UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended February 28, 2009
or
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2010
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ______
____________
Commission File No.file number: 333-118138
Quantum Energy, Inc.
(Exact
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(Exact name of registrant as specified in its charter)
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Registrant's
Nevada 98-0428608
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(State of incorporation) (I.R.S. Employer ID No.)
7250 N.W. Expressway, Oklahoma City, OK 73132
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(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (405) 728-3800
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
$0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
[ ] Yes o[X] No
x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes o[X] No
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Indicate by check markcheckmark whether the registrantissuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the precedingpast 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[X] No o
[ ]
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 o No o
Indicate by check markcheckmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o
[X]
Indicate by check markcheckmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitionthe definitions of “accelerated"large accelerated filer,” “large accelerated filer”" "accelerated filer," and
“smaller"smaller reporting company”company" in Rule 12b-2 of the Exchange Act.
(Check one):
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[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes x[X] No o
[ ]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently
completed second fiscal quarter:
As of August 31, 2008June 9, 2010 (the last business day of the registrant's most recently
completed second quarter), the aggregate market value of the voting and
non-voting common stock of the registrant held by non-affiliates of the
registrant was $5,170,000$235,000 (based upon the closing price of the registrant’sregistrant's
common stock as reported by the OTC Bulletin Board on August 31, 2008)June 9, 2010).
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:
As of June 12, 2009,9, 2010, there were 47,000,000 shares of the registrant’sregistrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
REFERENCE: None.
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Transitional Small Business Disclosure Format: Yes [ ] No [X]
This report, including information included in, or incorporated by reference from future filings by us with the SEC, as well as information contained in written material, press releases and oral statements issued by us or on our behalf, contain, or may contain, certain statements that are “forward-looking statements”document contains "forward-looking statements" within the meaning of federal securities laws that are subject to a numberthe
Private Securities Litigation Reform Act of risks and uncertainties, many of which are beyond our control. This report modifies and supersedes documents filed by us before this report. In addition, certain information that we file with the SEC in the future will automatically update and supersede information contain in this report.1995. All statements other than
statements of historical fact includedare "forward-looking statements" for purposes
of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or incorporated by reference in this report, regarding our strategy, future operations,other financial position, estimated revenuesitems; any statements of
the plans, strategies and losses, projected costs, prospects, plans and objectivesobjections of management are forward-looking statements. When used in this report,for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or
belief; and any statements of assumptions underlying any of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
foregoing.
Forward-looking statements may include statements about our business strategy, reserves, technology, financial strategy, oil and natural gas realized prices, timing and amount of future production of oil and natural gas, the amount, nature and timing of capital expenditures, drilling of wells, competition and government regulations, marketing of oil and natural gas, property acquisitions, costs of developing our properties and conductingwords "may", "could", "estimate",
"intend", "continue", "believe", "expect" or "anticipate" or other operations, general economic conditions, uncertainty regarding our future operating results and plans, objectives, expectations and intentions contained in this report that are not historical.
Allsimilar
words. These forward-looking statements speakpresent our estimates and assumptions
only as of the date of this report, and, exceptreport. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements, which speak only as required by law, weof
the dates on which they are made. We do not intendundertake to update any of these forward-lookingforward-
looking statements to reflect changes inthe impact of circumstances or events or circumstances that
arise after the date of this report.dates they are made. You should, not place undue reliancehowever, consult further
disclosures we make in future filings of our Annual Report on these forward-looking statements.Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe that our plans, intentions andthe expectations reflected in or suggested by theany of our
forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results tocould differ
materially from those projected or assumed in any of our expectations under “Management’s Discussionforward-looking
statements. Our future financial condition and Analysisresults of Financial Conditionoperations, as
well as any forward-looking statements, are subject to change and Resultsinherent
risks and uncertainties. The factors impacting these risks and uncertainties
include, but are not limited to:
o inability to raise additional financing for working capital and product
development;
o inability to fulfill and plan an event for an organization;
o deterioration in general or regional economic, market and political
conditions;
o the fact that our accounting policies and methods are fundamental to how we
report our financial condition and results of Operations”operations, and elsewherethey may
require management to make estimates about matters that are inherently
uncertain;
o adverse state or federal legislation or regulation that increases the costs
of compliance, or adverse findings by a regulator with respect to existing
operations;
2
These cautionaryIn this form 10-K references to "Your Event", "the Company", "we", "us", and
"our" refer to Your Event, Inc.
AVAILABLE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You can read these SEC filings and reports over the Internet at the
SEC's website at www.sec.gov. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street, NE, Washington, DC 20549 on official business days between the
hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for
further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including
audited financial statements, qualify all forward-looking statements attributableat no charge upon receipt to of a written
request to us or persons acting on our behalf.
at Quantum Energy, Inc., 7250 N.W. Expressway, Oklahoma City,
OK 73132.
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ITEM 1.BUSINESS
Unless the context otherwise requires, all references in this report to
“Quantum,” “our,” “us,” “we”"Quantum," "our," "us," "we" and the “Company”"Company") refer to Quantum Energy, Inc.
and its subsidiaries, as a combined entity.
Quantum Energy Inc. is a development stage company engaged in the acquisition and exploration of gas and
oil properties. Quantum was incorporated on February 5, 2004, in the State of
Nevada. The Company's principal executive offices now are located at 7250 NW
Expressway, suite 260, Oklahoma City, OK. The Company’sCompany's telephone number is
(405) 728-3800.
Starting in May of 2006, we decided to embark on a new business path in oil and gas exploration and acquisitions. We acquired interests in numerous oil & gas properties in the Barnett Shale area of West Texas. Our business strategy is to acquire interest in the properties of, and working interests in the production owned by, established oil and gas production companies, whether public or private, in the United States oil producing areas. We believe such opportunities exist in the United States. We also believe that these opportunities have considerable future potential for the development of additional oil reserves. Such new reserves might come from the development of existing but as yet undeveloped reserves as well as from future success in exploration.
When and if funding becomes available, we plan to acquire high-quality oil and gas properties, primarily "proven producing and proven undeveloped reserves." We will also explore low-risk development drilling and work-over opportunities with experienced, well-established operators.
Competition
We operate in a highly competitive environment. We compete with major and independent oil and natural gas companies, many of whom have financial and other resources substantially in excess of those available to us. These competitors may be better positioned to take advantage of industry opportunities and to withstand changes affecting the industry, such as fluctuations in oil and natural gas prices and production, the availability of alternative energy sources and the application of government regulation.
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The availability of a ready market for future oil and gas production from possible U.S. assets will depend upon numerous factors beyond our control. These factors may include, amongst others, regulation of oil and natural gas production, regulations governing environmental quality and pollution control, and the effects of regulation on the amount of oil and natural gas available for sale, the availability of adequate pipeline and other transportation and processing facilities and the marketing of competitive fuels. These regulations generally are intended to prevent waste of oil and natural gas and control contamination of the environment.
We expect that our sales of crude oil and other hydrocarbon liquids from our future U.S.-based production will not be regulated and will be made at market prices. However, the price we would receive from the sale of these products may be affected by the cost of transporting the products to market via pipeline and marine transport.
Environmental Regulations
Our U.S. assets could be subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities and concentration of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit drilling activities on certain lands within wilderness, wetlands and other protected areas, require remedial measures to mitigate pollution from former operations, such as pit closure and plugging abandoned wells, and impose substantial liabilities for pollution resulting from production and drilling operations. Public interest in the protection of the environment has increased dramatically in recent years. The worldwide trend of more expansive and stricter environmental legislation and regulations applied to the oil and natural gas industry could continue, resulting in increased costs of doing business and consequently affecting profitability. To the extent laws are enacted or other governmental action is taken that restricts drilling or imposes more stringent and costly waste handling, disposal and cleanup requirements, our business and prospects could be adversely affected.
Employees
At June 12, 2009,9, 2010, we had 2 part-time employees. We consider our relations with
our employees to be good.
ITEM 1A.RISK FACTORS
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Not applicable.
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None. ITEM 2.PROPERTIES
Our corporate office is currently located at 7250 N.W. Expressway, Suite 260, Oklahoma City, OK 73132.
ITEM 3.LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None. PART II
ITEM 5.MARKET FOR REGISTRANT’SREGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market for the Common Stock
Our common stockInformation
Quantum Energy, Inc. is traded on the OTC Bulletin Board and is quoted under
the symbol “QEGYE.OB.” The following quotations were obtained from Yahoo Finance and reflect interdealer prices, without retail markup, markdown, or commission, and may not represent actual transactions.symbol: QEGY. There havehas been no reported transactions inlimited trading of our stock since it was
cleared for certaintrading.
(b) Holders of Common Stock
At the trading days during the periods reported below. The following table sets forth the high and low bid prices for ourdate of this report, we had 24 stockholders of record holding a total
of 47,000,000 shares of common stock, on the OTC Bulletin Board for the periods indicated (as adjusted for stock splits):
| High | Low |
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Fiscal Year Ended February 28, 2009: |
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Quarter ending February 28, 2009 | 0.02 | 0.01 |
Quarter ending November 30, 2008 | 0.11 | 0.01 |
Quarter ended August 31, 2008 | 0.17 | 0.09 |
Quarter ended May 31, 2008 | 0.17 | 0.12 |
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Fiscal Year ended February 29, 2008: |
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Quarter ending February 29, 2008 | 0.27 | 0.11 |
Quarter ending November 30, 2007 | 0.23 | 0.15 |
Quarter ended August 31, 2007 | 0.35 | 0.15 |
Quarter ended May 31, 2007 | 0.37 | 0.33 |
Holders of the Common Stock
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par value $0.001. (c) Dividends
Our dividend policy for holders of common stock is to retain earnings to support the expansion of operations through organic growth or by strategic acquisitions. We have not previously paid any cash dividends, and we do not intend to pay cash dividends in the near future. Any future cash dividends will depend on our future earnings, capital requirements, financial condition and other factors deemed relevant by the Board of Directors.
ITEM 6.SELECTED FINANCIAL DATA
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Not applicable.
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Results Of Operations
Year
Overview
- --------
Unless the context otherwise requires, all preferences to "Quantum," "our,"
"us," "we" and the "Company" refer to Quantum Energy, Inc. and its
subsidiaries, as a combined entity.
We were incorporated on February 5, 2004, in the State of Nevada. Our
principal executive offices are located at 7250 NW Expressway, suite 260,
Oklahoma City, OK. Our telephone number is (405) 728-3800.
Starting in May of 2006, we decided to embark on a new business path in oil
and gas exploration and acquisitions. We acquired interests in numerous oil &
gas properties in the Barnett Shale area of West Texas. Our business
strategy is to acquire interest in the properties of, and working interests
in the production owned by, established oil and gas production companies,
whether public or private, in the United States oil producing areas. We
believe such opportunities exist in the United States. We also believe that
these opportunities have considerable future potential for the development of
additional oil reserves. Such new reserves might come from the development of
existing but as yet undeveloped reserves as well as from future success in
exploration.
Barnett Shale Developments; after the initial success of the Barnett Shale
leases, the production program in the Barnett Shale area encountered
substantial difficulties. Numerous wells throughout this extensive area
experienced production difficulties. In addition to the production problems
was the severe drop in natural gas prices. All of the wells in which the
Company had interests were suspended and all marginal wells have been capped,
resulting in the Company abandoning the Company's interest in the Barnett
Shale area.
When and if funding becomes available, we plan to acquire high-quality oil
and gas properties, primarily "proven producing and proven undeveloped
reserves." We will also explore low-risk development drilling and work-over
opportunities with experienced, well-established operators.
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20092010 ($82,985 - 2009) a decrease of cash
outflow of $$82,733.
Cash inflow from financing activities was $nil for the twelve months ended
February 28, 2010 ($43,198 - 2009).
Results of Operations
- ---------------------
For the twelve (12) months ended February 28, 2010 operating expenses were
$42,058 compared to year$104,218 for the twelve (12) months ended February 29, 2008
Revenues28,
2009. This decrease of was due to a decrease in professional fees, management
fees, marketing and office and administration.
The Company posted a net loss of $140,748 for the year ended
February 28, 2009 were $nil as compared to revenues of $109,248 for the year ended February 29, 2008.
For the year ended February 28, 2009, operating expenses totaled $104,218 as compared to operating expenses of $480,640 for the year ended February 29, 2008. This was a decrease of $376,422 or 78%. This decrease was primarily due to a decrease in amortization, depletion and depreciation expense and administrative costs incurred by the Company.
Interest expense for the year ended February 28, 2009 was $500,133 as compared to interest expenses of $115,775 for the year ended February 29, 2008. This was an increase of $384,378. The majority of the increase which was $381,250 of imputed interest calculated on 125,000 of our shares to be issued to Nitro Petroleum Incorporated on the concession of our interest in certain oil and gas interests from an Asset Purchase Agreement with Nitro Petroleum Incorporated dated September 1, 2006.
The net loss for the year ended February 28, 2009 was $592,245 as compared to $486,122 for the year ended February 29, 2008. The increase in losses for the year ended February 28, 2009 was due to the increase in interest expense.
Liquidity and Capital Resources
Total current assets as of February 28, 2009 were $1,036 as compared to $43,323 as of February 29, 2008, all in cash. Additionally, a shareholders deficiency in the amount of $3,241,019 as of February 29, 2008 as compared to $2,648,774 as of February 29, 2008, a direct result of the Company not obtaining sufficient revenues.
We had a negative cash flow of $82,985 from operating activities for the year ended February 28, 2009, as2010, compared to a negative cash flownet loss of $175,693 for the year ended February 29, 2008, a decrease in cash outflow of approximately 52%.
Cash inflow from financing activities was $43,198 the year ended February 28, 2009 as compared to cash outflow of $150,000 for the year ended February 29, 2008 attributable to the repayment of financing.
As of February 28, 2009, we had a working capital deficiency of $2,479,306 as compared to $2,269,050 as of February 29, 2008. A major portion of debt is attributed to payments made for mineral properties, and operating deficiency.
At February 28, 2009, there was no bank debt.
Going Concern
The on-going negative cash flow from operations raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on the ability to raise additional capital and implement its business plan.
We have not realized any income since inception and$592,245 for the year
ended February 28, 2009.
We are presently operating at an ongoing deficit.
We have not attained profitable operations and will require additional funding in order to cover the anticipated professional fees and general administrative expenses and to proceed with the anticipated investigation to identify and purchase new mineral properties worthy of exploration or any other business opportunities that may become available to us. We anticipate that additional funding will be required in the form of equity financing from the sale of common stock. However, we cannot provide investors with any assurance that sufficient funding from the sale of common stock to fund the purchase and the development of any future projects can be obtained. We believe that debt financing will not be an alternative for funding future corporate programs. We do not have any arrangements in place for any future equity financings.
At February 28, 2010 there was no bank debt. Off-Balance Sheet Arrangements
- ------------------------------
There are no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
stockholders.
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Not applicable.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Financial Statement Schedules - See Index to Consolidated Financial Statements and Schedules immediately following the signature page of this report.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.CONTROLS AND PROCEDURES.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by it in the reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized, and
reported within the time periods specified by the Securities and Exchange
Commission's rules and forms, and that information is accumulated and
communicated to its management, including its principal executive and
principal financial officers (whom we refer to in this periodic report as our
Certifying Officers), as appropriate to allow timely decisions regarding
required disclosure. Our management evaluated, with the participation of its
Certifying Officers, the effectiveness of its disclosure controls and
procedures as of February 28, 2009,2010, pursuant to Rule 13a-15 under the
Securities Exchange Act. Based upon that evaluation, our Certifying Officers
concluded that, as of February 28, 2009,2010, our disclosure controls and
procedures were effective.
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2009were2010 were effective and provided
reasonable assurance that the books and records accurately reflected our
transactions.
There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
ITEM 9B.OTHER INFORMATION.
None.
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ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Board of Directors is currently composed of one person: Sharon Farris.
Ms. Farris, age 48,49, has been a director since 2007 and also serves as our
President, acting Chief Financial Officer and Secretary.
Sharon Farris
- ------------- Sharon Farris was appointed as our Secretary and to our board of directors on March 1, 2007. On January 14, 2009, Ms. Farris was appointed as our President. Ms. Farris has worked in the oil and gas industry for the past several years. She has worked for Buccaneer Energy Corporation and HoCo, Inc. for the past two and a half years, working with the Oklahoma Corporation Commission, Oklahoma Tax Commission, Petroleum Engineers, Geologist, Landowners, and Attorneys, Crude Purchasers as well as various oil field workers.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish US with copies of all Section 16(a) forms they file. A Form 3 for Ms. Farris has yet to be filed and are delinquent as of the date of this report.
Code of Ethics
Our code of ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics was filed as an exhibit to the 2006 Annual Report and is incorporated by reference herein. We will provide to any person, without charge, a copy of our Code of Ethics upon receipt of a written request addressed Quantum Energy, Inc., Attn: Corporate Secretary, 7250 N.W. Expressway, Suite 260, Oklahoma City, OK 73132.
Corporate Governance
We do not presently does not have an audit committee of the board of directors due to the early stage of our operations and the fact that we have only recently started to acquire leases and working interests in oil and gas properties. Additionally, our size makes it impractical to implement board committees at this point.
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Our directors and executive officers received no compensation during the last three fiscal years and no compensation has accrued. There are no securities authorized for issuance under any equity compensation plan, or any options, warrants, or rights to purchase our common stock.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
As of June 12, 2009,9, 2010, based upon ownership filings with the SEC, we have no
shareholders that beneficially own more than 5% of our outstanding shares of
common stock. As of June 12, 2009, none of our directors or named executive
officers owned any shares of our common stock.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Director Independence
No members of our Board of directors are independent.
ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth information regarding the amount billed to us by our independent auditor, Killman, Murrell & Company, P.C., for the fiscal years ended February 28, 2009 and February 29, 2008:
| Years Ended February 29 or 28 | |
| 2009 | 2008 |
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Audit Fees (1) | $ 38,644 | $ 24,557 |
Audit-Related Fees | - | - |
Tax Fees | - | - |
All Other Fees | - | - |
Years Ended February 29 or 28 2010 2009 ----------------------------- Audit Fees (1) $ 8,505 $ 38,644 Audit-Related Fees - - Tax Fees - - All Other Fees - - (1) Audit Fees are the aggregate fees billed by the independent auditor for the audit of the consolidated annual financial statements, reviews of interim financial statements, and attestation services that are provided in connection with statutory and regulatory filings or engagements.
Generally, the board of directors approves in advance audit and non-audit services to be provided by our independent auditors. In other cases, in accordance with Rule 2-01(c)(7) of Securities and Exchange Commission Regulation S-X, the board of directors has delegated preapproval authority to our President for matters that arise or otherwise require approval between regularly scheduled meetings of the board of directors, provided that such approvals are reported to the board of directors at its next regularly scheduled meeting.
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Exhibit
Number Description of Exhibit Location
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Item 3 Articles of Incorporation and Bylaws
3.1 Articles of Incorporation Incorporated by reference
from the Registration
Statement Amendment 2 on
Form SB-2 filed October 26,
2004, SEC File No. 333-118138
3.2 Bylaws, as amended Incorporated by reference
from the Registration
Statement Amendment 2 on
Form SB-2 filed October 26,
2004, SEC File No. 333-118138
3.3 Articles of Amendment Incorporated by reference
from 10-KSB annual report
filed on June 14, 2006,
SEC File No. 333-118138
Item 31 Rule 13a-14(a)/15d-14(a) Certifications
31.1 Certification of Chief Executive This filing
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
Item 32 Section 1350 Certifications
32.1 Certification of Chief Executive This filing
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
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In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Quantum Energy, Inc.
By: /s//s/ Sharon Farris
----------------------------------------- Sharon Farris
President and Chief Executive Officer (acting principal financial officer)
Date: June 12, 2009
9, 2010 Pursuant to the requirements of the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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2010
14
Audited Financial Statements
And
Report of Independent Registered Public Accounting Firm
Years Ended February 28, 2010 and 2009
and February 29, 2008
PART I – FINANCIAL INFORMATION
QUANTUM ENERGY, INC.
ITEM 1. FINANCIAL STATEMENTS
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F-1
Killman, Murrell & Company P.C.
Certified Public Accountants
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To the Board of Directors and Stockholders
Quantum Energy Inc.
401 - 1529 West 6th Avenue
Vancouver, British Columbia, Canada V6J 1R1
7250 N.W. Expressway
Oklahoma City, Oklahoma
We have audited the accompanying balance sheets of Quantum Energy,Nitro Petroleum Inc. as of
February 28, 20092010 and February 29, 20082009, and the related statements of operations,
stockholders’stockholders' deficit, and cash flows for each of the years in the two-year period ended February 28, 2009.then ended. Quantum
Energy Inc.’s's management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The
company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
company’scompany's internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Quantum Energy,Nitro Petroleum Inc. as of
February 28, 20092010 and February 29, 2008,2009, and the results of its operations and its cash
flows for each of the years in the two-year periodthen ended February 28, 2009 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming Quantum Energy, Inc.the Company
will continue as a going concern. As describeddiscussed in Note 1 to the financial
statements, the Company’s operating losses raiseCompany has generated revenues from operations but has
substantial accumulated deficit and working capital deficiency and this
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1.
The 2010 and 2009 financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/
/s/ Killman, Murrell & Company, P.C.
- ------------------------------------ Killman, Murrell & Company, P.C. Odessa, Texas
May 29, 2009
F- 2
June 9, 2010
F-2
BALANCE SHEETS
(Stated
Balance Sheets
(Expressed in US Dollars)
| February 28, | February 29, |
| 2009 | 2008 |
ASSETS |
|
|
|
|
|
Current assets |
|
|
Cash and cash equivalents | $ 1,036 | $ 40,823 |
Prepaid expense | - | 2,500 |
Total current assets | 1,036 | 43,323 |
Other assets |
|
|
Other equipment, net of accumulated depreciation of $4,275 in 2009 (Note 3) | 787 | 1,526 |
Total other assets | 787 | 1,526 |
|
|
|
TOTAL ASSETS | $ 1,823 | $ 44,849 |
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | ||
|
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities | $ 442,384 | $ 317,613 |
Promissory notes payable (Note 5) | 2,017,708 | 1,994,760 |
Due to related party (Note 5) | 20,250 | - |
Total current liabilities | 2,480,342 | 2,312,373 |
Common stock issuance liability (Note 6) | 762,500 | 381,250 |
Total liabilities | 3,242,842 | 2,693,623 |
|
|
|
Stockholders’ (deficit) |
|
|
Common stock, par value $0.001 per share: |
|
|
75,000,000 shares authorized: 47,000,000 |
|
|
Shares issued and outstanding, respectively | 47,000 | 47,000 |
Additional paid-in capital | 1,685,913 | 1,685,913 |
Retained (deficit) | (4,973,932) | (4,381,687) |
Total stockholders’ (deficit) | (3,241,019) | (2,648,774) |
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | $ 1,823 | $ 44,849 |
F- 3
The accompanying notes are an integral part of these financial statements
F-3
STATEMENTS OF OPERATIONS
(Stated
Statements of Operations
(Stated in US Dollars)
|
| Years Ended | ||
|
|
| February 28, | February 29, |
|
|
| 2009 | 2008 |
|
|
|
|
|
Oil and gas revenue |
|
| $ - | $ 116,422 |
Production taxes |
|
| - | (7,174) |
Net oil and gas revenue |
|
| - | 109,248 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Lease operating |
|
| - | 64,633 |
Amortization, depletion and depreciation |
|
| 738 | 225,794 |
Management fees |
|
| 42,000 | 61,200 |
Marketing |
|
| 10,042 | 29,708 |
Office and administration |
|
| 2,897 | 18,035 |
Professional fees |
|
| 48,541 | 81,270 |
Total operating expenses |
|
| 104,218 | 480,640 |
|
|
|
|
|
Net loss before other income (expenses) |
|
| (104,218) | (371,392) |
|
|
|
|
|
Other items |
|
|
|
|
Interest expense |
|
| (500,133) | (115,755) |
Currency translation |
|
| 12,106 | 612 |
Other income |
|
| - | 433 |
Total other income (expenses) |
|
| (488,027) | (114,730) |
|
|
|
|
|
Loss before income taxes |
|
| (592,245) | (486,122) |
|
|
|
|
|
Income tax expense (Note 7) |
|
| - | - |
|
|
|
|
|
Net loss |
|
| $ (592,245) | $ (486,122) |
|
|
|
|
|
Basic and diluted loss per share |
|
| $ (0.01) | $ (0.01) |
|
|
|
|
|
Weighted average number of shares outstanding |
|
| 47,000,000 | 47,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
|
| Years Ended | ||
|
|
| February 28 | February 29 |
|
|
| 2009 | 2008 |
|
|
|
|
|
Operating Activities |
|
|
|
|
Net loss |
|
| $ (592,245) | $ (486,122) |
Adjustment to reconcile net loss to net cash used by operating activities |
|
|
|
|
Amortization, depreciation and depletion |
|
| 738 | 225,794 |
Interest expense |
|
| 381,250 | - |
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable trade |
|
| - | 15,722 |
Prepaid expenses |
|
| 2,500 | - |
Accounts payable and accrued liabilities |
|
| 124,772 | 68,913 |
|
|
|
|
|
Cash (used in) operating activities |
|
| (82,985) | (175,693) |
|
|
|
|
|
Investing Activities |
|
|
|
|
Accounts receivable sale of assets |
|
| - | 308,200 |
|
|
|
|
|
Cash provided by investing activities |
|
| - | 308,200 |
|
|
|
|
|
Financing Activities |
|
|
|
|
Issuance (payment) of promissory notes payable |
|
| 22,948 | (150,000) |
Due to related party |
|
| 20,250 | - |
|
|
|
|
|
Cash provided by (used in) financing activities |
|
| 43,198 | (150,000) |
|
|
|
|
|
Decrease in cash during the year |
|
| (39,787) | (17,493) |
|
|
|
|
|
Cash, beginning of the year |
|
| 40,823 | 58,316 |
|
|
|
|
|
Cash, end of the year |
|
| $ 1,036 | $ 40,823 |
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
Cash paid for income tax purposes |
|
| $ - | $ - |
Cash paid for interest |
|
| $ - | $ - |
|
|
|
|
|
F-5
QUANTUM ENERGY, INC.
STATEMENT OF STOCKHOLDERS’ (DEFICIT)
Statements of Stockholders' (Deficit)
For the Years Ended February 28, 2010 and 2009
and February 29, 2008
(Stated(Stated in US Dollars)
| Common Shares | Paid-in | Accumulated |
| |
| Number | Par Value | Capital | (Deficit) | Total |
|
|
|
|
|
|
Balance, February 28, 2007 | 45,500,000 | $ 47,000 | $ 1,685,913 | $ (3,895,563) | $ (2,162,650) |
Net Loss, February 29, 2008 | - | - | - | (486,124) | (486,124) |
| 45,500,000 | 47,000 | 1,685,913 | (4,381,687) | (2,648,774) |
Net loss | - | - | - | (592,245) | (592,245) |
Balance, February 28, 2009 | 47,000,000 | $ 47,000 | $ 1,685,913 | $ (4,973,932) | $ (3,241,019) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-6
The accompanying notes are an integral part of these financial statements
F-5
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2009
(Stated
Statements of Cash Flows
(Stated in US Dollars)
|
|
|
|
Boomers Cultural Development Inc. (“
The accompanying notes are an integral part of these financial statements
F-6
Company”Financial Statements
February 28, 2010 and 2009
(Stated in US Dollars)
Note 1 Nature of Operations and Going Concern
QUANTUM ENERGY INC. ("the Company") was incorporated inunder the name "Boomers
Cultural Development Inc." under the laws of the State of Nevada United States of America, on February
5, 2004. On May 18, 2006 the name of the Company wascompany changed from Boomers Cultural Development Inc.its name to Quantum Energy Inc.
|
|
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which assumes
that the Company will be able to meet its obligations and continue its
operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be unable to
continue as a going concern. The continuation of the Company as a going
concern is dependent upon the continued financial support from its
shareholders, the ability of the Company to obtain necessary equity financing
to continue operations and to determine the existence, discovery and
successful exploitation of economically recoverable reserves in its resource
properties, confirmation of the Company's interests in the underlying
properties, and the attainment of profitable operations. At February 28,
2009,2010, the Company had not yet achieved profitable operations, has accumulated losses of ($4,973,932) since its inception, has a working
capital deficiency of $2,479,306 and expects to incur further losses in the development of its business, all of which casts$2,619,267 ($2,479,306 - 2008). These factors raise
substantial doubt aboutregarding the Company’sCompany's ability to continue as a going
concern.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assuranceNote 2 Summary of additional funding being available.
|
|
Significant Accounting Policies
The financial statements of the Company have been prepared in accordance with
accounting principles generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent
upon future events, the preparation of financial statements for a period
necessarily involves the use of estimates, which have been made using careful
judgment. Actual results may vary from these estimates.
The financial statements have, in management’smanagement's opinion been properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies summarized below:
|
a) Cash |
For purposes of the balance sheet and the statement ofCash Equivalents
Cash and cash flows, the Company considers allequivalents include highly liquid debt instruments purchasedinvestments with maturityoriginal
maturities of three months or less to be cash equivalents.less. As ofat February 28, 2009, the Company had no2010, cash and cash
equivalents
consist of cash only. F-7
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements February 28, 2010 and 2009
(Stated
(Stated in US Dollars)
|
|
|
|
The Company’s uses the U.S. dollar as its reporting currency for consistency with registrants
Note 2 Summary of the Securities and Exchange Commission (“SEC”) and in accordance with the SFAS No. 52. Transactions in Canadian dollars are translated into U.S. dollars as follows:
|
|
|
|
|
|
|
|
|
Significant Accounting Policies (Continued) b) Other Equipment Other equipment is recorded at cost. Depreciation of computer equipment is at a rate of 30% per annum, on a straight-line basis. Depreciation of office equipment is at a rate of 20% per annum, on a straight-line basis.
|
|
In
c) Foreign Currency Translation
The Company's functional currency is the United States dollar. The Company
uses the United States dollar as its reporting currency for consistency with
registrants of the Securities and Exchange Commission ("SEC") and in
accordance with SFAS No. 128 – “Earnings per Share”, the basicASC 830-10.
Assets and liabilities were translated at the exchange rate in effect at the
period end and capital accounts are translated at historical rates. Income
statement accounts are translated at the average rates of exchange prevailing
during the period. Any exchange gains and losses are included in the
Statement of Operation
d) Use of Estimates
The preparation of financial statements in conformity with US generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The Company regularly evaluates estimates and assumptions
related to donated expenses, and deferred income tax valuations. The Company
bases its estimates and assumptions on current facts, historical experience
and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and the accrual of costs and
expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the
Company's estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be
affected.
e) Stock-based Compensation
The Company records stock-based compensation in accordance with ASC subtopic
718-10 "Compensation - Stock Compensation" using the fair value method. The
Company has not issued any stock options since its inception.
F-8
stockholdersshareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
potentially dilutive common shares outstanding. Diluted loss per common shareoutstanding during the period. In
computing diluted EPS, the average stock price for the period is computed similar to basic loss per common share except that the denominator is increased to includeused in
determining the number of additional common shares that would have been outstandingassumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all potentially dilutive
shares if the potential common shares had been issued and if the additional common shares were dilutive.their effect is anti-dilutive. At February 28, 2010, there are
250,000 dilutive potential common shares.
g) Financial Instruments
In August 2009, the Company had no stock equivalentsFASB issued ASU 2009-05 which includes amendments to
Subtopic 820-10, "Fair Value Measurements and Disclosures-Overall". The
update provides clarification that were anti-dilutive and excluded in circumstances, in which a quoted price
in an active market for the earnings per share computation.
|
|
The carrying value of the Company’s financial instruments consisting of cash, accounts payable, accrued liabilities and notes payable approximate their fair value due to the short term maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Companyidentical liability is not exposed to significant interest, currency or credit risks arising from these financial statements.
|
|
The Company uses the asset and liability method of accounting for income taxes pursuant to SFAS No. 109, “Accounting for Income taxes”. Under the assets and liability method of SFAS 109, the deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets apply to taxable income in the years which those temporary differences are expected to be recovered.
F-8
QUANTUM ENERGY, INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2009
(Stated in US Dollars)
|
|
Recent Accounting Pronouncements
On December 12, 2007, the Financial Accounting Standards Board ratified the consensus reached by the Emerging Issues Task Force on Issue No. 07-01 “Accounting for Collaborative Arrangements”. This issue will be effective for the fiscal year beginning January 1, 2009. This pronouncementavailable, a reporting
entity is not expected to have a material impact on the Company’s financial statements.
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), which provides expanded guidance for using fair value to measure assets and liabilities. SFAS 157 establishes a hierarchy for data used to value assets and liabilities at fair value, the information usedrequired to measure fair value using one or more of the techniques
provided for in this update. The amendments in this ASU clarify that a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability and also clarifies that both a quoted price in an
active market for the identical liability at the measurement date and the
effectquoted price for the identical liability when traded as an asset in an active
market when no adjustments to the quoted price of the asset are required are
Level 1 fair value measurements on earnings. Implementation of SFAS 157 was required on January 1, 2008measurements. The guidance provided in this ASU is
effective for financial assets and liabilities, as well as other assets and liabilities that are carried at fair value on a recurring basis in financial statements. FASB Financial Staff Position No. FAS 157-2 deferred implementation for other non-financial assets and liabilities for one year. Examples of non-financial assets and liabilities are asset retirement obligations and non-financial assets and liabilities initially measured at fair value in a business combination.the first reporting period, including interim periods,
beginning after issuance. The adoption of SFAS 157this standard did not have a
material impact on the Company's consolidated financial statements.
position and results
of operations
The Company's financial instruments consist principally of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
and notes payable. The Company believes that the recorded values of all of
the other financial instruments approximate their current fair values because
of their nature and respective maturity dates or durations.
F-9
Board revised StatementCodification. The Codification is the sole source for authoritative U.S. GAAP
and supersedes all accounting standards in U.S. GAAP, except for those issued
by the SEC. The guidance was effective for financial statements issued for
reporting periods ending after September 15, 2009. The adoption had no impact
on the Company's financial position, cash flows or results of operations.
In June 2009, the FASB issued FASB ASC 855-10, "Subsequent Events." FASB
ASC855-10 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. FASB ASC 855-10 applies
to both interim financial statements and annual financial statements. FASB
ASC 855-10 is effective for interim or annual financial periods ending after
June 15, 2009. The adoption of FASB ASC 855-10 during the period did not have
a material impact on the Company's financial position, cash flows or results
of operations.
F-10
No. 141 (Revised 2007) “Business Combinations” (SFAS 141R)Board) issued
Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil
and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This
amendment to Topic 932 has improved the reserve estimation and disclosure
requirements by (1) updating the reserve estimation requirements for changes
in 2007. The revision broadenspractice and technology that have occurred over the application of SFAS 141 to cover all transactionslast several decades
and events in which(2) expanding the disclosure requirements for equity method investments.
This is effective for annual reporting periods ending on or after December
31, 2009. However, an entity obtains control over onethat becomes subject to the disclosures because
of the change to the definition oil- and gas- producing activities may elect
to provide those disclosures in annual periods beginning after December 31,
2009. Early adoption is not permitted. The Company does not expect the
provisions of ASU 2010-03 to have a material effect on the financial
position, results of operations or morecash flows of the Company
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in
Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does
not change, the scope of current US GAAP. It clarifies the decrease in
ownership provisions of Subtopic 810-10 and removes the potential conflict
between guidance in that Subtopic and asset derecognition and gain or loss
recognition guidance that may exist in other businesses. This standard requiresUS GAAP. An entity will be
required to follow the amended guidance beginning in the period that transaction costs related to business combinations be expensed rather than beit first
adopts FAS 160 (now included in Subtopic 810-10). For those entities that
have already adopted FAS 160, the acquisition cost. This Statement applies prospectively to business combinations for which the acquisition date is on or afteramendments are effective at the beginning
of the first interim or annual reporting period beginningending on or after December
15, 2008.2009. The impactamendments should be applied retrospectively to the first
period that an entity adopted FAS 160. The Company does not expect the
provisions of this standardASU 2010-02 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit
on the amount of cash that will be distributed is not a stock dividend for
purposes of applying Topics 505 and 260. Effective for interim and annual
periods ending on or after December 15, 2009, and would be applied on a
retrospective basis. The Company does not expect the provisions of ASU 2010-
01 to have a material effect on the financial position, results of operations
or cash flows of the Company.
F-11
recorded for future business combinations after adoption.
On February 2007, the Financial Accounting Standards Board issued Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendmentmeasurement of
FASB Statement No. 115”investments in certain entities that calculate net asset value per share (or
its equivalent). The fair value option established by this statement permits all entities to choose to measure eligible items at fair value at specified election dates. Companies are required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This StatementIt is effective asfor interim and annual periods ending after
December 15, 2009. Early application is permitted in financial statements
for earlier interim and annual periods that have not been issued. The Company
does not expect the provisions of ASU 2009-12 to have a material effect on
the financial position, results of operations or cash flows of the beginning of an entity’s first fiscal year that begins after November 15, 2007. It does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. The Company has not elected the fair value option for any eligible items.
Company.
In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting StandardsSFAS No. 160 “Noncontrolling Interest in Consolidated Financial Statements – an Amendment of ARB 51” (SFAS 160)141, (revised 2007), "Business Combinations". SFAS 160 clarifies that141 (R) applies
the acquisition method of accounting for business combinations established in
SFAS 141 to all acquisitions where the acquirer gains a noncontrollingcontrolling interest,
in a subsidiary is an ownership interest inregardless of whether consideration was exchanged. Consistent with SFAS 141,
SFAS 141 (R) requires the consolidated entity that should be reported as equity inacquirer to fair value the consolidated financial statements. It also requires consolidated net income to be reported at amounts that include the amounts attributable to both parentassets and the noncontrolling interest, and requires disclosure, on the faceliabilities
of the consolidated statement of income, ofacquiree and record goodwill on bargain purchases, with main
difference the amounts of consolidated net income attributableapplication to the parent and to the noncontrolling interest.all acquisitions where control is achieved.
SFAS 160141 (R) is effective for fiscal years, and interim periods within thosefinancial statements issued for fiscal years
beginning on or after December 15, 2008. AdoptionThe adoption of this standardstatement is not
expected to have a material impacteffect on the Company’sCompany's future financial statements.
F-9
QUANTUM ENERGY, INC.
NOTES TO THE FINNCIAL STATEMENTS
February 28, 2009
(Stated in US Dollars)
|
|
Recent Accounting Pronouncements (continued)
position
or results of operations
In March 2008,December 2007, the Financial Accounting Standards Board ("FASB") issued
StatementSFAS No. 160, "Non controlling Interests in Consolidated Financial Statements
- - An amendment of Financial Accounting StandardsARB No. 161 “Disclosures about Derivative Instruments and Hedging Activities – An Amendment51".SFAS 160 requires companies with non
controlling interests to disclose such interests clearly as a portion of
FASB Statement No. 133” (SFAS 161), that requires new and expanded disclosures regarding hedging activities. These disclosures include,equity but are not limited to, a prescribed tabular presentationseparate from the parent's equity. The non controlling interest's
portion of derivative data; financial statement presentation of fair valuesnet income must also be clearly presented on a gross basis, including those that currently qualify for netting under FASB Interpretation No. 39’ and specific footnote narrative regarding how and why derivatives are used. The disclosures are required in all interim and annual reports.the Income Statement.
SFAS 161160 is effective for fiscal and interim periods beginning after November 15, 2008.
On December 31, 2008, the SEC published the final rules and interpretations updating its oil and gas reporting requirements. Many of the revisions are updates to definitions in the existing oil and gas rules to make them consistent with the petroleum resource management system, which is a widely accepted standard for the management of petroleum resources that was developed by several industry organizations. Key revisions include the ability to include nontraditional resources in reserves, the use of new technology for determining reserves, permitting disclosure of probable and possible reserves, and changes to the pricing used to determine reserves in that companies must use a 12-month average price. The average is calculated using the first-day-of-the-month price for each of the 12 months that make up the reporting period. The SEC will require companies to comply with the amended disclosure requirements for registrationfinancial statements filed after January 1, 2010, and for annual reportsissued for fiscal years
ending on orbeginning after December 15, 2009. Early2008. The adoption of this statement is not
permitted. The Company is currently evaluating the impact that the adoption willexpected to have a material effect on the Company's future financial statements.
|
|
| Cost | Accumulated Depreciation | Net Book Value | Net Book Value February 29, 2008 |
Office equipment | $ 3,629 | $ 2,842 | $ 787 | $ 1,513 |
Computer equipment | 1,433 | 1,433 | - | 13 |
|
|
|
|
|
| $ 5,062 | $ 4,275 | $ 787 | $ 1,526 |
|
|
position
or results of operations.
The Company uses the successful efforts method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed.
Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairmentfollowing various other pronouncement (ASU) as announced by providing an impairment allowance. Other unproved properties are amortized basedFASB have no
material effect on the Company’s experience of successful drillingCompany financial statements: ASU 2010-08 Technical
Correction to Various Topics issue February 2010, ASU 2010-07 Not for Profit
entities issued January 2010, ASU 2010-04 Accounting for Various Topics -
Technical Corrections issued January 2010, ASU 2009-16 Transfers and
average holding period. Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.
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Servicing issued December 2009, ASU 2009-15 Accounting for Own-Share Lending
Arrangements issued October 2009, ASU 2009-14 Software: Certain Revenue
Arrangements that include Software elements issued October 2009, ASU 2009-13,
Revenue Recognition: Multiple-Deliverable Revenue Arrangements, EITF No. 09-1
Accounting for Own-Share Lending Arrangements issued July 2009.
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NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements February 28, 2010 and 2009
(Stated
(Stated in US Dollars)
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On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.
On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the costs of the interest retained.
As at
Note 3 Other Assets
Accumulated Net Book Value Net Book Value
Cost Depreciation February 28, 2010 February 29, 2008 the Company’s management determined that future development and operating costs on the wells owned would exceed future revenues therefore an adjustment to the carrying values of the oil and gas properties was recognized as additional depletion at February 29, 2008.
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In accordance with the KOKO Purchase Agreement, the Company has accepted financing for $1,594,760 due on demand, interest compounded annually at 4%, $400,000 at 10%, and $22,948 in non-interest bearing notes. At any time the Company may pay off all or any part of the principal that remains unpaid together with applicable interest. Gross promissory notes of $1,767,708 are not secured, and have no defined terms of repayment. Promissory notes of $250,000 are secured, by way of 250,000 shares in the capital stock of the Company and a collateral interest in the oil and gas properties. Interest of $118,770 has been accrued in the financial statements.
A related party loaned the Company $20,250 during the year ending February 28, 2009.
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2009
-------------------------------------------------------
Office equipment $3,629 $ 3,629 $ - $ 787
Computer equipment 1,433 1,433 - -
-------------------------------------------------------
$5,062 $ 5,062 $ - $ 787
=======================================================
Note 4 Common Stock
The authorized number of common shares remains at 75,000,000 common shares
with a par value of $0.001. At February 28, 2010 and 2009, 47,000,000 shares
of common stock were issued and outstanding. The Company alsohas agreed to issue
an additional 250,000 shares of the Company's common stock to a debt holder.
Note 5 Promissory Notes Payable
The Company's outstanding notes payable and accrued interest are summarized
as follows:
February 28, 2010 and 2009 February 28, 2010
Note Payable Accrued Interest
-----------------------------------------------
Fourteen (14) 4% notes
payable to investors in oil
and gas investments by the
Company, unsecured and due
on demand $ 1,594,760 $ 293,797
10% note payable to an
investor in oil and gas
investments by the Company,
unsecured and due on demand 172,948 65,300
10% note payable to a company
that sold oil and gas properties
to the Company, secured by the
oil and gas properties and due
on demand 250,000 74,999
-----------------------------------------------
$ 2,017,708 $ 434,096
===============================================
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capital stockpurchase of oil and gas properties. Due to non-payment of
the Company as a collateral interest against a promissory$250,000 note issuedpayable by the Company.
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Company these shares were valued at $3.05
per share and interest expenses of $381,250 was recognized for the years
ended February 28, 2007 and 2009. The 250,000 shares have not been issued as
of February 28, 2010, therefore, the liability section of the accompanying
balance sheet reflects a "Common stock issuance liability" of $762,500.
Interest expense related to the notes payable was $106,080 and $118,883 for
the years ended February 28, 2010 and 2009 respectively.
Note 6 Income Taxes
At February 28, 2009,2010, the Company had a net operating loss carry forward of
$4,907,857$5,114,680 which will begin to expire in 2025. A valuation allowance has been
provided for the deferred tax assets as it is uncertain whether the Company
will have future taxable income.
F- 11
QUANTUM ENERGY, INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 2009
(Stated in US Dollars)
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A reconciliation of the benefit for income taxes with amounts determined by applying the statutory federal income tax rate (34%) to the loss before income taxes is as follows:
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| 2009 | 2008 |
Benefit for income taxes computed using the statutory | $ 201,363 | $ 165,282 | ||
Non-deductible expense | - | - | ||
Change in valuation allowance | (201,363) | (165,282) | ||
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Provision for income taxes | $ - | $ - | ||
----------------------
2010 2009
----------------------
Benefit for income taxes computed using the
statutory rate of 34% $ 47,854 $ 201,363
Non-deductible expense - -
Change in valuation allowance (47,854) (201,363)
----------------------
Provision for income taxes $ - $ -
======================
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Company’sCompany's deferred tax assets were as follows
at February 28, 20092010 and February 29, 2008.
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| 2009 | 2008 |
Deferred tax assets and liabilities: |
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Stock issued for expenses | $ 259,250 | $ 129,625 | ||
Tax operating loss carry forward | 1,409,421 | 1,337,683 | ||
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| 1,668,671 | 1,467,308 |
Valuation allowance | (1,668,671) | (1,467,308) | ||
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Net deferred tax asset | $ - | $ - | ||
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