Scout Exploration (SCXN) 10-Q 2013 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 March 31, 2013

o Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______________ to ______________

Commission File Number 0 - 52280

SCOUT EXPLORATION, INC.

(Exact name of Small Business Issuer as specified in its charter)

Nevada	98-0504670
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

609-475 Howe Street, Vancouver, BC V6C 2B3

(Address of principal executive offices)

(604) 682-1643

(Issuer’s telephone number)

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 o   No þ

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 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 the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   Noþ

There are 16,541,356 common shares of Scout Exploration, Inc. issued and outstanding as of May 23, 2013.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Scout Exploration, Inc.

(an Exploration Stage Enterprise)

Interim Financial Statements

(Unaudited) (presented in US dollars)

March 31, 2013

1

INDEX

Interim Balance Sheets	3
Interim Statements of Stockholders’ Deficit	4
Interim Statements of Operations	5
Interim Statements of Cash Flows	6
Notes to the Interim Financial Statements	7

2

Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Balance Sheets
(Unaudited) (Presented in US Dollars)
	(Unaudited) March 31, 2013			September 30, 2012
Assets
Current
Cash	$	502		$	-
Liabilities
Current
Bank indebtedness	$	-		$	466
Accounts payable and accrued liabilities (Note 6)		369,515			395,903
Notes payable (Note 7)		79,349			37,534
Due to related parties (Note 6)		20,096			24,365
		468,960			458,268
Stockholders' Deficit
Preferred stock
Authorized: 1,000,000 shares with par value of $0.01
Issued: Nil (September 30, 2012 - Nil)		-			-
Common stock
Authorized: 50,000,000 shares with par value of $0.001
Issued: 16,541,356 (September 30, 2012 - 15,441,356)		16,541			15,441
Subscriptions received in advance		4,100			4,100
Additional paid in capital		1,368,977			1,315,077
Accumulated deficit		(1,858,076	)		(1,792,886	)
		(468,458	)		(458,268	)
	$	502		$	-
Going Concern (Note 1)

The accompanying notes are an integral part of the interim financial statements.

3

Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Stockholders' Equity
(Unaudited) (Presented in US Dollars)
From Incorporation on February 1, 1999 to March 31, 2013
	Shares of				Additional			Subscriptions
	common		Capital		paid-in			received			Subscriptions			Accumulated
	stock		stock		capital			in advance			receivable			Deficit			Total
Balance February 1, 1999		-	$	-	$	-		$	-		$	-		$	-		$	-
Subscriptions received in advance		-		-		-			37,100			-			-			37,100
Net loss for the period		-		-		-			-			-			(32,002	)		(32,002	)
Balance September 30, 1999		-		-		-	��		37,100			-			(32,002	)		5,098
Net loss for the year		-		-		-			-			-			(3,829	)		(3,829	)
Balance September 30, 2000		-		-		-			37,100			-			(35,831	)		1,269
Shares issued for cash		3,700,000		3,700		33,300			(37,000	)		-			-			-
Net loss for the year		-		-		-			-			-			(3,754	)		(3,754	)
Balance September 30, 2001		3,700,000		3,700		33,300			100			-			(39,585	)		(2,485	)
Net loss for the year		-		-		-			-			-			(3,216	)		(3,216	)
Balance September 30, 2002		3,700,000		3,700		33,300			100			-			(42,801	)		(5,701	)
Net loss for the year		-		-		-			-			-			(3,120	)		(3,120	)
Balance September 30, 2003		3,700,000		3,700		33,300			100			-			(45,921	)		(8,821	)
Net loss for the year		-		-		-			-			-			(3,127	)		(3,127	)
Balance September 30, 2004		3,700,000		3,700		33,300			100			-			(49,048	)		(11,948	)
Net loss for the year		-		-		-			-			-			(10,776	)		(10,776	)
Balance September 30, 2005		3,700,000		3,700		33,300			100			-			(59,824	)		(22,724	)
Shares issued for cash		1,700,000		1,700		83,300			-			-			-			85,000
Shares issued for mineral property		500,000		500		24,500			-			-			-			25,000
Net loss for the year		-		-		-			-			-			(85,201	)		(85,201	)
Balance September 30, 2006		5,900,000		5,900		141,100			100			-			(145,025	)		2,075
Shares issued for cash and subscription receivable		1,400,000		1,400		208,600			-			(75,000	)		-			135,000
Net loss		-		-		-			-			-			(131,869	)		(131,869	)
Balance September 30, 2007		7,300,000		7,300		349,700			100			(75,000	)		(276,894	)		5,206
Cash received for subscriptions receivable		-		-		-			-			75,000			-			75,000
Shares issued for consulting services		150,000		150		74,850			-			-			-			75,000
Shares issued for cash		1,397,000		1,397		557,403			4,000			(23,000	)		-			539,800
Net loss		-		-		-			-			-			(792,378	)		(792,378	)
Balance September 30, 2008		8,847,000		8,847		981,953			4,100			(23,000	)		(1,069,272	)		(97,372	)
Shares issued for consulting services		100,000		100		14,900			-			-			-			15,000
Cash received for subscriptions receivable		-		-		-			-			17,754			-			17,754
Net loss		-		-		-			-			-			(167,156	)		(167,156	)
Balance September 30, 2009		8,947,000		8,947		996,853			4,100			(5,246	)		(1,236,428	)		(231,774	)
Net loss		-		-		-			-			-			(73,488	)		(73,488	)
Balance September 30, 2010		8,947,000		8,947		996,853			4,100			(5,246	)		(1,309,916	)		(305,262	)
Net loss		-		-		-			-			-			(75,322	)		(75,322	)
Balance September 30, 2011		8,947,000		8,947		996,853			4,100			(5,246	)		(1,385,238	)		(380,584	)
Cash received for subscriptions
receivable		-		-		-			-			5,246			-			5,246
Shares issued for research and development		5,000,000		5,000		245,000			-			-			-			250,000
Shares issued for settlement
of accounts payable		1,494,356		1,494		73,224			-			-			-			74,718
Net loss		-		-		-			-			-			(407,648	)		(407,648	)
Balance September 30, 2012		15,441,356		15,441		1,315,077			4,100			-			(1,792,886	)		(458,268	)
Shares issued for settlement
of accounts payable		1,100,000		1,100		53,900			-			-			-			55,000
Net loss		-		-		-			-			-			(65,190	)		(65,190	)
Balance March 31, 2013		16,541,356	$	16,541	$	1,368,977		$	4,100		$	-		$	(1,858,076	)	$	(468,458	)

The accompanying notes are an integral part of the interim financial statements.

4

Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Operations
(Unaudited) (Presented in US Dollars)
	Cumulative from inception through March 31			Three months ended March 31						Six months ended March 31
	2013			2013			2012			2013			2012
Administrative expenses
Accounting and audit	$	255,473		$	14,889		$	2,000		$	16,889		$	4,000
Bank charges and interest		41,725			2,455			943			3,702			1,896
Consulting fees		117,983			-			-			-			-
Directors’ fees		158,000			6,000			6,000			12,000			12,000
Filing fees, dues and subscriptions		27,097			2,299			-			6,907			-
Foreign exchange loss (gain)		28,855			(3,102	)		3,369			(5,802	)		8,131
Legal		144,702			485			665			485			4,390
Magazine rights		5,100			-			-			-			-
Management fees		35,575			-			-			-			-
Office and administration		270,023			11,790			12,008			23,481			23,464
Promotion and travel		65,182			3,616			-			3,616			-
Research and development		252,457			977			-			2,457			-
Transfer agent		26,421			715			600			1,455			1,200
		1,428,593			40,124			25,585			65,190			55,081
Resource property expenses
Acquisition costs		30,000			-			-			-			-
Exploration costs		2,723			-			-			-			-
		32,723			-			-			-			-
Loss from impairment of investment		396,760			-			-			-			-
Loss and comprehensive loss	$	(1,858,076	)	$	(40,124	)	$	(25,585	)	$	(65,190	)	$	(55,081	)
Basic and diluted loss per share				$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Basic and diluted weighted average shares outstanding					16,541,356			8,947,000			16,154,543			8,947,000

The accompanying notes are an integral part of the interim financial statements.

5

Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Cash Flows
(Unaudited) (Presented in US Dollars)
	Cumulative from inception through March 31			Six months ended March 31
	2013			2013			2012
Cash flows from operating activities
Net loss	$	(1,858,076	)	$	(65,190	)	$	(55,081	)
Adjustments to reconcile net loss to net cash
used in operating activities
Services settled by issuance of common stock		115,100			-			-
Shares issued for debt settlement		74,718			-			-
Shares issued for research and development		250,000			-			-
Loss from impairment of investment		396,760			-			-
Expenses paid by subsidiary and forgiven		20,480			-			-
Foreign exchange loss (gain)		29,459			5,802			8,131
Accrued interest		15,342			3,858			1,860
Changes in operating assets and liabilities
Accounts payable and accrued liabilities		404,483			22,807			43,762
		(551,734	)		(32,723	)		(1,328	)
Cash flows from investing activities
Acquisition of investment		(417,240	)		-			-
Cash flows from financing activities
Proceeds from Issuance of common stock		889,554			-			-
Advances from (to) related parties		20,096			(4,269	)		-
Bank indebtedness		-			(466	)		-
Proceeds from issuance of notes payable		64,007			37,957			-
		973,657			33,222			-
Effect of exchange rate changes on cash		(4,181	)		3			61
Change in cash		502			502			(1,267	)
Cash at beginning of the period		-			-			2,930
Cash at end of the period	$	502		$	502		$	1,663
Supplemental disclosure with respect to cash flows
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

The accompanying notes are an integral part of the interim financial statements.

6

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

March 31, 2013

1. Nature of operations and going concern

Scout Exploration, Inc. (the “Company”) was incorporated in the State of Nevada on February 1, 1999. The Company was initially engaged in the business of designing, developing and marketing educational products. On April 10, 2006 the Company changed its name from Virtual Curricula Corp. to Scout Exploration, Inc.

The Company’s continuing operations, as intended, are dependent on management’s ability to raise required funding through future equity issuances, asset sales or a combination thereof, which is not assured. These financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business.

At March 31, 2013, the Company had suffered losses from exploration stage activities to date, and has a working capital deficit of $468,458. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2. Basis of presentation

The interim financial statements presented herein have been prepared by the Company in accordance with the accounting policies in its audited financial statements for the year ended September 30, 2012 and should be read in conjunction with the notes thereto.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim period presented have been made. The results of operations for the period presented is not necessarily indicative of the results to be expected for the year.

Interim financial data presented herein are unaudited, except for the balance sheet at September 30, 2012, which has been derived from the audited financial statements at that date.

3. Resource properties

On March 4, 2006 the Company signed a letter of agreement with a non-arms length private Canadian Corporation for a 100% interest in and to the Wheaton River AAV 1-9 Claims situated in the Whitehorse Mining District of the Yukon Territory, Canada. Terms of the purchase require a cash payment of $5,000 by March 31, 2006 (paid) and $20,000 on or before September 30, 2006 (subsequently deferred until such time as the Company is able to secure financing), and the issuance of 500,000 common shares of the Company (issued at fair value of $0.05 per common share). The Vendor will retain a 3% net smelter royalty, up to 2% of which can be re-purchased for $2,000,000.

7

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

March 31, 2013

4. IDS Letter of intent

On September 14, 2011 and as last amended on September 15, 2012, the Company entered into a letter of intent (“LOI”) with IDS Offshore Inc. (“IDS”) pursuant to which the Company may acquire the exclusive rights to certain intellectual property and patents surrounding the rapid oil boom project held and developed by IDS (the “Project”), for total cash consideration of $4,265,000 payable at various dates over a 3 year period commencing on June 15, 2013, and issuance of 5,000,000 common shares of the Company on signing the amended letter of intent (issued, valued at $0.05/share), and a total 7,500,000 common shares of the Company upon completion of various phases of the Project.

The cash consideration will be initially used to develop prototype. The costs associated with the project will be expenses until capitalization criteria are met.

5. Financial instruments and risk management

a) Fair value

The Company’s financial instruments include cash and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

b) Foreign exchange risk

The Company expects to raise equity predominantly in United States dollars. The Company is conducting business in Canada where financial transactions are based on the Canadian dollar. As such, the Company is subject to risks due to fluctuations in the exchange rates for the U.S. and Canadian dollar. The Company does not enter into derivative financial instruments to mitigate its exposure to foreign currency risk.

6. Related party transactions

a) During the six months ended March 31, 2013, directors’ fees of $12,000 (2012 - $12,000) were paid or accrued to two Directors of the Company.

b) During the six months ended March 31, 2013, office and administration fees of $23,481 (2012 - $23,139) were paid or accrued to a corporation controlled by an officer of the Company.

c) At March 31, 2013, $210,422 (September 30, 2012 - $238,636) owed to Directors and corporations controlled by a Director of the Company was included in accounts payable. The balance is due on demand, has no specific terms of repayments, is non-interest bearing and is unsecured, and accordingly fair value cannot be reliably determined.

d) As of March 31, 2013, directors of the Company have advanced $20,096 (September 30, 2012 - $24,365) in short term loans to the Company. The advances are due on demand, have no specific terms of repayment, are non-interest bearing and unsecured, and accordingly fair value cannot be reliably determined.

The above transactions occurred in the normal course of operations and were measured at the exchange value which represented the consideration established and agreed to by the related parties.

8

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

March 31, 2013

7. Notes payable

Notes payable comprise nine notes.

The first unsecured note has a principal amount of $10,000, bears interest at 25% per annum, and was due on June 21, 2010. As further consideration the lender will be issued shares of the Company’s capital stock having an aggregate value of $2,500. The principal amount, interest, and shares are all still outstanding subsequent to the period ended March 31, 2013.

The second unsecured note has a principal amount of $5,000, bears interest at 15% per annum, and is due on demand.

The third unsecured note has a principal amount of $3,072, bears interest at 15% per annum, and is due on demand.

The fourth unsecured note has a principal amount of $3,968, bears interest at 15% per annum, and is due on demand.

The fifth unsecured note has a principal amount of $4,010, bears interest at 15% per annum, and is due on demand.

The sixth unsecured note has a principal amount of $1,481, bears interest at 15% per annum, and is due on demand.

The seventh unsecured note has a principal amount of $35,000, bears interest at 25% per annum, and is due on demand.

The eighth unsecured note has a principal amount of $1,485, bears interest at 15% per annum, and is due on demand.

The ninth unsecured note has a principal amount of $293, bears interest at 15% per annum, and is due on demand.

9

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward Looking Statements

This report contains forward-looking statements that involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of precious and base metals, oil and gas, availability of funds, government regulations, operating costs, exploration costs, outcomes of exploration programs and other factors. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Our actual results may differ materially. In evaluating these statements, you should consider various factors. These factors may cause actual results to differ materially from any forward-looking statement. While these forward-looking statements are made in good faith and reflect our current judgment regarding our business plans, actual results from our operations will almost always vary, sometimes materially, from any future performance suggested herein.

General

The following discussion and analysis should be read in conjunction with our financial statements for the six months ended March 31, 2013, and notes related thereto appearing elsewhere in this report.

Plan of Operations

Over the next year our plan of operations is to further develop the airborne oil spill response system we acquired from IDS, and secure financing to carry out our operations.

On September 14, 2011 and as amended on July 31, 2012 and September 15, 2012, we entered into a letter of intent with IDS Offshore Inc. (“IDS”) pursuant to which we may acquire the exclusive rights to certain intellectual property and patents surrounding the rapid oil boom project currently under development by IDS (the “Project”), for total cash consideration of $4,265,000 payable at various dates over a 3 year period commencing on June 15, 2013, and issuance of 5,000,000 common shares of the Company on signing the amended letter of intent (issued at a value of $0.05 per share), and a total of 7,500,000 common shares of the Company upon completion of various phases of the Project.

The cash consideration will be initially used to develop a prototype. The costs associated with the project will be expensed until capitalization criteria are met.

Faster and more effective oil spill response represents an immanent challenge and opportunity for the oil exploration, production and transportation industries. Reliable solutions targeted for primary response—the first few hours immediately following an incident, before traditional response infrastructure can reach spills, have a critical impact on the scale of ecological damage and overall remediation costs.

10

Oil spill remediation costs can reach the multi-billion dollar range. For example, nominal remediation costs for the British Petroleum Deepwater Horizon incident have exceeded $40 billion to date.

Current methods entail a significant lag prior to deployment of response measures, during which time spill damage can spread exponentially. The unmanned, air deployed Scout / IDS response systems target this period, and significantly reduce time to containment and oil spill spread.

Equipment delivery by air has been an essential military tool for decades, and will become increasingly important in marine emergencies around the world.

As of March 31, 2013, we had $502 cash on hand and negative working capital of $468,458.

We will need to obtain additional financing in order to continue our plan of operations.

We believe that debt financing will not be a feasible alternative, as we do not have sufficient unencumbered tangible assets to secure any debt financing. We anticipate that additional financing will be equity financing from the sale of our common stock. However, we do not have any financing arranged and nor can we provide investors with any assurance that we will be able to raise sufficient funding from such potential equity financings.  In the absence of such financing, we will not be able to continue our operations and our business plan will then fail. Even if we are successful in obtaining equity financing to fund development of the Project, as well as other operational costs, there is no assurance of success. In the event we do not continue to obtain additional financing, we will be forced to abandon the Project.

Future Financing

We anticipate continuing to rely on sales of our common stock to finance our business operations. Issuances of additional shares of our common stock will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our plan of operations.

Results of Operations

General and administrative expenses have increased from $55,081 for the six months ended March 31, 2012 to $65,190 for the six months ended March 31, 2013, mainly due to fees related to the audit of our financial statements for the year ended September 30, 2012.

Our loss for the six months ended March 31, 2013 was $65,190 as compared to $55,081 for the six months ended March 31, 2012.

Item 3 Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

11

Item 4 Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 of the Exchange Act, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, these officers concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company's management, including our company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2013: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2013, there were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

12

PART II – OTHER INFORMATION

Item 1 LEGAL PROCEEDINGS.

None.

Item 2 UNREGISTERED SALES OF EQUITY SECURITIES.

None.

Item 3 DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4 (REMOVED AND RESERVED)

Item 5 OTHER INFORMATION.

None.

Item 6 EXHIBITS

Exhibit 31.1	Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1	Certifications of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certifications of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13

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.

Date:  May 23, 2013

SCOUT EXPLORATION, INC.

By: /s/ John Roozendaal                                       

Name: John Roozendaal

Title: President and Chief Executive Officer

By: /s/ Jason Walsh                                                

Name: Jason Walsh

Title: Treasurer and Principal Accounting Officer

By: /s/ Rene Lange                                                  

Name: Rene Lange

Title: Director

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