming, Inc., which has
been inactive in recent years.



Going
Concern



As
reflected in the accompanying Consolidated Statements of Operations, the Company has a history of losses. In addition, the Company
has a significant working capital deficit and is currently experiencing substantial liquidity issues.



On
February 28, 2012, we signed definitive agreements with Amegy Bank (“Amegy”) and Off-Shore, LLC (“Off-Shore”)
relating to outstanding debt and other obligations we owed to them (see Note 3). Although the cash outflow necessary to pay Amegy
has been eliminated under terms of the Stock Purchase Agreement, we are still in need of additional capital to meet our obligations
under the Nicaraguan Concessions, and are seeking sources of additional equity or debt financing. There can be no assurance that
we will be able to obtain such capital or obtain it on favorable terms.



The
Company conducted an environmental study and developed geological information from the reprocessing and additional evaluation
of existing 2-D seismic data acquired over its Nicaraguan Concessions. It issued letters of credit totaling $851,550 for this
and additional work on the leases as required by the Nicaraguan Concessions. The Company has completed certain activity under
the initial work plan to date, but there remain significant additional activities to comply with certain requirements of the Nicaraguan
Concessions. The Company intends to seek joint venture or working interest partners prior to the commencement of any significant
exploration or drilling operations on the Nicaraguan Concessions. The Company’s commitment to acquire, process and interpret
additional 2-D seismic data must be completed by January 2014 or the Nicaragua Concessions will be at risk of forfeiture. The
Company must successfully contract with a company that has the capabilities to perform, process and interpret the 2-D seismic
activities required by the work plan and consequently the Company must raise the necessary funding to negotiate, close and pay
for the contract necessary to fulfill such requirements. These are substantial operational and financial requirements that the
Company must satisfy prior to January 2014 in order to maintain its Nicaragua Concessions and there can be no assurance that it
will be able to do so.



Due
to the uncertainties related to these matters, there exists substantial doubt about the Company’s ability to continue as
a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue
as a going concern



F-5







Fair
Value of Financial Instruments



As
defined in ASC 820, fair value is the price that would be received in the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that
market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the
inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The
Company classifies fair value balances based upon observability of those inputs. ASC 820 establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (level 1 measurement), pricing inputs are other than quoted prices in active markets,
but are either directly or indirectly observable and are valued using models or other valuation methodologies (level 2 measurement),
and the lowest priority to unobservable inputs (level 3 measurement). There were no changes in valuation techniques or reclassifications
of fair value measurements between levels 1, 2 or 3 during the nine months ended September 30, 2013.



The
carrying values of the Company’s accounts receivable, accounts payable and accrued liabilities represent the estimated fair
value due to the short-term nature of the accounts.



The
estimated fair value of the Company’s non-current derivative liabilities, all of which are related to detachable warrants
issued in connection with notes payable, were estimated using a closed-ended option pricing model utilizing assumptions related
to the contractual term of the instruments, estimated volatility of the price of the Company’s common stock, interest rates,
the probability of both the downward adjustment of the exercise price and the upward adjustment to the number of warrants as provided
by the warrant agreement terms (Note 2) and non-performance risk factors, among other items (ASC 820, Fair Value Measurements(“ASC 820”) fair value hierarchy Level 3). All notes payable have been paid off as of September 30, 2013, therefore
the derivative liability was adjusted as of the extinguishment date of the notes and the resulting derivative liability was transitioned
from a liability to equity as of such date. A comparison of the assumptions used in calculating estimated fair value of derivative
liabilities at the issue date and as of the date of the transition from liability to equity is as follows:



|                                |  | Upon
    Issuance |                                                                                               |  | As
    of date of transition to equity | 
|------------------------------- |  | ----------------- | --------------------------------------------------------------------------------------------- |  | -------------------------------------- | 
|                                |  |                   |                                                                                               |  |                                        | 
|Volatility – range              |  |                   | 89.75%
                                                                               - 94.5% |  |                                        | 
|Contractual term                |  |                   | 2
                                                                               years        |  |                                        | 
|Exercise price                  |  |                   | $2.50                                                                                         |  |                                        | 
|Number of warrants in aggregate |  |                   | 825,000                                                                                       |  |                                        | 



The
following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial
instruments, measured at fair value on a recurring basis using significant unobservable inputs:



|Balance at December 31, 2012                             |  | $ | 42,508   |  
|-------------------------------------------------------- |  | - | -------- | -
|Fair value of warrant derivative liabilities at issuance |  |   | 698,064  |  
|Unrealized derivative losses included in other expense   |  |   | 24,410   |  
|Transition of derivative liability to equity             |  |   | (764,982 | )
|Balance at September 30, 2013                            |  | $ | -        |  



The
estimated initial fair value of the Company’s Series A and B redeemable convertible preferred stock was determined based
upon estimates of the expected occurrence and timing of certain future events, such as the date such shares might be redeemed
or converted (assumed to be December 31, 2013); an estimate of discount rates to be utilized in determining net present value
of the preferred stock, based upon rates observed in similar or analogous, but not identical, market transactions, upon past Company-specific
effective borrowing rates, and the assessment of each instrument’s specific rights and obligations. (ASC 820, Fair Value
Measurements (“ASC 820”) fair value hierarchy Level 3.



Reclassifications



Certain
amounts in the prior period were reclassified to conform to the current period’s financial statement presentation. These
reclassifications had no effect on previously reported net loss or accumulated deficit.





F-6









Note
2 — Debt



Debt
consists of the following at September 30, 2013 and December 31, 2012:





|                                                               |  | September
    30, 2013 |        |  | December
    31, 2012 |  
|-------------------------------------------------------------- |  | ---------------------- | ------ |  | --------------------- | -
|                                                               |  |                        |        |  |                       |  
|Line-of-credit
    with related party                          |  | $                      | 21,025 |  |                       | $
|Note
    payable to related party, net of discount, short-term |  | $                      | -      |  |                       | $
|Notes
    payable, net of discount, long-term                  |  | $                      | -      |  |                       | $



Line-of-Credit
with Related Party



The
Company entered into a line of credit facility on September 23, 2013 which provides for borrowings on a revolving basis up to
a maximum of $50,000. The entity providing the credit facility is owned by an officer of another corporation for which Infinity’s
CEO serves as CEO and chairman of the board. The facility is unsecured, bears interest at 8% and expires on November 23, 2013.
The Company granted the holder a common stock purchase warrant exercisable to purchase 15,000 shares of common stock at a price
of $3.50 per share. The warrant is immediately exercisable and expires on September 23, 2015. The Company estimated the fair value
of this warrant at $32,734 as of the grant date, which has been recorded as debt issuance costs and classified in prepaid expenses
in the accompanying consolidated balance sheets. The weighted average grant date fair value for these warrants was $2.18 per share
which was calculated using the Black-Scholes option model with the following assumptions: (i) stock market price of 3.38; (ii)
expected volatility of 132%; (iii) discount rate of 0.35%, and (iv) expected term of two years.



Such
costs are amortized ratably over the term of the credit facility which totaled $3,818 for the three and nine months ended September
30, 2013 and the remaining unamortized balance was $28,916 as of September 30, 2013.



Notes
Payable – Short-term



In
November 2012 the Company entered into an agreement with its law firm to issue the firm a 3% note payable in satisfaction of $212,400
in fees. The note was due with all accrued interest on March 14, 2014. The note and accrued interest are convertible to shares
of the Company’s common stock at $3.00 per share at any time prior to and including maturity date. The note was discounted
to its estimated fair value and the amount of the discount at issue date, $40,435, was recorded as a reduction in legal expense
in 2012. Interest expense for the three and nine months ended September 30, 2013 aggregated $5,071 and $22,304, respectively,
which includes interest at the stated rate of 3% and amortization of discount. On August 23, 2013, the holder exercised its right
to convert the note payable to common stock at the contractual conversion price of $3.00 per share and was issued 72,464 common
shares in full satisfaction of the promissory note and accrued interest which totaled $217,392. The unamortized discount at the
date of conversion of $17,735 was charged to additional paid in capital.



During
the nine months ended September 30, 2013, the Company borrowed an aggregate of $825,000 from six entities or individuals. The
term of each note was for a period of 60 days and bore interest at 8% per annum. At the date of borrowing, each entity or individual
was also issued a warrant for the purchase of common shares of stock at $2.50 per share, in aggregate, for 825,000 shares, valid
for a period of two years from the date of the note. The warrants provided that if the related notes and interest were not paid
in full by their respective maturity dates (ranging from April 13 to June 15, 2013) the warrants’ exercise prices would
be reduced to $0.10 per share and the number of shares under the warrants would be increased to an aggregate of 8,250,000 shares.
The ratchet provision in the warrant’s exercise price required that these be accounted as derivative liabilities. The Company
recorded the estimated fair value of the warrants as discounts on note payable and as a derivative liability in the same amount,
each as of the date of the respective note.



The
Company paid all of notes or their holders converted them to equity on or prior to their maturity dates, causing the ratchet provisions
on the warrants to terminate. The discounts were amortized on a straight line basis (substantially equivalent to the effective-interest
basis) over the terms of the notes. Interest expense for the three and nine months ended September 30, 2013 includes discount
amortization in the amount of $381,327 and $698,064, respectively.



F-7







Note
Payable to Related Party



On
August 28, 2012, the Company borrowed $250,000 from an entity that is 49% owned by a board member of another corporation for which
Infinity’s CEO serves as CEO and chairman of the board. The Company issued a short-term note payable to the entity in this
amount, bearing interest at 8% per annum, maturing February 28, 2013. At the same time, the Company issued the same entity a warrant
exercisable to purchase 120,000 shares of the Company’s common stock at a price of $2.50 per share, expiring August 2017.
The Company has recorded the estimated fair value of the warrant as of August 28, 2012 as a discount on note payable in the amount
of $48,654 and a derivative liability in the same amount at that date. The discount of $48,654 was amortized on a straight line
basis over the expected term of the note (August 28, 2012 through February 28, 2013) and interest expense for the three and nine
months ended September 30, 2013 includes discount amortization of $15,686. The estimated current value of the warrant derivative
liability was increased to $192,604 as of the date the note was repaid, February 28, 2013, and at that date the derivative liability
was terminated and the balance was recorded as an addition to additional paid-in capital as a transition back to equity.



Interest
Bearing Liabilities to Vendors



At
September 30, 2013 and December 31, 2012, the Company had agreed to pay interest of 8% per annum on certain accrued liabilities
aggregating $410,500. The total amount of interest accrued relating to these liabilities for the three and nine months ended September
30, 2013 was $8,277 and $24,652, respectively and $8,277 and $24,652 for the three and nine months ended September 30, 2012.



Note
3  — Cancellation of Debt and Related Obligations and Issuance of Securities in Exchange for Debt



On
February 28, 2012, the Company signed definitive agreements with Amegy and Off-Shore relating to outstanding debt and other obligations
owed them. In accordance with these agreements, on April 13, 2012, the Company issued Amegy 2,000,000 shares of common stock and
130,000 shares of Series A redeemable convertible preferred stock, and issued Off-Shore 15,016 shares of Series B redeemable convertible
preferred stock. Amegy also agreed to cancel the Amegy Warrant that had originally been issued in February 2011, exercisable to
purchase 931,561 shares of common stock. In aggregate, the Company cancelled debt, accrued interest and fees and the derivative
liability that had been recorded relative to the Amegy Warrant in the aggregate amount of $21,883,393.



The
Series A and Series B redeemable convertible preferred stock have a 6% annual dividend and are convertible into common stock at
a price of $6.50 per share. Both series of preferred stock automatically convert into common stock if the average of the closing
prices of the common stock for 30 consecutive trading days equals at least $7.50 per share. The Company has the right to redeem
both series of preferred stock at any point for an amount equal to their issue price of $100 per share plus all accrued and unpaid
dividends; however the Series A preferred stock has a higher liquidation preference and must be redeemed prior to any redemption
of Series B preferred stock. Commencing January 1, 2013, the Series A preferred stock will vote with the common stock on all matters
presented to the holders of the common stock. Beginning January 1, 2014, the Series A preferred shareholders will have a majority
vote on all such matters and the right to elect a majority of the Board of Directors if the Series A preferred stock has not been
redeemed or converted into common stock. Series B preferred stock has no voting privileges. Neither series of preferred stock
is transferrable for 180 days after issuance.



The
common stock issued to Amegy has been recorded at a value equal to the closing price of the shares of the Company’s common
stock on April 13, 2012, the date the agreement was effective, for a total of $2,980,000. Taking into consideration the rights
and preferences accruing to the preferred stock issued, as summarized above, the Company has classified both Series A and B preferred
stock as temporary equity on the accompanying consolidated balance sheet at September 30, 2013 and accordingly has recorded such
stock at their estimated fair values. That estimated fair value was $9,743,210 for Series A preferred and $1,106,625 for Series
B preferred at the date of issuance, April 13, 2012. The recorded fair value of Series A and B preferred stock increased in calculated
present value to $12,462,792 and $1,436,005, respectively, as of September 30, 2013 ($577,737 and $1,662,144 was accreted in the
three and nine months ended September 30, 2013, respectively). Both Series A and B preferred stock are being accreted to their
face values over a period commencing April 14, 2012 through December 31, 2013. Accrued dividends payable on the Series A and B
preferred stock in the amount of $1,276,141 have been recorded as of September 30, 2013 ($217,524 and $652,572 was accrued in
the three and nine months ended September 30, 2013, respectively).



Note
4 —  Common Stock



During
the nine months ended September 30, 2013, the Company conducted a private placement of its common stock in which it sold 556,250
units, each consisting of one share of common stock and one half of a common stock purchase warrant, at $1.60 per unit, for total
proceeds of $890,000. One holder of a promissory note issued by the Company in February 2013 participated in the private placement
and converted the principal amount $125,000 plus accrued interest to 79,170 units. As a result of the conversion, the Company
recognized a loss on conversion of $11,085 during the nine months ended September 30, 2013. The common stock purchase warrants
provide for an exercise price of $2.50 per share, are immediately exercisable and have a term of five years.



F-8









During
the nine months ended September 30, 2013, the Company issued 25,000 shares to a consultant for services rendered which were valued
at $39,750 based on the Company’s share price at the grant date.



Note
5  — Stock Options



The
Company applies ASC 718, Stock Compensation, which requires companies to recognize compensation expense for share-based payments
based on the estimated fair value of the awards. ASC 718 also requires tax benefits relating to the deductibility of increases
in the value of equity instruments issued under share-based compensation arrangements to be presented as financing cash inflows
in the statement of cash flows. Compensation cost is recognized based on the grant-date fair value for all share-based payments
granted, and is estimated in accordance with the provisions of ASC 718.



The
following table summarizes stock option activity for the nine months ended September 30, 2013:



|                                                  |  | Number
    of Options |           |  | Weighted
    Average Exercise Price Per Share |   |      | Weighted
    Average Remaining Contractual Term |  |  | Aggregate
                                                                                Intrinsic
                                                                                Value | 
|------------------------------------------------- |  | --------------------- | --------- |  | --------------------------------------------- | - | ---- | ----------------------------------------------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Outstanding at December 31, 2012                  |  |                       | 3,303,500 |  |                                               | $ | 4.17 |                                                 |  |  | 7.3
                                                                                          years                                                                                       | 
|Granted                                           |  |                       | 96,000    |  |                                               |   | 3.00 |                                                 |  |  | 5.8
                                                                               years                                                                                                  | 
|Exercised                                         |  |                       | -         |  |                                               |   | -    |                                                 |  |  | -                                                                                                                                                                                         | 
|Forfeited                                         |  |                       | -         |  |                                               |   | -    |                                                 |  |  | -                                                                                                                                                                                         | 
|Outstanding at September 30, 2013                 |  |                       | 3,399,500 |  |                                               | $ | 4.14 |                                                 |  |  | 6.6
                                                                                                                  years                                                               | 
|Outstanding and exercisable at September 30, 2013 |  |                       | 2,526,167 |  |                                               | $ | 4.53 |                                                 |  |  | 6.2
                                                                                                                  years                                                               | 



During
the nine months ended September 30, 2013, the Company granted 96,000 options which have an exercise price of $3.00 per share and
original terms ranging from five to ten years. A total of 36,000 options vested immediately while the remaining 60,000 options
vest at a rate of 30,000 for each of the two years thereafter. The weighted average grant date fair value for these options was
$1.93 per share which was calculated using the Black-Scholes option model with the following assumptions: (i) stock market price
of $2.14 - $2.75; (ii) expected volatility of 131% - 132%; (iii) discount rate of 0.13% - 0.60% and (iv) expected terms ranging
from 2.5 to 10 years.



The
Company recognized compensation and legal expense in connection with the vesting of options granted above and in 2012 in the amount
of $353,730 and $1,476,383 during the three and nine months ended September 30, 2013, respectively. The intrinsic value of all
outstanding stock options aggregated $1,625,885 and the intrinsic value of all vested options totaled $1,337,685 as of September
30, 2013.



Note
6 — Warrants



The
following table summarizes warrant option activity for the nine months ended September 30, 2013:



|                                                     |  | Number
    of Warrants |           |  | Weighted
    Average Exercise Price Per Share |   |      | Weighted
    Average Remaining Contractual Term | 
|---------------------------------------------------- |  | ---------------------- | --------- |  | --------------------------------------------- | - | ---- | ----------------------------------------------- | 
|Outstanding and exercisable at December 31, 2012     |  |                        | 120,000   |  |                                               | $ | 2.50 |                                                 | 
|Issued in conjunction with notes payable (Note 2)    |  |                        | 825,000   |  |                                               |   | 2.50 |                                                 | 
|Issued in private placement of common stock (Note 4) |  |                        | 317,710   |  |                                               |   | 2.50 |                                                 | 
|Issued in conjunction with line-of-credit (Note 2)   |  |                        | 15,000    |  |                                               |   | 3.00 |                                                 | 
|                                                     |  |                        |           |  |                                               |   |      |                                                 | 
|Outstanding and exercisable at September 30, 2013    |  |                        | 1,277,710 |  |                                               | $ | 2.50 |                                                 | 



The
intrinsic value of all outstanding common stock purchase warrants and the intrinsic value of all vested common stock purchase
warrants totaled $1,048,049 as of September 30, 2013.



F-9







Note
7 — Commitments and Contingencies



The
Company has no insurance coverage on its U.S domestic oil and gas properties. The Company is not in compliance with Federal and
State laws regarding the U.S. domestic oil and gas properties. The Company’s known compliance issues relate to the Texas
Railroad Commission regarding administrative filings and renewal permits. The ultimate resolution of these compliance issues could
have a material adverse impact on the Company’s financial statements.



Nicaraguan
Concessions



The
significant terms and work commitments associated with the Nicaraguan Concessions by area (Perlas and Tyra blocks) are summarized
below. Within 15 days of entering an exploration sub-period, the Company is required to provide an irrevocable guarantee (“Irrevocable
Guarantee”) in favor of the Nicaraguan Ministry of Energy, payable in Nicaragua, in an amount equal to the estimated cost
of such exploration sub-period, subject to an accumulated credit carry forward for the excess of work performed in the preceding
exploration sub-period, as provided in the agreements relating to the Nicaraguan Concessions.



As
of December 31, 2012 and September 30, 2013, the Company was in Sub-Period 1 for both Perlas and Tyra. On April 11, 2013, the
Company received its Environmental Permit, permitting it to proceed to Phase II of Sub-Period 1. In accordance with the Nicaraguan
Concession agreements, the Company has provided the Ministry of Energy with the required letters of credit in the amounts of $443,100
for Perlas (expiring March 2014) and $408,450 for Tyra (expiring September 2014). The Company has also made all required expenditures
related to the Nicaraguan Concessions for training programs and as “area fees,” for each respective year for 2010
through 2013. The Company considers it is fully in compliance with the terms of the Nicaraguan Concession agreements and is in
year four of the 30 year concessions.



Minimum
Work Program – Perlas



|Block
    Perlas – Exploration Minimum Work Commitment and Relinquishments                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exploration
                                                                                                                                                                 Period
        (6
        Years)
|Sub-Period
    1                                                                                                                                                                                             
|Sub-Period
                                                                                     2
        Optional                                                                                           
|Sub-Period
                                                                                     3
        Optional                                                                                           
|Sub-Period
                                                                                     4
        Optional                                                                                           



Minimum
Work Program - Tyra



|Block
    Tyra – Exploration Minimum Work Commitment and Relinquishments                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exploration
                                                                                                                                     Period
        (6
        Years)
|Sub-Period
    1                                                                                                                                                                 
|Sub-Period
                                                         2
        Optional                                                                                           
|Sub-Period
                                                         3
        Optional                                                                                           
|Sub-Period
                                                         4
        Optional                                                                                           



F-10







Contractual
and Fiscal Terms



|Training
    Program      | US
    $50,000 per year, per block                                                                                                                                              |                                                          
|------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------
|Area
    Fee              | Yr
                                                                                                 1-3
        Yr
        4-7
        Yr
        8 fwd                         | $0.05/hectare
        $0.10/hectare
        $0.15/hectare
|Royalties                 | Recovery
                                                                                                 Factor
        0
        – 1.5
        1.5
        – 3.0
        >3.0 | Percentage
        5%
        10%
        15%            
|Natural
    Gas Royalties | Market
    value at production                                                                                                                                                  | 5%                                                       
|Corporate
    Tax         | Rate
    no higher than 30%                                                                                                                                                     |                                                          
|Social
    Contribution   | 3%
    of the net profit (1.5% for each autonomous region)                                                                                                                      |                                                          
|Investment
    Protection | ICSID
                                                                                     arbitration
        OPIC
        insurance                                           |                                                          



Phase
II of Sub Period 1 started April 13, 2013, when the Nicaraguan Government approved the environmental impact study. The minimum
cash requirements for the next twelve month period will be $1,968,000 of which $1,635,000 is related to seismic and $333,000 is
related to the training fees, area fees and other direct costs under the Nicaraguan Concessions. The Company estimates that the
actual cost of seismic activities for the acreage will range between $4 million and $8 million depending upon the amount
and combination of 2D and 3D seismic performed over the next approximate 12 month period. The Company estimates that its minimum
working capital requirements for the next twelve-month period will be $600,000 to maintain corporate operations, exclusive of
the Nicaraguan Concessions and payment of existing third party obligations. See Note 1 for discussion of Going Concern.



Revenue
Sharing Commitments



On
March 23, 2009, the Company entered into a Securities Purchase Agreement, dated effective as of March 23, 2009, with Off-Shore,
an accredited investor, to issue a subordinated secured promissory note in the aggregate principal amount of up to $1,275,000
and a one percent (1%) revenue sharing interest in the Nicaraguan Concessions. As of December 31, 2009, Off-Shore had funded $1,275,000
(the “Funding Amount”).



Under
the Revenue Sharing Agreement (the “Revenue Agreement”), Infinity assigned to Off-Shore a monthly payment (the “RSP”)
equal to the revenue derived from one percent (1%) of Infinity’s share of the hydrocarbons produced at the wellhead from
the Nicaraguan Concessions. The RSP will bear its proportionate share of all costs incurred to deliver the hydrocarbons to the
point of sale to an unaffiliated purchaser, including its share of production, severance and similar taxes, and certain additional
costs. The RSP will be paid to Off-Shore by the last day of each month based on the revenue received by Infinity from the purchaser
of the production during the previous month from the Nicaraguan Concessions. The Revenue Agreement does not create any obligation
for Infinity to maintain or develop the Nicaraguan Concessions, and does not create any rights in the Nicaraguan Concessions for
Off-Shore. Off-Shore has assigned its RSP to its members in connection with its dissolution.



On
June 6, 2009 the Company entered into a Revenue Sharing Agreement with the officers and directors for services provided. Infinity
assigned to officers and directors a monthly payment (the “RSP”) equal to the revenue derived from one percent (1%)
of Infinity’s share of the hydrocarbons produced at the wellhead from the Nicaraguan Concessions. The RSP will bear its
proportionate share of all costs incurred to deliver the hydrocarbons to the point of sale to an unaffiliated purchaser, including
its share of production, severance and similar taxes, and certain additional costs. The RSP will be paid by the last day of each
month based on the revenue received by Infinity from the purchaser of the production during the previous month from the Nicaraguan
Concessions. The Revenue Agreement does not create any obligation for Infinity to maintain or develop the Nicaraguan Concessions,
and does not create any rights in the Nicaraguan Concessions for officers and directors.



F-11









The
Company intends to seek joint venture or working interest partners (the “Farmout”) prior to the commencement of any
exploratory drilling operations on these Nicaraguan Concessions. On September 8, 2009 the Company entered into a Revenue Sharing
Agreement with Jeff Roberts to assist the Company with its technical studies of gas and oil holdings in Nicaragua and managing
and assisting in the Farmout. Infinity assigned to Jeff Roberts a monthly payment (the “RSP”) equal to the revenue
derived from one percent (1%) of Infinity’s share of the hydrocarbons produced at the wellhead from the Nicaraguan Concessions.
The RSP will bear its proportionate share of all costs incurred to deliver the hydrocarbons to the point of sale to an unaffiliated
purchaser, including its share of production, severance and similar taxes, and certain additional costs. The RSP will be paid
to Jeff Roberts by the last day of each month based on the revenue received by Infinity from the purchaser of the production during
the previous month from the Nicaraguan Concessions. The Revenue Agreement does not create any obligation for Infinity to maintain
or develop the Nicaraguan Concessions, and does not create any rights in the Nicaraguan Concessions for Jeff Roberts.



On
September 8, 2009 the Company entered into a Revenue Sharing Agreement with Thompson Knight Global Energy Services (“Thompson
Knight”) to assist the Company with its technical studies of gas and oil holdings in Nicaragua and managing and assisting
in the Farmout. Infinity assigned to Thompson Knight a monthly payment (the “RSP”) equal to the revenue derived from
one percent (1%) of Infinity’s share of the hydrocarbons produced at the wellhead from the Nicaraguan Concessions. The RSP
will bear its proportionate share of all costs incurred to deliver the hydrocarbons to the point of sale to an unaffiliated purchaser,
including its share of production, severance and similar taxes, and certain additional costs. The RSP will be paid to Thompson
Knight by the last day of each month based on the revenue received by Infinity from the purchaser of the production during the
previous month from the Nicaraguan Concessions. The Revenue Agreement does not create any obligation for Infinity to maintain
or develop the Nicaraguan Concessions, and does not create any rights in the Nicaraguan Concessions for Thompson Knight.



Lack
of Compliance with Law Regarding Domestic Properties



Infinity
is not in compliance with existing federal, state and local laws, rules and regulations for its domestic properties and this could
have a material or significantly adverse effect upon the liquidity, capital expenditures, earnings or competitive position of
Infinity. For the year ended December 31, 2008 the remaining values of Infinity-Texas and Infinity-Wyoming were written down to
zero as the Company focused solely on the development of the Nicaraguan Concessions. Management believes the estimate of the Company’s
asset retirement obligations consisting of costs related to the plugging of wells, the removal of facilities and equipment, and
site restoration on oil and gas properties is sufficient to cover any noncompliance liabilities. The Company no longer carries
insurance on the domestic properties.



Contingent
Fees



In
addition to the Revenue Sharing Agreement with Thompson Knight to assist the Company with its technical studies of gas and oil
holdings in Nicaragua and managing and assisting in the Farmout, the Company agreed to compensate Thompson Knight a success fee
of 5% of the upfront cash fee paid to Infinity by a third party earning an interest in the Nicaragua asset up to $20 million and
10% of any amount exceeding the $20 million. A 2% success fee would be paid to Thompson Knight of the remaining cash investment
in subsequent years.



Litigation



The
Company is subject to numerous claims and legal actions in which vendors are claiming breach of contract due to the Company’s
failure to pay amounts due. The Company believes that it has made adequate provision for these claims in the accompanying financial
statements.



The
Company is currently involved in litigation as follows:



| | ● | Exterran
                                                                                                                                                                                                                                                                                        Energy
                                                                                                                                                                                                                                                                                        Solutions,
                                                                                                                                                                                                                                                                                        L.P.,
                                                                                                                                                                                                                                                                                        f/k/a
                                                                                                                                                                                                                                                                                        Hanover
                                                                                                                                                                                                                                                                                        Compression
                                                                                                                                                                                                                                                                                        Limited
                                                                                                                                                                                                                                                                                        Partnership,
                                                                                                                                                                                                                                                                                        who
                                                                                                                                                                                                                                                                                        filed
                                                                                                                                                                                                                                                                                        an
                                                                                                                                                                                                                                                                                        action
                                                                                                                                                                                                                                                                                        in
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        District
                                                                                                                                                                                                                                                                                        Court
                                                                                                                                                                                                                                                                                        of
                                                                                                                                                                                                                                                                                        Erath
                                                                                                                                                                                                                                                                                        County,
                                                                                                                                                                                                                                                                                        Texas,
                                                                                                                                                                                                                                                                                        number
                                                                                                                                                                                                                                                                                        CV30512,
                                                                                                                                                                                                                                                                                        on
                                                                                                                                                                                                                                                                                        March
                                                                                                                                                                                                                                                                                        31,
                                                                                                                                                                                                                                                                                        2010
                                                                                                                                                                                                                                                                                        against
                                                                                                                                                                                                                                                                                        Infinity
                                                                                                                                                                                                                                                                                        Oil
                                                                                                                                                                                                                                                                                        and
                                                                                                                                                                                                                                                                                        Gas
                                                                                                                                                                                                                                                                                        of
                                                                                                                                                                                                                                                                                        Texas,
                                                                                                                                                                                                                                                                                        Inc.,
                                                                                                                                                                                                                                                                                        Infinity
                                                                                                                                                                                                                                                                                        Energy
                                                                                                                                                                                                                                                                                        Resources,
                                                                                                                                                                                                                                                                                        Inc.,
                                                                                                                                                                                                                                                                                        Longhorn
                                                                                                                                                                                                                                                                                        Properties,
                                                                                                                                                                                                                                                                                        LLC,
                                                                                                                                                                                                                                                                                        and
                                                                                                                                                                                                                                                                                        Forest
                                                                                                                                                                                                                                                                                        Oil
                                                                                                                                                                                                                                                                                        Corporation.
                                                                                                                                                                                                                                                                                        Exterran
                                                                                                                                                                                                                                                                                        Energy
                                                                                                                                                                                                                                                                                        Solutions,
                                                                                                                                                                                                                                                                                        L.P.
                                                                                                                                                                                                                                                                                        provided
                                                                                                                                                                                                                                                                                        certain
                                                                                                                                                                                                                                                                                        gas
                                                                                                                                                                                                                                                                                        compressor
                                                                                                                                                                                                                                                                                        and
                                                                                                                                                                                                                                                                                        related
                                                                                                                                                                                                                                                                                        equipment
                                                                                                                                                                                                                                                                                        pursuant
                                                                                                                                                                                                                                                                                        to
                                                                                                                                                                                                                                                                                        a
                                                                                                                                                                                                                                                                                        Gas
                                                                                                                                                                                                                                                                                        Compressor/Production
                                                                                                                                                                                                                                                                                        Equipment
                                                                                                                                                                                                                                                                                        Master
                                                                                                                                                                                                                                                                                        Rental
                                                                                                                                                                                                                                                                                        &
                                                                                                                                                                                                                                                                                        Servicing
                                                                                                                                                                                                                                                                                        Agreement
                                                                                                                                                                                                                                                                                        with
                                                                                                                                                                                                                                                                                        Infinity
                                                                                                                                                                                                                                                                                        dated
                                                                                                                                                                                                                                                                                        January
                                                                                                                                                                                                                                                                                        3,
                                                                                                                                                                                                                                                                                        2005
                                                                                                                                                                                                                                                                                        in
                                                                                                                                                                                                                                                                                        Erath
                                                                                                                                                                                                                                                                                        County,
                                                                                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                                                                                        and
                                                                                                                                                                                                                                                                                        is
                                                                                                                                                                                                                                                                                        claiming
                                                                                                                                                                                                                                                                                        breach
                                                                                                                                                                                                                                                                                        of
                                                                                                                                                                                                                                                                                        contract
                                                                                                                                                                                                                                                                                        for
                                                                                                                                                                                                                                                                                        failure
                                                                                                                                                                                                                                                                                        to
                                                                                                                                                                                                                                                                                        pay
                                                                                                                                                                                                                                                                                        amounts
                                                                                                                                                                                                                                                                                        due.
                                                                                                                                                                                                                                                                                        The
                                                                                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                                                                                        has
                                                                                                                                                                                                                                                                                        included
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        impact
                                                                                                                                                                                                                                                                                        of
                                                                                                                                                                                                                                                                                        this
                                                                                                                                                                                                                                                                                        litigation
                                                                                                                                                                                                                                                                                        as
                                                                                                                                                                                                                                                                                        liabilities
                                                                                                                                                                                                                                                                                        in
                                                                                                                                                                                                                                                                                        its
                                                                                                                                                                                                                                                                                        accounts
                                                                                                                                                                                                                                                                                        payable
                                                                                                                                                                                                                                                                                        because
                                                                                                                                                                                                                                                                                        it
                                                                                                                                                                                                                                                                                        does
                                                                                                                                                                                                                                                                                        not
                                                                                                                                                                                                                                                                                        dispute
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        amount
                                                                                                                                                                                                                                                                                        owed.
                                                                                                                                                                                                                                                                                        In
                                                                                                                                                                                                                                                                                        2009
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                                                                                        recorded
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        amount
                                                                                                                                                                                                                                                                                        claimed.
                                                                                                                                                                                                                                                                                        The
                                                                                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                                                                                        will
                                                                                                                                                                                                                                                                                        seek
                                                                                                                                                                                                                                                                                        to
                                                                                                                                                                                                                                                                                        settle
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        lawsuit
                                                                                                                                                                                                                                                                                        when
                                                                                                                                                                                                                                                                                        it
                                                                                                                                                                                                                                                                                        has
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        financial
                                                                                                                                                                                                                                                                                        resources
                                                                                                                                                                                                                                                                                        to
                                                                                                                                                                                                                                                                                        do
                                                                                                                                                                                                                                                                                        so.
                                                                                                                                                                                                                                                                                        The
                                                                                                                                                                                                                                                                                        suit
                                                                                                                                                                                                                                                                                        is
                                                                                                                                                                                                                                                                                        in
                                                                                                                                                                                                                                                                                        the
                                                                                                                                                                                                                                                                                        discovery
                                                                                                                                                                                                                                                                                        stage.
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F-12









| | ● | In
                                                                                                                                                                                                                        October
                                                                                                                                                                                                                        2012
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        State
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        filed
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        lawsuit
                                                                                                                                                                                                                        naming
                                                                                                                                                                                                                        Infinity-Texas,
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        corporate
                                                                                                                                                                                                                        officers
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Infinity-Texas,
                                                                                                                                                                                                                        seeking
                                                                                                                                                                                                                        $30,000
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        reclamation
                                                                                                                                                                                                                        costs
                                                                                                                                                                                                                        associated
                                                                                                                                                                                                                        with
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        single
                                                                                                                                                                                                                        well,
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        addition
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        administrative
                                                                                                                                                                                                                        expenses
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        penalties.
                                                                                                                                                                                                                        The
                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        engaged
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        negotiations
                                                                                                                                                                                                                        with
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        State
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        late
                                                                                                                                                                                                                        2012
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        early
                                                                                                                                                                                                                        2013
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        reached
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        settlement
                                                                                                                                                                                                                        agreement
                                                                                                                                                                                                                        that
                                                                                                                                                                                                                        would
                                                                                                                                                                                                                        reduce
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        aggregate
                                                                                                                                                                                                                        liability,
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        this
                                                                                                                                                                                                                        action
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        any
                                                                                                                                                                                                                        extension
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        this
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        other
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        wells,
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        $45,103,
                                                                                                                                                                                                                        which
                                                                                                                                                                                                                        amount
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        been
                                                                                                                                                                                                                        paid.
                                                                                                                                                                                                                        Certain
                                                                                                                                                                                                                        performance
                                                                                                                                                                                                                        obligations
                                                                                                                                                                                                                        remain
                                                                                                                                                                                                                        which
                                                                                                                                                                                                                        must
                                                                                                                                                                                                                        be
                                                                                                                                                                                                                        satisfied
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        2013
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        order
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        finally
                                                                                                                                                                                                                        settle
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        dismiss
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        matter.
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| |  | Pending
                                                                                                                                         satisfactory
                                                                                                                                         performance
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         performance
                                                                                                                                         obligations
                                                                                                                                         and
                                                                                                                                         their
                                                                                                                                         acceptance
                                                                                                                                         by
                                                                                                                                         the
                                                                                                                                         State
                                                                                                                                         of
                                                                                                                                         Texas,
                                                                                                                                         the
                                                                                                                                         officers
                                                                                                                                         retain
                                                                                                                                         potential
                                                                                                                                         liability
                                                                                                                                         on
                                                                                                                                         the
                                                                                                                                         above
                                                                                                                                         matter,
                                                                                                                                         and
                                                                                                                                         the
                                                                                                                                         Company
                                                                                                                                         has
                                                                                                                                         indemnified
                                                                                                                                         the
                                                                                                                                         officers
                                                                                                                                         for
                                                                                                                                         this
                                                                                                                                         potential
                                                                                                                                         liability.
                                                                                                                                         Therefore
                                                                                                                                         these
                                                                                                                                         liabilities,
                                                                                                                                         to
                                                                                                                                         the
                                                                                                                                         extent
                                                                                                                                         they
                                                                                                                                         might
                                                                                                                                         become
                                                                                                                                         actual,
                                                                                                                                         are
                                                                                                                                         the
                                                                                                                                         obligations
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         Company.
                                                                                                                                         Management
                                                                                                                                         estimates
                                                                                                                                         that
                                                                                                                                         the
                                                                                                                                         liabilities
                                                                                                                                         associated
                                                                                                                                         with
                                                                                                                                         this
                                                                                                                                         matter
                                                                                                                                         will
                                                                                                                                         not
                                                                                                                                         exceed
                                                                                                                                         $780,000,
                                                                                                                                         calculated
                                                                                                                                         as
                                                                                                                                         $30,000
                                                                                                                                         for
                                                                                                                                         each
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         26
                                                                                                                                         Infinity-Texas
                                                                                                                                         operated
                                                                                                                                         wells.
                                                                                                                                         This
                                                                                                                                         related
                                                                                                                                         liability,
                                                                                                                                         less
                                                                                                                                         the
                                                                                                                                         payment
                                                                                                                                         made
                                                                                                                                         to
                                                                                                                                         the
                                                                                                                                         State
                                                                                                                                         of
                                                                                                                                         Texas
                                                                                                                                         in
                                                                                                                                         2012
                                                                                                                                         in
                                                                                                                                         the
                                                                                                                                         amount
                                                                                                                                         of
                                                                                                                                         $45,103,
                                                                                                                                         is
                                                                                                                                         classified
                                                                                                                                         as
                                                                                                                                         officer
                                                                                                                                         indemnification
                                                                                                                                         liability
                                                                                                                                         on
                                                                                                                                         the
                                                                                                                                         consolidated
                                                                                                                                         balance
                                                                                                                                         sheets.
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| | ● | Tim
                                                                                                                                                                Berge,
                                                                                                                                                                who
                                                                                                                                                                filed
                                                                                                                                                                an
                                                                                                                                                                action
                                                                                                                                                                in
                                                                                                                                                                the
                                                                                                                                                                District
                                                                                                                                                                Court,
                                                                                                                                                                City
                                                                                                                                                                and
                                                                                                                                                                County
                                                                                                                                                                of
                                                                                                                                                                Denver
                                                                                                                                                                Colorado
                                                                                                                                                                number
                                                                                                                                                                09CV9566,
                                                                                                                                                                was
                                                                                                                                                                granted
                                                                                                                                                                a
                                                                                                                                                                default
                                                                                                                                                                judgment
                                                                                                                                                                on
                                                                                                                                                                November
                                                                                                                                                                8,
                                                                                                                                                                2010
                                                                                                                                                                against
                                                                                                                                                                Infinity
                                                                                                                                                                Energy
                                                                                                                                                                Resources,
                                                                                                                                                                Inc.
                                                                                                                                                                in
                                                                                                                                                                the
                                                                                                                                                                amount
                                                                                                                                                                of
                                                                                                                                                                $304,921
                                                                                                                                                                plus
                                                                                                                                                                costs.
                                                                                                                                                                Mr.
                                                                                                                                                                Berge
                                                                                                                                                                provided
                                                                                                                                                                certain
                                                                                                                                                                geological
                                                                                                                                                                services
                                                                                                                                                                to
                                                                                                                                                                Infinity
                                                                                                                                                                Oil
                                                                                                                                                                and
                                                                                                                                                                Gas
                                                                                                                                                                of
                                                                                                                                                                Texas,
                                                                                                                                                                Inc.
                                                                                                                                                                and
                                                                                                                                                                claimed
                                                                                                                                                                breach
                                                                                                                                                                of
                                                                                                                                                                contract
                                                                                                                                                                for
                                                                                                                                                                failure
                                                                                                                                                                to
                                                                                                                                                                pay
                                                                                                                                                                amounts
                                                                                                                                                                he
                                                                                                                                                                alleged
                                                                                                                                                                were
                                                                                                                                                                due.
                                                                                                                                                                The
                                                                                                                                                                Company
                                                                                                                                                                was
                                                                                                                                                                unable
                                                                                                                                                                to
                                                                                                                                                                defend
                                                                                                                                                                itself
                                                                                                                                                                in
                                                                                                                                                                this
                                                                                                                                                                matter
                                                                                                                                                                due
                                                                                                                                                                to
                                                                                                                                                                limited
                                                                                                                                                                financial
                                                                                                                                                                resources
                                                                                                                                                                even
                                                                                                                                                                though
                                                                                                                                                                it
                                                                                                                                                                believes
                                                                                                                                                                that
                                                                                                                                                                it
                                                                                                                                                                had
                                                                                                                                                                meritorious
                                                                                                                                                                defenses.
                                                                                                                                                                The
                                                                                                                                                                Company
                                                                                                                                                                has
                                                                                                                                                                included
                                                                                                                                                                the
                                                                                                                                                                impact
                                                                                                                                                                of
                                                                                                                                                                this
                                                                                                                                                                litigation
                                                                                                                                                                as
                                                                                                                                                                an
                                                                                                                                                                accrued
                                                                                                                                                                liability
                                                                                                                                                                in
                                                                                                                                                                the
                                                                                                                                                                accompanying
                                                                                                                                                                balance
                                                                                                                                                                sheet.
                                                                                                                                                                On
                                                                                                                                                                October
                                                                                                                                                                17,
                                                                                                                                                                2013,
                                                                                                                                                                the
                                                                                                                                                                Company
                                                                                                                                                                filed
                                                                                                                                                                a
                                                                                                                                                                motion
                                                                                                                                                                in
                                                                                                                                                                the
                                                                                                                                                                District
                                                                                                                                                                Court
                                                                                                                                                                of
                                                                                                                                                                Johnson
                                                                                                                                                                County,
                                                                                                                                                                Kansas
                                                                                                                                                                seeking
                                                                                                                                                                to
                                                                                                                                                                set
                                                                                                                                                                aside
                                                                                                                                                                the
                                                                                                                                                                default
                                                                                                                                                                judgment.
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Note
8 — Income Taxes



The
Company appealed an assessment of Kansas corporate income tax that had been issued by the Department of Revenue for the tax year
ended December 31, 2006 in the amount of approximately $653,000, which was accrued for and was reported under accrued liabilities
in the consolidated balance sheet at December 31, 2012. On July 30, 2013, the Kansas Department of Revenue issued a letter to
the Company advising it that it no longer owed any corporate income tax to the State of Kansas and has released the Company from
the payment of such taxes. Consequently, the related accrual was reversed and an income tax benefit of $653,000 was recorded for
the three and nine months ended September 30, 2013.



For
income tax purposes, the Company has net operating loss carry-forwards of approximately $82,285,000 as of January 1, 2013, which
are expected to expire from 2025 through 2028. The Company has provided for a valuation allowance due to the uncertainty of realizing
the tax benefits from its net deferred tax asset.



Note
9 — Sale of Infinity-Texas, Related Potential Litigation, and Discontinued Operations Reporting



On
July 31, 2012, the Company sold 100% of the stock of its wholly-owned subsidiary, Infinity Oil and Gas of Texas (Infinity-Texas)
to an individual, the single member of a limited liability company which purchased the oil and gas properties of Infinity-Texas
in 2011. The terms of the Stock Purchase Agreement with the purchaser are that purchaser would acquire 100% of the stock of Infinity-Texas
for $1.00 and thereby assume all of it liabilities. At the date of the sale, Infinity-Texas had net liabilities of $5,152,111.
Management believes that there are certain contingent liabilities related to Texas properties for which the Company, the parent
entity, may retain financial responsibility. The liabilities are related to the reclamation of oil and gas properties and include
the cost of plugging inactive wells and removal and recovery of any remaining production equipment. Infinity-Texas, as an independent
entity following its sale, is primarily responsible for such obligations, but the officers of Infinity-Texas at the time such
wells were in production, in their capacities as signatories of certain regulatory filings, could be personally responsible.



The
assets, liabilities and operations of Infinity-Texas are reported on the accompanying consolidated financial statements as those
of a discontinued operation for the current and prior periods and dates presented. Because Infinity-Texas was not actively operating
during any of the periods presented, no overhead costs have been allocated to the discontinued operations during such periods.



F-13







The
analysis below sets forth the total assets and liabilities of Infinity-Texas as of the date of sale (July 31, 2012) and the determination
of the gain recognized on sale of discontinued operation of Infinity-Texas:



|Total liabilities of Infinity-Texas                                                                                                                                                                                                         |  | $ | 5,155,103                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|Total assets of Infinity-Texas                                                                                                                                                                                                              |  |   | 2,992                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  
|Net liabilities of Infinity-Texas                                                                                                                                                                                                           |  |   | 5,155,103                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  
|                                                                                                                                                                                                                                            |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  
|Potential liabilities related to indemnification of officers
    by the Company                                                                                                                                                             |  |   | (780,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | )
|                                                                                                                                                                                                                                            |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  
|Gain
                                                                     on sale of discontinued operation, during the three and nine
                                                                     months ended September 30, 2012 |  | $ | $
                                                                                                                                                                                                                                                                                                                                                                                                                                                                    4,372,111 |  



F-14







The operating
expenses of Infinity-Texas for the nine months ended September 30, 2012:



|General and administrative expenses |  | $ | -      | 
|----------------------------------- |  | - | ------ | 
|Accretion expense                   |  |   | 17,736 | 
|Interest expense                    |  |   | 44,553 | 
|Total expenses                      |  | $ | 62,289 | 



Note
10 — Related Party Transactions



The
corporate office was located in Denver, Colorado until November 2008 when the Denver office was closed. The corporate office moved
to the business office of the CFO of the Company in Overland Park, Kansas. The Company currently does not have any employees and
the staff of the CFO provided the office services until May 2013. These services were billed at the CFO firm’s standard
billing rate plus out-of-pocket expenses. For the quarters ended September 30, 2013 and 2012, the Company was billed $0 and $59,745,
respectively and $0 and $203,328 for the nine months ended September 30, 2013 and 2012, respectively. The amount due to the CFO’s
firm for services provided was $767,407 at September 30, 2013 and $767,407 at December 31, 2012, is included in accrued liabilities
at both dates.



The
Company entered into a subordinated loan with Off-Shore in the aggregate amount of $1,275,000 for funds for the Nicaraguan Concessions.
This note was satisfied by the Company’s issuance of shares of Series B redeemable convertible preferred stock effective
April 13, 2012 to Off-Shore (see Note 3). The managing partner of Off-Shore and the CFO are partners in the accounting firm which
the Company uses for its corporate office. Off-Shore has assigned all of its shares of the Series B preferred stock to its members
in connection with its dissolution.



As
of September 30, 2013 and December 31, 2012, the Company had accrued compensation to its officers and directors of $770,208 and
$705,208, respectively.



As
discussed in Note 2, on August 28, 2012, the Company borrowed $250,000 from an entity that is 49% owned by a board member of another
corporation for which Infinity’s CEO serves as CEO and chairman of the board. The Company issued a short-term note bearing
interest at 8% per annum and maturing February 28, 2013 to such party. The note and all accrued interest was repaid on its maturity
date in accordance with the terms of the note. In connection with the transaction, the Company issued the lender a warrant exercisable
to purchase 120,000 shares of the Company’s common stock at a price of $2.50 per share, expiring August 2017.



As
discussed in Note 2, the Company entered into a line-of-credit facility on September 23, 2013 that provides for borrowings on
a revolving basis up to a maximum of $50,000. The entity providing the credit facility is owned by an officer of another corporation
for which Infinity’s CEO serves as CEO and chairman of the board. The facility is unsecured, bears interest at 8% per annum
and expires on November 23, 2013. The Company granted the holder a common stock purchase warrant exercisable to acquire 15,000
shares of common stock at a price of $3.50 per share. The warrant is immediately exercisable and terminates on September 23, 2015.
The Company estimated the fair value of these warrants at $32,734 of the date, which amount has been recorded as debt issuance
costs, classified in prepaid expenses and amortized ratably over the term of the credit facility. Amortization of the debt issuance
cost totaled $3,818 for the three and nine months ended September 30, 2013 and the remaining unamortized balance was $28,916 as
of September 30, 2013.



Note
11 — Subsequent Events



On
October 10, 2013, the Company issued 31,521 shares of common stock pursuant to the cashless exercise of 125,000 warrants to purchase
common stock.



On
October 21, 2013, the Company entered into a consulting agreement with an entity to provide investor relations services. The agreement
has an initial 90-day term with automatic extensions unless terminated by either party with 30-day written notice. The Company
will compensate the consultant with a monthly payment of $7,000 (plus out-of-pocket expenses) and a one-time issuance of 15,000
shares of common stock.



On November 4, 2013, the
Company granted the entity providing the line of credit facility set forth in Note 9 - Related Party Transactions a warrant exercisable
to purchase an additional 10,000 shares on the same terms as the original warrant in consideration for the entity increasing the
facility to $75,000.





F-15









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



The
following information should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes presented elsewhere
in this Report. Infinity follows the full-cost method of accounting for oil and gas properties. See “Summary of Significant
Accounting Policies,” included in Note 1 to the Consolidated Financial Statements for the Three and Nine months Ended September
30, 2013 and the Year Ended December 31, 2012.



Infinity
Energy Resources, Inc. and its subsidiaries, (collectively, “Infinity,” “Company,” “we,” “us”
and “our”) are engaged in the acquisition and exploration of oil and gas properties offshore Nicaragua in the Caribbean
Sea.



On
March 5, 2009 Infinity signed the contracts relating to its Nicaraguan Concessions. Infinity has submitted an environmental study
and the development of geological information from reprocessing and additional evaluation of existing 2-D seismic data that was
acquired over the Nicaraguan Concessions located offshore. On April 11, 2013, the Company received its Environmental Permit. Infinity
is currently seeking offers from other industry operators for interests in the acreage in exchange for cash and a carried interest
in exploration and development operations or other arrangements. The funds raised through the subordinated note transaction and
Forbearance advances from the bank were used to fund these expenses. No assurance can be given that these funds will be sufficient
to cover the exploration and development cost until a partner is found. The Company’s commitment to acquire, process and
interpret additional 2-D seismic data must be completed by January 2014 or the Nicaragua Concessions will be at risk of forfeiture.
The Company must successfully contract with a company that has the capabilities to perform, process and interpret the 2-D seismic
activities required by the work plan and consequently the Company must raise the necessary funding to negotiate, close and pay
for the contract necessary to fulfill such requirements. These are substantial operational and financial requirements that the
Company must satisfy prior to January 2014 in order to maintain its Nicaragua Concessions and there can be no assurance that it
will be able to do so.



We
do not have any off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations)
or other relationships with any unconsolidated entities or other persons that may have material current or future effect on financial
conditions, changes in the financial conditions, results of operations, liquidity, capital expenditures, capital resources, or
significant components of revenue or expenses.



FORWARD-LOOKING
STATEMENTS



This
Report for the three months ended September 30, 2013, contains certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended
to be covered by the safe harbors created thereby. To the extent there are statements that are not recitations of historical fact,
such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking
statement, where we express an expectation or belief as to future results or events, such expectation or belief is expressed in
good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief
will be achieved or accomplished.



The
actual results or events may differ materially from those anticipated and as reflected in forward-looking statements included
herein. Factors that may cause actual results or events to differ from those anticipated in the forward-looking statements included
in this Report include the Risk Factors described in Item 1A of our Registration Statement on Form 10 filed on May 13, 2011, as
amended on July 1, 2011 and April 4, 2012.



3









Factors
that could cause or contribute to our actual results differing materially from those discussed in this Report or for our stock
price to be adversely affected include, but are not limited to: (i) we have a history of losses and are experiencing substantial
liquidity problems; (ii) we have been unable to satisfy most of our current liabilities; (iii) we require working capital for
our operations for the next 12 months and capital to continue our exploration and development efforts on the Nicaraguan Concessions
and there can be no assurances we will be able to obtain it or do so on terms favorable to us; (iv) we and our independent registered
public accounting firm have concluded that there exists substantial doubt about our ability to continue as a going concern; (v)
our Nicaraguan Concessions and planned future exploration activities are in a country with a developing economy and are subject
to the risks of political and economic instability associated with such economies; (vi) exploration and development of our Nicaraguan
Concessions will require large amounts of capital or a commercial relationship with an industry operator which we may not be able
to obtain; (vii) we may not have sufficient resources to conduct seismic mapping on our Nicaraguan Concessions or be able to meet
the deadlines to complete such mapping; (viii) the oil and gas exploration business involves a high degree of business and financial
risk; (ix) we will be subject to regulations affecting our activities with the Nicaraguan Concessions; (x) our operations may
be adversely affected by changes in the fiscal regime of Nicaragua; (xi) we are continuing to negotiate with our creditors and
may face additional claims in the future; (xii) oil prices may be affected by regional factors; (xiii) any future production will
be contingent on successful exploration, development and acquisitions to establish reserves and revenue in the future; (xiv) the
oil and gas industry is highly competitive; (xv) exploratory drilling is an uncertain process with many risks; (xvi) oil and gas
prices are volatile, and declines in prices would hurt our revenues and ability to achieve profitable operations; (xvii) our common
stock is traded on the Over the Counter QB Tier Market (OTCQB); (xviii) we depend on key personnel; (xix) sufficient voting power
by coalitions of a few of our larger stockholders to make corporate governance decisions that could have significant effect on
us and the other stockholders; (xx) sale of substantial amounts of our common stock may have a depressive effect on the market
price of the outstanding shares of our common stock; (xxi) our issuance of common and Series A redeemable convertible preferred
stock to Amegy and Series B redeemable convertible preferred stock diluted the ownership interests of our existing stockholders
and the possible issuance of additional common stock subject to options and warrants that may dilute the interest of stockholders;
(xxii) our ability to comply with Sarbanes-Oxley Act of 2002 Section 404 if we are required to do so; (xxiii) our nonpayment of
dividends and lack of plans to pay dividends in the future; (xxiv) future sale of a substantial number of shares of our common
stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital;
(xxv) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of
our common stock; (xxvi) our stock price is likely to be highly volatile due to a number of factors, including a relatively limited
public float; and (xxvii) indemnification of our officers and directors.



Readers
are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date
of this Report. We believe the information contained in this Form 10-Q to be accurate as of the date of this Report. Changes may
occur after that date, and we will not update that information except as required by law in the normal course of our public disclosure
practices.



2013
Operational and Financial Objectives



Corporate
Activities



On
April 14, 2011, we announced that we had completed and filed with the Nicaraguan government the Environmental Impact Assessment
(“EIA”) covering proposed seismic activities on the 1.4 million-acres in our Nicaraguan Concessions. The filing of
the EIA was followed by a “comment period” during which there was interaction among Infinity; the Ministerio
del Ambiente y los Recursos Naturales de Nicaragua, an agency of the Nicaraguan government; and the autonomous regions of Nicaragua
that are nearest the Nicaraguan Concessions. In accordance with the provisions of the Nicaraguan Concessions,Phase II
of Sub Period 1 started April 13, 2013, when the Nicaraguan Government approved the EIA. Thus,Infinity
is now able to commence additional 2-D and 3-D seismic mapping activities in the area.The minimum cash requirements for
the next approximate twelve-month period related to the Nicarguan Concessions will be $1,968,000, of which $1,635,000 is related
to seismic and $333,000 is related to the training fees, area fees and other direct costs under the Nicarguan Concession. The
Company estimates that the actual cost of seismic activities for the acreage will range between $4 million and $8 million depending
upon the amount and combination of 2D and 3D seismic performed over the next approximate twelve-month period. The Company estimates
that its minimum working capital requirements for the next twelve-month period will be $600,000 to maintain corporate operations,
exclusive of the Nicaraguan Concessions and payment of existing third party obligations. See Liquidity and Capital Resources below.



The
Company conducted an environmental study and developed geological information from the reprocessing and additional evaluation
of existing 2-D seismic data acquired over its Nicaraguan Concessions. It issued letters of credit totaling $851,550 for this
and additional work on the leases as required by the Nicaraguan Concessions. The Company has completed certain activity under
the initial work plan to date, but there remain significant additional requirements to comply with the Nicaraguan Concessions.
The Company intends to seek joint venture or working interest partners prior to the commencement of any significant exploration
or drilling operations on the Nicaraguan Concessions. The Company’s commitment to acquire, process and interpret additional
2-D seismic data must be completed by January 2014 or the Nicaragua Concessions will be at risk of forfeiture. The Company must
successfully contract with a company that has the capabilities to perform, process and interpret the 2-D seismic activities required
by the work plan and consequently the Company must raise the necessary funding to negotiate, close and pay for the contract necessary
to fulfill such requirements. These are substantial operational and financial requirements that the Company must satisfy prior
to January 2014 in order to maintain its Nicaragua Concessions and there can be no assurance that it will be able to do so.



4







Subject
to obtaining sufficient capital, we plan to commence our seismic mapping activities in the fourth quarter of 2013. The additional
2-D and 3-D seismic program will seek to further evaluate the structures that were previously identified with historical 2-D seismic
in the Eocene Zone. Our geological consultants have estimated that these Eocene structures may contain recoverable oil in place.
In addition, 3-D seismic should provide our first look at the potential for oil resources in the Cretaceous Zone, which we could
not evaluate using less precise 2-D seismic mapping.



We
intend to finance our business strategy through external financing, which may include debt and equity capital raised in public
and private offerings, joint ventures, sale of working or other interests, employment of working capital and cash flow from operations,
if any, net proceeds from the sales of assets.



Our
ability to complete these activities is dependent on a number of factors, including, but not limited to, the availability of the
capital resources required to fund the activity; and the availability of third party contractors for the services necessary to
provide the required services.



Results
of operations for the three months ended September 30, 2013 compared to the three months ended September 30, 2012



Infinity
incurred a net loss applicable to common shareholders of $639,477, or $(0.03) per diluted share, for the three months ended September
30, 2013 compared to net income of $3,482,083, or $0.17 per diluted share, for the three months ended September 30, 2012.The
Company’s Series A and Series B redeemable convertible preferred stock were issued on April 13, 2012, and therefore were
outstanding for the entire three months ended September 30, 2013 and 2012. In 2013, the 6% cumulative dividend accrued relative
to the period, as well as the accretion in the value ascribed to the Series A and Series B preferred stock between those dates
(which represent value attributable to holders of the preferred rather than common shares) increased the Company’s actual
net loss by $795,261 to arrive at the loss applicable to common shareholders in the determination of basic and diluted net loss
per share.



The
Company’s consolidated statement of operations for the three months ended September 30, 2012 segregate the operating expenses
of its formerly wholly owned subsidiary, Infinity-Texas, which was sold effective July 31, 2012, as $6,776 representing a “Loss
of Discontinued Operation” and a “Gain from Sale of Discontinued Operation” of $4,372,111. The gain on sale
of the discontinued operation was the primary factor that led to the net income of $3,482,083, or $0.17 per diluted share, for
the three months ended September 30, 2012.



Revenue



The
Company had no revenues in either the three months ended September 30, 2013 or 2012. The Company focused solely on the exploration,
development and financing of the Nicaraguan Concessions.



General
and Administrative Expenses



General
and administrative expenses in the three months ended September 30, 2013 were $456,963 compared with $152,523 for the same period
in 2012. This increase is substantially attributable to stock-based compensation cost reflected in the three months ended September
30, 2013 in the aggregate amount of $353,730, which results from the adjustment of the fair value of, and recognition of progressive
vesting of, certain stock options awarded in November 2012, May 2013 and August 26, 2013 to Company officers, directors, consultants
and legal counsel. This additional cost is reflected in the three months ended September 30, 2013 as compensation of ($314,307)
and legal ($39,423) expense. There was no stock compensation expense recorded in the three and nine months ended September 30,
2012.



Other
income (expense)



Interest
expense net of amounts capitalized to oil and gas properties increased from $18,542 for the three months ended September 30, 2012
to $17,175 for the three months ended September 30, 2013. The decrease is relatively small at approximately 7%, and the interest
expense in 2013 and 2012 is largely attributable to interest accrued on borrowings on various short-term notes payable used for
working capital purposes.



The
change in derivative fair value, which can be either an “other expense” or an “other income” item, varied
from the three months ended September 30, 2012, when it was an expense of $19,129, to $-0- for the same period in 2013. During
the three months ended September 30, 2012, the Company had warrants and related derivative liabilities recorded related to short-term
notes payable that contained ratcheting provisions. The impact of the changes in fair value of the various derivative liabilities
outstanding during the 2012 period was a value (an expense item) of $19,129. There was no derivative liability associated with
warrants on notes during the three months ended September 30, 2013 because all such notes were repaid or converted to equity earlier
in 2013 prior to the three months ended September 30, 2013 .



5









Income
Tax



The
Company had previously appealed an assessment of Kansas corporate income tax that had been issued by the Department of Revenue
for the tax year ended December 31, 2006 in the amount of approximately $653,000 which was accrued for and was reported under
accrued liabilities in the consolidated balance sheet at December 31, 2012. On July 30, 2013, the Kansas Department of Revenue
issued a letter to the Company advising it that it no longer owed any corporate income tax to the State of Kansas and has released
the Company from the payment of such taxes. Consequently, the related accrual was reversed and an income tax benefit was recorded
in three months ended September 30, 2013.



Infinity
reflected no net income tax benefit or expense in the three-month periods ended September 30, 2013 or 2012 other than the Kansas
State income tax benefit described above. The net operating loss incurred during the three months ended September 30, 2013 and
the net income generated during the three months ended September 30, 2012 adjusted Infinity’s gross deferred tax asset related
to its future ability to utilize net operating losses to reduce future income tax outlays. Due to uncertainty as to the ultimate
ability of the Company to utilize its net deferred tax asset, the Company has recognized no net deferred tax benefit, and has,
as a result, offset its gross deferred tax benefit with a 100% valuation allowance.



Results
of operations for the six ended September 30, 2013 compared to the nine months ended September 30, 2012



Infinity
incurred a net loss applicable to common shareholders of $4,340,465, or $(0.21) per diluted share, for the nine months ended September
30, 2013 compared to net income of $2,137,769, or $0.11 per diluted share, for the nine months ended September 30, 2012.The
Company’s Series A and Series B redeemable convertible preferred stock, issued April 13, 2012, were therefore not outstanding
for the entire nine months ended September 30, 2012, but were outstanding for the entire nine months ended September 30, 2013.
In 2013, the 6% cumulative dividend accrued relative to the period and the accretion in the value ascribed to the Series A and
Series B preferred shares between those dates (which represent value attributable to holders of the preferred rather than common
shares) increased the Company’s actual net loss by $2,314,716 to arrive at the loss applicable to common shareholders in
the determination of basic and diluted net loss per share as compared to $1,284,237 for the comparable period in 2012.



The
Company’s consolidated statement of operations for the nine months ended September 30, 2012 segregate the operating expenses
of its formerly 100% owned subsidiary, Infinity-Texas, which was sold in its entirety effective July 31, 2012, as $62,289 representing
the “Loss of Discontinued Operation” and a “Gain from Sale of Discontinued Operation” of $4,372,111. The
gain on sale of the discontinued operation was the primary factor that led to the net income of $2,137,769, or $0.11 per diluted
share, for the nine months ended September 30, 2012.



Revenue



The
Company had no revenues in either the nine months ending September 30, 2013 or 2012. The Company focused solely on the exploration,
development and financing of the Nicaraguan Concessions.



General
and Administrative Expenses



General
and administrative expenses in the nine months ended September 30, 2013 were $1,796,270 compared with $593,714 for the same period
in 2012. This increase is substantially attributable to stock-based compensation cost reflected in the nine months ended September
30, 2013 in the aggregate amount of $1,476,383, which results from the adjustment of the fair value of, and recognition of progressive
vesting of, certain stock options awarded in November 2012, May 2013 and August 2013 to Company officers, directors, consultants
and legal counsel. This additional cost is reflected in the three months ended September 30, 2013 as compensation ($1,347,532)
and legal ($128,851) expense.



6







Other
income (expense)



Interest
expense net of amounts capitalized to oil and gas properties increased from $364,758 for the nine months ended September 30, 2012
to $779,261 for the nine months ended September 30, 2013. The interest expense in the 2012 period was primarily related to the
debt to Amegy and Off-Shore, which was outstanding for the partial period in 2012 and was satisfied April 13, 2012 by the issuance
of Series A and B redeemable convertible preferred stock (see Note 3). The interest expense in 2013 is largely attributable to
interest accrued on, and amortization of debt discount and debt issuance costs related to borrowings on various short-term notes
payable used for working capital purposes, which aggregated $735,942 for the period.



The
change in derivative fair value, which can be either an “other expense” or an “other income” item, varied
significantly from the nine months ended September 30, 2012, when it was income of $99,556, to a loss of $24,410 for the same
period in 2013. The 2012 income effect resulted from a decrease during the period in the fair value of the derivative liability
related to the Amegy Warrant (see Note 3), which warrant was cancelled in April 2012 and thus was not outstanding during the nine
months ended September 30, 2013. During the nine months ended September 30, 2013, the Company had warrants and related derivative
liabilities recorded related to short-term notes payable. The combined impact of the changes in fair value of the various derivative
liabilities outstanding during the 2013 period was a decrease in such value (an expense item) of $24,410. The derivative liability
associated with warrants on notes that were outstanding during the nine months ended September 30, 2013 decreased in fair value
and all such notes were repaid as of September 30, 2013. The liability related to warrants issued in connection with the notes
repaid in the nine months ended September 30, 2013 decreased in fair value before the related note was repaid, at which date the
derivative liability, in accordance with generally accepted accounting principles, was effectively terminated and its balance
became a contribution to additional paid-in capital. All derivative liabilities have been terminated as a result of the repayment
of all related notes at September 30, 2013.



Income
Tax



The
Company had previously appealed an assessment of Kansas corporate income tax that had been issued by the Department of Revenue
for the tax year ended December 31, 2006 in the amount of approximately $653,000,which was accrued for and was reported under
accrued liabilities in the consolidated balance sheet at December 31, 2012. On July 30, 2013, the Kansas Department of Revenue
issued a letter to the Company advising it that it no longer owed any corporate income tax to the State of Kansas and has released
the Company from the payment of such taxes. Consequently, the related accrual was reversed and an income tax benefit was recorded
in nine months ended September 30, 2013.



Infinity
reflected no net income tax benefit or expense in the nine-month periods ended September 30, 2013 or 2012 other than the Kansas
State income tax benefit described above. The net operating loss incurred during the nine months ended September 30, 2013 and
the net income generated during the nine months ended September 30, 2012 adjusted Infinity’s gross deferred tax asset related
to its future ability to utilize net operating losses to reduce future income tax outlays. Due to uncertainty as to the ultimate
ability of the Company to utilize its net deferred tax asset, the Company has recognized no net deferred tax benefit, and has,
as a result, offset its gross deferred tax benefit with a 100% valuation allowance.



Liquidity
and Capital Resources; Going Concern



The
Company has a history of losses. The Company continues to have significant working capital deficits and continues to experience
substantial liquidity issues.



The
Company must meet significant aspects of the Nicaraguan Concessions’ work plan in the near term or risk the forfeiture of
the concessions. The Company has issued letters of credit totaling $851,550 for this and additional work on the leases as required
by the Nicaraguan Concessions. The Company has completed certain activity under the initial work plan to date but there remains
significant additional activities to comply with the Nicaraguan Concessions. The Company intends to seek joint venture or working
interest partners prior to the commencement of any significant exploration or drilling operations on the Nicaraguan Concessions.
The Company’s commitment to acquire, process and interpret additional 2-D seismic data must be completed by January 2014
or the Nicaragua Concessions will be at risk of forfeiture. The Company must successfully contract with a company that has the
capabilities to perform, process and interpret the 2-D seismic activities required by the work plan and consequently the Company
must raise the necessary funding to negotiate, close and pay for the contract necessary to fulfill such requirements. These are
substantial operational and financial requirements that the Company must satisfy prior to January 2014 in order to maintain its
Nicaragua Concessions and there can be no assurance that it will be able to do so.



Subject
to obtaining sufficient capital, we plan to commence our seismic mapping activities during the remainder of 2013. The additional
2-D and 3-D seismic program will seek to further evaluate the structures that were previously identified with historical 2-D seismic
in the Eocene Zone. Our geological consultants have estimated that these Eocene structures may contain recoverable oil in place.
In addition, 3-D seismic should provide our first look at the potential for oil resources in the Cretaceous Zone, which we could
not evaluate using less precise 2-D seismic mapping.



7









We
plan to raise capital to satisfy the foregoing needs through an offering of our equity or debt securities and/or through a commercial
relationship with other industry operators. Such commercial relationships may involve the granting of revenue or other interests
in exchange for cash and/or a carried interest in exploration and development activities or the creation of a joint venture or
other strategic partnership. There can be no assurance that we will obtain such funding or obtain it on terms acceptable to us.
Further, if we cannot meet our obligations with respect to the Nicaraguan Concessions, some of which are immediate, we will forfeit
our rights to them.



Due
to the uncertainties related to these matters, there exists substantial doubt about our ability to continue as a going concern.
The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset
carrying amounts or the amount and classifications of liabilities that might result should we be unable to continue as a going
concern.



Changes
in Internal Control Over Financial Reporting



There
have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that
have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



Internal
control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined
to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal
controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



(Not Applicable)



ITEM
4. CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



Our
Chief Executive Officer, Stanton Ross and Chief Financial Officer, Daniel F. Hutchins evaluated the effectiveness of our disclosures
(as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this Report. Based on the evaluation,
Messrs. Ross and Hutchins have concluded that the Company’s disclosure controls and procedures are not effective in assuring
that financial statement presentation and disclosure are in conformity with those which are required to be included in our periodic
SEC filings. The lack of timeliness is a material weakness which Management believes could be relieved with sufficient working
capital to allow full-time account ting staff or the equivalent.



Changes
in Internal Control Over Financial Reporting



There
have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter which
have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



Internal
control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined
to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal
controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.



8







PART
II



ITEM
1. LEGAL PROCEEDINGS



The
Company is currently involved in litigation as follows:



| | ● | Exterran
                                                                                                                                                                                                                                Energy
                                                                                                                                                                                                                                Solutions,
                                                                                                                                                                                                                                L.P.,
                                                                                                                                                                                                                                f/k/a
                                                                                                                                                                                                                                Hanover
                                                                                                                                                                                                                                Compression
                                                                                                                                                                                                                                Limited
                                                                                                                                                                                                                                Partnership,
                                                                                                                                                                                                                                who
                                                                                                                                                                                                                                filed
                                                                                                                                                                                                                                an
                                                                                                                                                                                                                                action
                                                                                                                                                                                                                                in
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                District
                                                                                                                                                                                                                                Court
                                                                                                                                                                                                                                of
                                                                                                                                                                                                                                Erath
                                                                                                                                                                                                                                County,
                                                                                                                                                                                                                                Texas,
                                                                                                                                                                                                                                number
                                                                                                                                                                                                                                CV30512,
                                                                                                                                                                                                                                on
                                                                                                                                                                                                                                March
                                                                                                                                                                                                                                31,
                                                                                                                                                                                                                                2010
                                                                                                                                                                                                                                against
                                                                                                                                                                                                                                Infinity
                                                                                                                                                                                                                                Oil
                                                                                                                                                                                                                                and
                                                                                                                                                                                                                                Gas
                                                                                                                                                                                                                                of
                                                                                                                                                                                                                                Texas,
                                                                                                                                                                                                                                Inc.,
                                                                                                                                                                                                                                Infinity
                                                                                                                                                                                                                                Energy
                                                                                                                                                                                                                                Resources,
                                                                                                                                                                                                                                Inc.,
                                                                                                                                                                                                                                Longhorn
                                                                                                                                                                                                                                Properties,
                                                                                                                                                                                                                                LLC,
                                                                                                                                                                                                                                and
                                                                                                                                                                                                                                Forest
                                                                                                                                                                                                                                Oil
                                                                                                                                                                                                                                Corporation.
                                                                                                                                                                                                                                Exterran
                                                                                                                                                                                                                                Energy
                                                                                                                                                                                                                                Solutions,
                                                                                                                                                                                                                                L.P.
                                                                                                                                                                                                                                provided
                                                                                                                                                                                                                                certain
                                                                                                                                                                                                                                gas
                                                                                                                                                                                                                                compressor
                                                                                                                                                                                                                                and
                                                                                                                                                                                                                                related
                                                                                                                                                                                                                                equipment
                                                                                                                                                                                                                                pursuant
                                                                                                                                                                                                                                to
                                                                                                                                                                                                                                a
                                                                                                                                                                                                                                Gas
                                                                                                                                                                                                                                Compressor/Production
                                                                                                                                                                                                                                Equipment
                                                                                                                                                                                                                                Master
                                                                                                                                                                                                                                Rental
                                                                                                                                                                                                                                &
                                                                                                                                                                                                                                Servicing
                                                                                                                                                                                                                                Agreement
                                                                                                                                                                                                                                with
                                                                                                                                                                                                                                Infinity
                                                                                                                                                                                                                                dated
                                                                                                                                                                                                                                January
                                                                                                                                                                                                                                3,
                                                                                                                                                                                                                                2005
                                                                                                                                                                                                                                in
                                                                                                                                                                                                                                Erath
                                                                                                                                                                                                                                County,
                                                                                                                                                                                                                                Texas
                                                                                                                                                                                                                                and
                                                                                                                                                                                                                                is
                                                                                                                                                                                                                                claiming
                                                                                                                                                                                                                                breach
                                                                                                                                                                                                                                of
                                                                                                                                                                                                                                contract
                                                                                                                                                                                                                                for
                                                                                                                                                                                                                                failure
                                                                                                                                                                                                                                to
                                                                                                                                                                                                                                pay
                                                                                                                                                                                                                                amounts
                                                                                                                                                                                                                                due.
                                                                                                                                                                                                                                The
                                                                                                                                                                                                                                Company
                                                                                                                                                                                                                                has
                                                                                                                                                                                                                                included
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                impacts
                                                                                                                                                                                                                                of
                                                                                                                                                                                                                                this
                                                                                                                                                                                                                                litigation
                                                                                                                                                                                                                                as
                                                                                                                                                                                                                                liabilities
                                                                                                                                                                                                                                in
                                                                                                                                                                                                                                its
                                                                                                                                                                                                                                accounts
                                                                                                                                                                                                                                payable
                                                                                                                                                                                                                                because
                                                                                                                                                                                                                                it
                                                                                                                                                                                                                                does
                                                                                                                                                                                                                                not
                                                                                                                                                                                                                                dispute
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                amount
                                                                                                                                                                                                                                owed.
                                                                                                                                                                                                                                In
                                                                                                                                                                                                                                2009
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                Company
                                                                                                                                                                                                                                recorded
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                amount
                                                                                                                                                                                                                                claimed.
                                                                                                                                                                                                                                The
                                                                                                                                                                                                                                Company
                                                                                                                                                                                                                                will
                                                                                                                                                                                                                                seek
                                                                                                                                                                                                                                to
                                                                                                                                                                                                                                settle
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                lawsuit
                                                                                                                                                                                                                                when
                                                                                                                                                                                                                                it
                                                                                                                                                                                                                                has
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                financial
                                                                                                                                                                                                                                resources
                                                                                                                                                                                                                                to
                                                                                                                                                                                                                                do
                                                                                                                                                                                                                                so.
                                                                                                                                                                                                                                The
                                                                                                                                                                                                                                suit
                                                                                                                                                                                                                                is
                                                                                                                                                                                                                                in
                                                                                                                                                                                                                                the
                                                                                                                                                                                                                                discovery
                                                                                                                                                                                                                                stage.
| | - | 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| | ● | In
                                                                                                                                                                                                                        October
                                                                                                                                                                                                                        2012
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        State
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        filed
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        lawsuit
                                                                                                                                                                                                                        naming
                                                                                                                                                                                                                        Infinity-Texas,
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        corporate
                                                                                                                                                                                                                        officers
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Infinity-Texas,
                                                                                                                                                                                                                        seeking
                                                                                                                                                                                                                        $30,000
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        reclamation
                                                                                                                                                                                                                        costs
                                                                                                                                                                                                                        associated
                                                                                                                                                                                                                        with
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        single
                                                                                                                                                                                                                        well,
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        addition
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        administrative
                                                                                                                                                                                                                        expenses
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        penalties.
                                                                                                                                                                                                                        The
                                                                                                                                                                                                                        Company
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        engaged
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        negotiations
                                                                                                                                                                                                                        with
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        State
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        late
                                                                                                                                                                                                                        2012
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        early
                                                                                                                                                                                                                        2013
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        reached
                                                                                                                                                                                                                        a
                                                                                                                                                                                                                        settlement
                                                                                                                                                                                                                        agreement
                                                                                                                                                                                                                        that
                                                                                                                                                                                                                        would
                                                                                                                                                                                                                        reduce
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        aggregate
                                                                                                                                                                                                                        liability,
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        this
                                                                                                                                                                                                                        action
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        any
                                                                                                                                                                                                                        extension
                                                                                                                                                                                                                        of
                                                                                                                                                                                                                        this
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        other
                                                                                                                                                                                                                        Texas
                                                                                                                                                                                                                        wells,
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        $45,103,
                                                                                                                                                                                                                        which
                                                                                                                                                                                                                        amount
                                                                                                                                                                                                                        has
                                                                                                                                                                                                                        been
                                                                                                                                                                                                                        paid.
                                                                                                                                                                                                                        Certain
                                                                                                                                                                                                                        performance
                                                                                                                                                                                                                        obligations
                                                                                                                                                                                                                        remain
                                                                                                                                                                                                                        which
                                                                                                                                                                                                                        must
                                                                                                                                                                                                                        be
                                                                                                                                                                                                                        satisfied
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        2013
                                                                                                                                                                                                                        in
                                                                                                                                                                                                                        order
                                                                                                                                                                                                                        to
                                                                                                                                                                                                                        finally
                                                                                                                                                                                                                        settle
                                                                                                                                                                                                                        and
                                                                                                                                                                                                                        dismiss
                                                                                                                                                                                                                        the
                                                                                                                                                                                                                        matter.
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| |  | Pending
                                                                                                                                         satisfactory
                                                                                                                                         performance
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         performance
                                                                                                                                         obligations
                                                                                                                                         and
                                                                                                                                         their
                                                                                                                                         acceptance
                                                                                                                                         by
                                                                                                                                         the
                                                                                                                                         State
                                                                                                                                         of
                                                                                                                                         Texas,
                                                                                                                                         the
                                                                                                                                         officers
                                                                                                                                         retain
                                                                                                                                         potential
                                                                                                                                         liability
                                                                                                                                         on
                                                                                                                                         the
                                                                                                                                         above
                                                                                                                                         matter,
                                                                                                                                         and
                                                                                                                                         the
                                                                                                                                         Company
                                                                                                                                         has
                                                                                                                                         indemnified
                                                                                                                                         them
                                                                                                                                         for
                                                                                                                                         such
                                                                                                                                         potential
                                                                                                                                         liability.
                                                                                                                                         Therefore
                                                                                                                                         these
                                                                                                                                         liabilities,
                                                                                                                                         to
                                                                                                                                         the
                                                                                                                                         extent
                                                                                                                                         they
                                                                                                                                         might
                                                                                                                                         become
                                                                                                                                         actual,
                                                                                                                                         are
                                                                                                                                         the
                                                                                                                                         obligations
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         Company.
                                                                                                                                         Management
                                                                                                                                         estimates
                                                                                                                                         that
                                                                                                                                         the
                                                                                                                                         liabilities
                                                                                                                                         associated
                                                                                                                                         with
                                                                                                                                         this
                                                                                                                                         matter
                                                                                                                                         will
                                                                                                                                         not
                                                                                                                                         exceed
                                                                                                                                         $780,000,
                                                                                                                                         calculated
                                                                                                                                         as
                                                                                                                                         $30,000
                                                                                                                                         for
                                                                                                                                         each
                                                                                                                                         of
                                                                                                                                         the
                                                                                                                                         26
                                                                                                                                         Infinity-Texas
                                                                                                                                         operated
                                                                                                                                         wells.
                                                                                                                                         This
                                                                                                                                         related
                                                                                                                                         liability,
                                                                                                                                         less
                                                                                                                                         the
                                                                                                                                         payment
                                                                                                                                         made
                                                                                                                                         to
                                                                                                                                         the
                                                                                                                                         State
                                                                                                                                         of
                                                                                                                                         Texas
                                                                                                                                         in
                                                                                                                                         2012
                                                                                                                                         in
                                                                                                                                         the
                                                                                                                                         amount
                                                                                                                                         of
                                                                                                                                         $45,103,
                                                                                                                                         is
                                                                                                                                         classified
                                                                                                                                         as
                                                                                                                                         officer
                                                                                                                                         indemnification
                                                                                                                                         liability
                                                                                                                                         on
                                                                                                                                         the
                                                                                                                                         consolidated
                                                                                                                                         balance
                                                                                                                                         sheets.
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| | ● | Tim
                                                                                                                                                                                                                                                                                      Berge,
                                                                                                                                                                                                                                                                                      who
                                                                                                                                                                                                                                                                                      filed
                                                                                                                                                                                                                                                                                      an
                                                                                                                                                                                                                                                                                      action
                                                                                                                                                                                                                                                                                      in
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      District
                                                                                                                                                                                                                                                                                      Court,
                                                                                                                                                                                                                                                                                      City
                                                                                                                                                                                                                                                                                      and
                                                                                                                                                                                                                                                                                      County
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      Denver
                                                                                                                                                                                                                                                                                      Colorado
                                                                                                                                                                                                                                                                                      number
                                                                                                                                                                                                                                                                                      09CV9566,
                                                                                                                                                                                                                                                                                      was
                                                                                                                                                                                                                                                                                      granted
                                                                                                                                                                                                                                                                                      a
                                                                                                                                                                                                                                                                                      default
                                                                                                                                                                                                                                                                                      judgment
                                                                                                                                                                                                                                                                                      on
                                                                                                                                                                                                                                                                                      November
                                                                                                                                                                                                                                                                                      8,
                                                                                                                                                                                                                                                                                      2010
                                                                                                                                                                                                                                                                                      against
                                                                                                                                                                                                                                                                                      Infinity
                                                                                                                                                                                                                                                                                      Energy
                                                                                                                                                                                                                                                                                      Resources,
                                                                                                                                                                                                                                                                                      Inc.
                                                                                                                                                                                                                                                                                      in
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      amount
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      $304,921
                                                                                                                                                                                                                                                                                      plus
                                                                                                                                                                                                                                                                                      costs.
                                                                                                                                                                                                                                                                                      Mr.
                                                                                                                                                                                                                                                                                      Berge
                                                                                                                                                                                                                                                                                      provided
                                                                                                                                                                                                                                                                                      certain
                                                                                                                                                                                                                                                                                      geological
                                                                                                                                                                                                                                                                                      services
                                                                                                                                                                                                                                                                                      to
                                                                                                                                                                                                                                                                                      Infinity
                                                                                                                                                                                                                                                                                      Oil
                                                                                                                                                                                                                                                                                      and
                                                                                                                                                                                                                                                                                      Gas
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      Texas,
                                                                                                                                                                                                                                                                                      Inc.
                                                                                                                                                                                                                                                                                      and
                                                                                                                                                                                                                                                                                      claimed
                                                                                                                                                                                                                                                                                      breach
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      contract
                                                                                                                                                                                                                                                                                      for
                                                                                                                                                                                                                                                                                      failure
                                                                                                                                                                                                                                                                                      to
                                                                                                                                                                                                                                                                                      pay
                                                                                                                                                                                                                                                                                      amounts
                                                                                                                                                                                                                                                                                      he
                                                                                                                                                                                                                                                                                      alleged
                                                                                                                                                                                                                                                                                      were
                                                                                                                                                                                                                                                                                      due.
                                                                                                                                                                                                                                                                                      The
                                                                                                                                                                                                                                                                                      Company
                                                                                                                                                                                                                                                                                      was
                                                                                                                                                                                                                                                                                      unable
                                                                                                                                                                                                                                                                                      to
                                                                                                                                                                                                                                                                                      defend
                                                                                                                                                                                                                                                                                      itself
                                                                                                                                                                                                                                                                                      in
                                                                                                                                                                                                                                                                                      this
                                                                                                                                                                                                                                                                                      matter
                                                                                                                                                                                                                                                                                      due
                                                                                                                                                                                                                                                                                      to
                                                                                                                                                                                                                                                                                      limited
                                                                                                                                                                                                                                                                                      financial
                                                                                                                                                                                                                                                                                      resources
                                                                                                                                                                                                                                                                                      even
                                                                                                                                                                                                                                                                                      though
                                                                                                                                                                                                                                                                                      it
                                                                                                                                                                                                                                                                                      believes
                                                                                                                                                                                                                                                                                      that
                                                                                                                                                                                                                                                                                      it
                                                                                                                                                                                                                                                                                      had
                                                                                                                                                                                                                                                                                      meritorious
                                                                                                                                                                                                                                                                                      defenses.
                                                                                                                                                                                                                                                                                      The
                                                                                                                                                                                                                                                                                      Company
                                                                                                                                                                                                                                                                                      has
                                                                                                                                                                                                                                                                                      included
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      impact
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      this
                                                                                                                                                                                                                                                                                      litigation
                                                                                                                                                                                                                                                                                      as
                                                                                                                                                                                                                                                                                      an
                                                                                                                                                                                                                                                                                      accrued
                                                                                                                                                                                                                                                                                      liability
                                                                                                                                                                                                                                                                                      in
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      accompanying
                                                                                                                                                                                                                                                                                      balance
                                                                                                                                                                                                                                                                                      sheet.
                                                                                                                                                                                                                                                                                      On
                                                                                                                                                                                                                                                                                      October
                                                                                                                                                                                                                                                                                      17,
                                                                                                                                                                                                                                                                                      2013
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      Company
                                                                                                                                                                                                                                                                                      filed
                                                                                                                                                                                                                                                                                      a
                                                                                                                                                                                                                                                                                      motion
                                                                                                                                                                                                                                                                                      in
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      District
                                                                                                                                                                                                                                                                                      Court
                                                                                                                                                                                                                                                                                      of
                                                                                                                                                                                                                                                                                      Johnson
                                                                                                                                                                                                                                                                                      County,
                                                                                                                                                                                                                                                                                      Kansas
                                                                                                                                                                                                                                                                                      seeking
                                                                                                                                                                                                                                                                                      to
                                                                                                                                                                                                                                                                                      set
                                                                                                                                                                                                                                                                                      aside
                                                                                                                                                                                                                                                                                      the
                                                                                                                                                                                                                                                                                      default
                                                                                                                                                                                                                                                                                      judgment.
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ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



In
April 2013 the Company sold 635,420 units (the “Units”) at a price of $1.60 per Unit for total proceeds of $1,016,672.
Each Unit was composed of one share of common stock and one half of a common stock purchase warrant. For every two Units purchased,
the Company issued one full warrant. Each warrant is exercisable to purchase one share of Common Stock for a five-year term from
its date of issuance at a price of $2.50 per share.



One
of the holders of a promissory note in the principal amount of $125,000 issued by the Company in February 2013, as disclosed in
the March Form 8-K, exchanged such note and accrued interest for Units at a price of $1.60 per Unit as payment in full. This sale
is included in the total number of Units sold in the offering.



The
Company used the proceeds to fund certain requirements of its Nicaraguan Concessions, pay outstanding notes and provide working
capital.



The
Company sold the Units through its President and no commissions were paid in connection with the sales. The offering was made
as an exempt transaction under Regulation D under the Securities Act of 1933, as amended (“Securities Act”), and made
only to “accredited investors,” as defined in Regulation D.



The
Warrants are redeemable by the Company at a price $0.05 per Warrant if (i) the closing prices of the Company’s Common Stock
have averaged $7.50 per share or higher for a period of 20 trading days or (ii) the Company has achieved a liquidity event, such
as a merger, reorganization, acquisition or sale of all or substantially all of the assets of the Company to a third party. The
Company granted the holders of the Warrants “piggyback” registration rights respecting any registration statement
that the Company files while the Warrants are outstanding if no other registration statement is then effective respecting the
shares of Common Stock to be issued on exercise of the Warrants. This registration right is subject to the registration rights
of existing shareholders.



On
August 23, 2013, the Company’s former legal counsel exercised its right to convert its promissory note in the principal
amount of $212,400 plus accrued interest of $4,992 into 72,464 shares of common stock at a price of $3.00 per share.



9









ITEM
3. DEFAULTS UPON SENIOR SECURITIES



None.



ITEM
4. MINE SAFETY DISCLOSURES



None.



ITEM
5. OTHER INFORMATION



None.



ITEM
6. EXHIBITS



(c)
Exhibits.



|31.1 | Certification
    of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                             
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                        
|31.2 | Certification
    of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                             
|     |                                                                                                                                                        
|32   | Certification
    of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley
    Act)



10









SIGNATURES



In
accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|Signature                      |  | Capacity                                         |  | Date                                                                                                                                                                                                                                                                                          
|------------------------------ |  | ------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|/s/
        Stanton E. Ross    |  | Chief
        Executive Officer                  |  | November
                                                                                             5, 2013                                                                                                                                                                                 
|Stanton
    E. Ross            |  | (Principal
    Executive Officer)                |  |                                                                                                                                                                                                                                                                                               
|                               |  |                                                  |  |                                                                                                                                                                                                                                                                                               
|/s/
        Daniel F. Hutchins |  | Chief
        Financial Officer                  |  | November
                                                                                                                                       5,
                                                                                                                                       2013
|Daniel
    F. Hutchins         |  | (Principal
    Financial and Accounting Officer) |  |                                                                                                                                                                                                                                                                                               



11