Endevco 10Q 2009 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2009

OR

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

COMMISSION FILE NUMBER 001-31433

ENDEVCO, INC.
(Exact name of registrant as specified in its charter)

Texas		74-2142545
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Three Riverway, Suite 825, Houston, TX 77056

(Address of principal executive offices, including zip code)

(713) 977-4662

(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act

None

Securities registered pursuant to 12(g) of the Exchange Act

Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ]No[ ].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ]		Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ].

The number of shares outstanding of the registrant's common stock as of June 30, 2009 was 70,971,647.

ENDEVCO, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
JUNE 30, 2009

PART I - FINANCIAL INFORMATION

	ITEM 1. Financial Statements
		Consolidated Balance Sheets - June 30, 2009 (Unaudited) and December 31, 2008	3
		Consolidated Statements of Operations (Unaudited) - Three and Six Months Ended June 30, 2009 and 2008	4
		Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2009 and 2008	5
		Notes to Consolidated Financial Statements (Unaudited)	6-8

	ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		9-14

	ITEM 3. Controls and Procedures		15

PART II - OTHER INFORMATION

	ITEM 1 through ITEM 6		16-17

SIGNATURES AND CERTIFICATIONS			18-22

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EnDevCo, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, 2009 Compared to December 31, 2008

				06/30/2009	12/31/2008
				(Unaudited)
ASSETS
Current Assets
	Cash			$ 8,564	$ 46,391
	Accounts receivable			49,995	111,676
	Accounts receivable - Joint			3,339	3,615
	Accounts receivable - Other			--	163,329
	Prepaid expense			3,069	3,069
		Total Current Assets		64,967	328,080

Property and Equipment
	Oil and gas properties and equipment under full cost method			24,122,966	24,123,599
	Less accumulated depreciation depletion and amortization			(1,311,842)	(1,227,521)
		Net Property and Equipment		22,811,124	22,896,078
			Total Assets	$ 22,876,091	$ 23,224,158
				==========	==========

LIABILITIES
Current Liabilities
	Accounts payable			$ 4,829,427	$ 4,728,580
	Accrued liabilities			1,534,302	1,114,616
	Revenue payable			86,670	55,657
	Taxes payable			417,583	376,624
	Payable to related party			4,701,834	4,556,054
	Note payable - GasRock			14,070,267	13,423,221
	Note payable - related party			1,813,224	1,813,224
		Total Current Liabilities		27,453,307	26,067,976

Long-Term Liabilities
	Common stock issuance liability			--	354,635
		Total Long-Term Liabilities		--	354,635
		Total Liabilities		27,453,307	26,422,611

DEFICIT
Stockholders' Deficit
Preferred Stock
	10,000,000 shares authorized, $0.01 par value,
		no shares outstanding		--	--
Common Stock
	500,000,000 shares authorized, without par value
		70,971,647 shares outstanding June 30, 2009 and
		70,971,647 shares outstanding December 31, 2008		43,769,892	43,315,408
Additional Paid in Capital				6,826,373	6,826,373
Retained Deficit				(58,173,481)	(56,340,234)
	Total Stockholders' Deficit			(7,577,216)	(6,198,453)
Non-controlling Interest				3,000,000	3,000,000
	Total Deficit			(4,577,216)	(3,198,453)
			Total Liabilities, Minority Interest and Stockholders' Deficit	$ 22,876,091	$ 23,224,158
				==========	===========

The accompanying notes are integral part of the consolidated financial statements.

EnDevCo, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2009 and 2008
(Unaudited)

			For the Three Months Ended		For the Six Months Ended
			June 30,		June 30,
			2009	2008	2009	2008
Revenues
	Oil Sales		$ 199,383	$ 1,086,753	$ 328,646	$ 1,578,923
	Gas Sales		182	39,847	613	110,386
	Pipeline Transmission		523	1,834	1,777	4,960
Total Revenues			200,088	1,128,434	331,036	1,694,269

Cost of Revenues
	Lease Operating Cost		34,377	203,533	95,324	453,504
	Production Taxes		15,339	80,992	24,679	121,481
	Depletion		40,721	114,595	84,321	229,189
Total Cost of Revenues			90,437	399,120	204,324	804,174
Gross Profit			109,651	729,314	126,712	890,095

Costs and Expenses
	General and administrative		156,445	339,707	408,164	416,497
	Salaries and wages		230,000	198,000	460,000	396,000
	Shareholder services		--	25,541	265	30,375
Total Costs and Expenses			386,445	563,248	868,429	842,872
Net Income (Loss) from Operations			$ (276,794)	$ 166,066	$ (741,717)	$ 47,223

Other Income and (Expenses)
	Interest and other income		3	200,000	6	200,025
	Hedging income (loss)		--	(3,683,816)	--	(4,333,431)
	Shareholder roundup expense		--	(43,795)	--	(2,435,960)
	Interest expense		(546,162)	(945,525)	(1,091,536)	(1,416,731)
		Total Other Income(Expenses)	$ (546,159)	$ (4,473,136)	$ (1,091,530)	$ (7,986,097)
		Net Loss	$ (822,953)	$ (4,307,070)	$ (1,833,247)	$ (7,938,874)
			==========	==========	==========	==========
Basic and Diluted Loss Per Common Share			$ (0.01)	$ (0.06)	$ (0.03)	$ (0.19)

Weighted average number of common
	shares used in basic and diluted
	loss per share calculations		70,971,647	71,756,474	70,789,425	42,106,392
			==========	==========	==========	==========
The accompanying notes are integral part of the consolidated financial statements.

EnDevCo, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

			Six Months Ended
			June 30,
			(Unaudited)
			2009	2008
Cash Flows from Operating Activities

Net Loss			$ (1,833,247)	$ (7,938,874)
Adjustments to Reconcile Net Loss to Net Cash
	Provided by operating activities:
		Amortization of loan fees	41,078	61,618
		Issuance of Stock for Consulting	99,849	--
		Issuance of stock for shareholder roundup	--	2,435,960
		Depletion	84,321	229,189
		Hedging activity	--	3,751,526

	Changes in assets and liabilities:
		Accounts receivable	61,681	(157,096)
		Accounts receivable - joint interests	276	9,937
		Accounts receivable - other	163,329	71,392
		Cash overdraft	--	(26,571)
		Prepaid expenses	--	1,364
		Revenue payable	31,013	36,175
		Accounts payable	100,847	--
		Accrued liabilities	419,686	219,095
		Taxes payable	40,959	8,108
		Payable to related party	145,780	1,012,182
Net Cash Provided (Used by) by Operating Activities			(644,428)	(285,995)

Cash Flows from Investing Activities:
Purchase oil and gas property			632	(5,660,529)
Liabilities related to oil and gas property acquisitions			--	5,660,529
Net cash Used by Investing Activities			632	--

Cash Flows from Financing Activities:
	Notes payable advances		605,969	285,837
Net Cash Provided (Used) by Financing Activities			605,969	285,837
Net Change in Cash			(37,827)	(158)

Cash and cash equivalents
Cash Balance, Begin Period			46,391	1,135
Cash Balance, End Period			$ 8,564	$ 977
			==========	==========
Supplemental Disclosures:
	Cash paid for Interest		1,085,111	801,925
	Stock issued for services		--	--

The accompanying notes are integral part of the consolidated financial statements.

EnDevCo, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2009

NOTE 1- Summary of Significant Accounting Policies

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions of Regulation S-B. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information from the Company's financial statements for the year ended December 31, 2008 included on the Company's Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

Basis of Presentation -- EnDevCo, Inc. was originally incorporated under the laws of the State of Texas on November 7, 1980 as Roberts Oil and Gas, Inc. On September 30, 2003, the Company filed a Restated Articles of Incorporation with the Secretary of State of the State of Texas to change its name to EnDevCo, Inc.

Principles of Consolidation -- The consolidated financial statements include the accounts of EnDevCo, Inc. and its subsidiaries, EnDevCo Eureka LLC, Superior Stock Transfer, Inc., EnDevCo Minerals, Inc., EnDevCo Refining Corporation, Africa Energy Group, Inc., Ouachita Gas Company, EnDevCo Colombia S.A. and EnDevCo Eureka del Peru S.A.C. (the Company). All material inter-company balances and transactions have been eliminated in consolidation. All subsidiaries except EnDevCo Eureka LLC and Superior Stock Transfer, Inc. (the Company's transfer agent) are inactive.

Cash and Cash Equivalents -- The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments - Management estimates that the carrying value of financial instruments reported in the financial statements approximates their fair values.

Oil and Gas Properties -- The Company follows the full cost method of accounting for its oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. Depletion of oil and gas properties is computed using all capitalized costs and estimated future development and abandonment costs, exclusive of oil and gas properties not yet evaluated, on a unit of production method based on estimated proved reserves.

Depletion expense for the six months ending June 30, 2009 was $84,321. Depletion expense for the six months ending June 30, 2008 was $229,189.

Income Taxes -- The Company accounts for income taxes pursuant to the asset and liability method of computing deferred income taxes. Deferred tax assets and liabilities are established for the temporary differences between the financial reporting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. When necessary, valuation allowances are established to reduce deferred tax assets to the amount expected to be realized.

Loss Per Share -- Basic loss per share is computed by dividing the loss by the weighted average number of common shares outstanding.
Diluted loss per share is computed using the weighted average number of common shares and the dilutive securities outstanding. Dilutive securities having an anti-dilutive effect on diluted loss per share are excluded from the calculation.

Use of Estimates -- Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

EnDevCo, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2008

NOTE 2 -Stockholders' Equity

The Board of Directors passed a Corporate Resolution that reads, "Pursuant to and in accordance with Article 2.13 of the Texas Business Corporation Act of the State of Texas the Company does hereby certify that, pursuant to the authority conferred on the Board of Directors by the Articles of Incorporation of the Corporation, and pursuant and in accordance with Article 2.13 of the Texas Business Corporation Act of the State of Texas, said Board of Directors, pursuant to unanimous written consent dated December 9, 2002, duly adopted a resolution providing for the authorization and issuance of 5,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value per share (the Series A Preferred Stock)". At the annual shareholders meeting held on October 15, 2004, the shareholders approved an increase in the total number of authorized Series A convertible preferred shares with a $0.01 par value to 10,000,000. Since April 20, 2008 there have been no preferred shares outstanding. During the quarter ended June 30, 2009 no shares of preferred stock were issued.

On March 10, 2008, the Company effected a 1 for 100 reverse stock split of its common stock. The weighted average number of common shares outstanding reflected in the statements of operations and the loss per share have been restated to reflect the reverse stock split.

NOTE 3 -Note Payable - GASROCK CAPITAL LLC

The Company entered into an advancing term credit agreement for $30,000,000 on April 13, 2006 through its subsidiary EnDevCo Eureka, LLC with GasRock Capital, LLC to fund the purchase of the Short Junction Field in Cleveland County Oklahoma. This agreement was increased to $50,000,000 on April 2, 2007. The balance at June 30, 2009 was $14,070,267, net of debt discount of $10,276, and the Company paid interest of $485,567 for the six month period ended June 30, 2009. The note is secured by all of EnDevCo Eureka's assets and certain personal assets owned by Chris A. Dittmar, CEO of the Company. EnDevCo Eureka's assets are cross-collateralized on a $3,469,000 loan made by GasRock Capital, LLC to Alliance Energy Corporation, a related party. This loan is currently in default, with interest only payments being made.

On April 9, 2008, GasRock delivered to the Company a Notice of Events of Default and Unmatured Events of Default ("Default Notice") under the Credit Agreement. Due to these claimed Events of Default, interest under the Credit Agreement began accruing at the Default Rate of 15% and 100% of EnDevCo's Net Revenues were applied to Debt Service and other Obligations as of April 9, 2008. On April 16, 2008, GasRock delivered to the Company a Notice of Acceleration ("Acceleration Notice") under the Notes due to the continuing claimed Events of Default under the Credit Agreement. The Acceleration Notice declared the amounts due under the Note to be accelerated and due and owing in full as of April 16, 2008.

On July 22, 2008, GasRock, Eureka and Alliance Energy Corporation ("Alliance", and together with Eureka, the "Borrowers"), entered into that certain Limited Forbearance Agreement, pursuant to which GasRock agreed, subject to the terms thereof, to forbear from pursuing remedies under the Credit Agreement and Notes in respect of the Events of Default claimed as of that same date until the earlier of (i) November 15, 2008 and (ii) the date that GasRock gives Eureka notice of any additional payment default under the Credit Agreement. Alliance is controlled by the Company's CEO and is a guarantor of the Eureka Obligations under the Credit Agreement. GasRock is also a lender to Alliance under an Advancing Term Credit Agreement (the "Alliance Credit Agreement", and together with the Credit Agreement, the "Credit Agreements".

The Forbearance is subject to the following conditions to be fulfilled:

1) On or before November 15, 2008, (i) the Borrowers must repay all Obligations (as defined in the Credit Agreements) or (ii) EnDevCo must have entered an agreement for the full or partial sale of the Short Junction Field, the proceeds of which would fully repay the Obligations owing under the Credit Agreements, and such sale shall close and repayment of the Obligations shall be made by December 31, 2008;

2) If the Obligations are not repaid by November 15, 2008, EnDevCo must assign a 5.0% net profits interest in the Short Junction Field to GasRock, effective as of November 1, 2008. The form of this assignment and the potential assignments discussed in paragraph 3, below, will be substantially in the form of the Conveyance of Net Profits Overriding Royalty Interests, attached as Exhibit A to the Forbearance Agreement;

7

EnDevCo, Inc. and Subsidiaries
June 30, 2008

3) If the Obligations are not repaid by December 15, 2008, EnDevCo must assign an additional 1.0% net profits interest in the Short Junction Field to GasRock, effective as of December 1, 2008, and will assign to GasRock an additional 1.0% net profits interest each subsequent month if the Obligations are not repaid by the 15th of such month;

4) EnDevCo shall escrow one 5% net profits interest conveyance and five 1% net profits interest conveyances to ensure it's delivery of any potential obligations under paragraphs 2 and 3, above;

5) Any and all Net Proceeds (as defined in the Forbearance Agreement) from any equity issuance, refinancing, or asset sale will be applied first to outstanding fees and expenses of GasRock, second to the accrued and unpaid interest on the Notes, and third to the outstanding principal balances on the Notes; and

6) The Borrowers must ensure that its hydrocarbon purchasers make payments relating to any of GasRock's overriding royalty interests in the Short Junction Field directly to GasRock.

NOTE 4 - Accounts Payable, Payable to Related Party

On June 5, 2007, EnDevCo entered into a farm-out agreement with an effective date of September 5, 2007, with Alliance Energy Corporation (AEC), a related party, whereby AEC paid all costs to drill an initial well (the WSJU #109StH, which is in production at the time of filing this report) and up to three future development wells. On June 30, 2008, the parties agreed to terminate the farm-out agreement thereby cancelling AEC's right to drill three future wells and transferring 100 percent ownership of the WSJU #109StH well to EnDevCo effective March 1, 2008. In consideration, EnDevCo agreed to assume approximately $5.7 million in liabilities resulting from the actual cost of drilling the WSJU #109StH well.

At June 30, 2009, the amount payable to Alliance was $4,701,834.

NOTE 5 - Notes Payable - Long Term - Related Party

The Company has three long term notes payable totaling $1,813,224. All three notes accrue interest at the LIBOR monthly average coupon rate (2.46%) at September 30, 2008. The first two notes are in the amounts of $363,224 and $950,000 respectively and are due and payable December 31, 2009. The third note is in the amount of $500,000 and is due and payable June 30, 2009. The maker of these notes consists of the following related parties managed by Campbell Evans: OCE Partners, LLC, and OCE Interests, LLC; and OCE Advisors, LLC, managed by Chris A. Dittmar. All notes are unsecured.

NOTE 6 - Going Concern

The Company has reported net losses aggregating $9,877,016 for the two (2) year period ended December 31, 2008. At June 30, 2009, the consolidated balance sheet reported a working capital deficit of $27,388,031. The Company must raise significant amounts of cash to pay its current liabilities and to provide investment funds to continue development of its oil and gas leases. There can be no assurance the Company's management will be able to secure funding.

NOTE 7 - 2008 Restatement

The December 31, 2008 consolidated balance sheet includes adjustments not reflected in the financial statement included in the Form 10-K filed on April 15, 2009. The Company did not properly classify a liability related to the future issuance of common stock and the effect of the net profits interest conveyed to GasRock starting in November 2008 (this entry was not material to the 2008 financial statement, but was made so that the first quarter of 2009 operations were not adversely effected).

8

EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, includes certain forward-looking statements. The forward-looking statements reflect the Company's expectations, objectives and goals with respect to future events and financial performance. They are based on assumptions and estimates, which the Company believes are reasonable. However, actual results could differ materially from anticipated results. Important factors that may impact actual results include, but are not limited to, commodity prices, political developments, market and economic conditions, industry competition, the weather, changes in financial markets and changing legislation and regulations. The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. The notes to Consolidated Financial Statements sections contain information that is pertinent to the following analysis.

GENERAL COMMENTS ON BUSINESS PLAN

EnDevCo, Inc., a shortened version of the "Energy Development Company", establishes an identity that is consistent with the business development activities currently underway in the Corporation. The Company is actively negotiating to participate in several oil and gas projects both domestically and internationally within the traditional industry scope of oil and gas exploration and production. These activities include production of oil and gas from interests held by the Company in the United States and Colombia. The Company is also investigating investment in the development of new technologies for the enhancement of oil and gas production and the utilization of that technology to further acquire oil and gas production.

OIL AND GAS EXPLORATION AND DEVELOPMENT

The Company is pursuing oil and gas exploration and development opportunities in both domestic and international venues. Domestically, the Company has secured certain development rights onshore and offshore in the Gulf of Mexico that will provide it with the opportunity to participate in the drilling of low risk development wells. As a result of recently acquired 3D seismic data that has been integrated with previously known geological and engineering data, several low risk development drilling opportunities have been identified. Participation in these types of relatively low risk and low cost wells will provide near term cash flow to support the activities of the Company.

Internationally, the Company has identified several other exploration projects that carry significant upside potential (although at higher risk). The Company currently holds an agreement for certain exploration rights in the Rio Magdalena Valley of Colombia. Our exploration teams are also evaluating other opportunities located in Canada, South America, North Africa and the Middle East.

Gulf of Mexico - The Company has entered into a farm-in agreement with BT Operating Co. wherein the Company will participate in the drilling and completion of four wells in Eugene Island Block 294 and/or Chandeleur Block 14 to earn a 50% working interest in each block prior to December 31, 2009.

The Company has also entered into a farm-in agreement with Mariner Energy, Inc. which grants the Company an assignment of their operating rights down to a depth of 12,800 feet upon the initial commercial completion of the OC sand in East Cameron Block 71. Open Choke Exploration, LLC has a 67% interest in the farm-in agreement and the Company has the remaining 33% interest.

The Company has designated Open Choke as the project Operator who will drill the East Cameron #71-9 well and attempt to complete the OC sand. In the event that this well is not successful, EnDevCo has the right to drill a replacement well to test the OC sand within a reasonable time frame.

Pursuant to a joint participation agreement between EnDevCo and Open Choke, the Company will have access to the production platforms on East Cameron Block 71/72 Field which are equipped with all necessary production facilities and pipelines to support increased oil and gas production resulting from drilling and completing new wells.

Block XXIV, Peru - Following an extensive bidding process, a consortium including EnDevCo was awarded the exclusive concession to develop the Block XXIV prospect area located in northwest Peru. EnDevCo owns 20% of the consortium. Covering more than 276 thousand acres, the block contains both onshore and offshore prospects. The area is bracketed by recent discoveries to the immediate north (Olympic) and south (Olympic and Petrotech). The primary target horizon for the off shore area is the naturally fractured Amotape formation of Paleozoic age (quartzites, slates, etc.). This target formation boasts similar characteristics to those that have produced oil in the nearby Portachuelo Field and, more recently, the offshore San Pedro discovery. The reinterpretation of well logs using new technology indicates pay in target formation. Northwest Peru has solid infrastructure and substantial power demand, creating a ready-market for gas. For EnDevCo, the region represents an excellent opportunity for an integrated gas-to-power project.

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EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

OIL AND GAS EXPLORATION AND DEVELOPMENT (cont)

Cleveland County, Oklahoma - On April 13, 2006, the Company acquired a 98.712% working interest with a 70.085% net revenue interest in the West Short Junction Unit and a 100% working interest with a 71% net revenue interest in the Central Short Junction Unit hereinafter referred to as the ("Short Junction Field and/or the Field") located in Oklahoma City, Oklahoma through its subsidiary EnDevCo Eureka, LLC for a purchase price of $11.5 million. EnDevCo Eureka, LLC is owned 55% by its parent EnDevCo, Inc. and 45% by private investors who are related parties. These investors contributed $3.0 million in equity to enable EnDevCo to consummate the transaction. EnDevCo Eureka, LLC, managed by EnDevCo personnel, is the Operator for the Field which has an acquisition date of January 01, 2006.

Project financing was provided by GasRock Capital, LLC of Houston, Texas and now takes the form of a $50.0 million credit facility. GasRock Capital provides project based mezzanine debt financing to the oil and gas industry by backing proven management teams that identify high quality exploitation projects like the Short Junction Field.

The 12,000 acre fully unitized Field currently consists of 24 oil wells and 2 gas wells, 4 central collection and metering stages and 4 salt water disposal wells. The Field is currently producing 60 barrels of oil equivalent (BOE) per day comprised of 41 barrels of oil and 115 Mcf of gas from 25 verticle wells. Production from the single horizontal well is currently shut-in awaiting repair of the electrical submersible pump.

Since acquiring the Field, the Company has methodically performed maintenance activities on all oil wells to include improved chemical and hot oil treatments; new pump jacks, existing pump jack re-alignment, bearing and rod replacement, beam compressor installation and pipeline integrity testing and cleanout. EnDevCo has also installed new pumps, a new water knockout and two new heater treaters for improved oil separation at the central collection and metering stages and terminated the re-injection of water into the Hunton reservoir by re-piping and installing a new salt water disposal well.

The Field purchase included full ownership rights to a field wide gas pipeline and gathering system that offers two independent taps to the interstate gas transmission system.

Short Junction Field was originally developed by Conoco using vertical wells drilled on a 40 acre well spacing, resulting in oil and gas production from 270 active wells within the 12,000 acre leasehold. The Field currently contains 34 unplugged production well bores of which 26 are currently active. EnDevCo plans to continue a workover and recompletion program to further increase the current daily production.

Historically the primary zone of interest has remained the Hunton formation for oil production. However, above the Hunton, the Bartlesville, Prue, Red Fork and Skinner Sandstones along with the Pink Lime zones are present and most are indicated as productive based on well log analysis.

Current bottom hole pressures recently measured in the Hunton indicate that formation pressure today is essentially the same as when the Field was originally placed on production. This unique characteristic occurs as a result of the fact that Conoco instituted a water flood pressure maintenance program in the early stages of developing the field. As a result of this pressure maintenance, the original gas cap in the Hunton reservoir has never been produced.

EnDevCo plans to implement a 3D seismic program over the leasehold in order to pursue an aggressive horizontal drilling program in the Hunton formation to increase oil and gas production from that reservoir and to develop identified shallow gas sand reservoirs indicated on the subsurface well control.

ENERGY TECHNOLOGY DEVELOPMENT

Development and implementation of new energy technologies will become a key new business focus for the Company. The identification of and early participation in the implementation of these types of technologies opens several avenues for potential revenue generation and profits. In some instances, the technology can be manufactured and sold to end users once the market accepts the technology. In other instances, the technology might provide a unique competitive advantage that can be successfully leveraged by the Company in the acquisition and development of existing energy projects. Initially, the Company will limit its scope of investigation to those technologies that directly compliment the oil and gas, and power industries.

POWER GENERATION

EnDevCo's management team has extensive experience and expertise in the area of power plant development, operations and commercial management. The Company intends to leverage these capabilities by developing integrated gas-to-power and greenfield development projects in markets that create additional value through the gas-power delivery option.

EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2008

Line	Description		Six Months Ended June 30,		Differences	Percent
			2009	2008		Change

1	Revenues		$ 331,036	$ 1,694,269	$ (1,363,233)	-80.46%
2	Cost of Revenues		$ 204,324	$ 804,174	$ (599,850)	-74.59%
3	Costs and Expenses		$ 868,429	$ 842,872	$ 25,557	3.03%
4		General and Administrative Expense	$ 408,164	$ 416,497	$ (8,333)	-2.00%
5		Salaries and Wages	$ 460,000	$ 396,000	$ 64,000	16.16%
6		Shareholder Services	$ 265	$ 30,375	$ 30,110	-99.13%
7	Other Income and (Expenses)		$ (1,091,531)	$ (7,986,097)	$ 6,894,566	-86.33%
8		Interest and Other Income	$ 5	$ 200,025	$ 200,020	-100.00%
9		Hedging Loss	--	$ (4,333,431)	$ (4,333,431)	-100.00%
10		Interest Expense	$ (1,091,536)	$ (1,416,713)	$ (325,195)	-22.95%
11		Round-up Shares	--	$ (2,435,960)	$ (2,435,960)	-100.00%

Analysis of Six Months Comparison

Line 1 - Revenue decreased overall by $1,363,233 during the first half of 2009 as compared to 2008. This is due to the combined effect of: 1) lower production from the Short Junction field (including the WSJU #109StH being shut-in awaiting repairs) and 2) unfavorable changes in oil and gas pricing during the period.
Line 2 - Costs of revenues decreased overall $599,850 due to lower LOE, production taxes and depletion.
Line 3 - Total costs and expenses increased overall $25,557 during the first half of 2009 as compared to 2008. The detail explaining this decrease is shown on lines 4 and 6 below.
Line 4 - This decrease of $8,333 is due to the reduced use by the Company of external financial consultants and accounting services during the quarter.
Line 5 - Salaries and wages were higher by $64,000 as compared to the previous year.
Line 6 - This is due to a timing difference.
Line 7 - The Company reports a favorable change in other income and expenses of $6,894,566 in the current period. The detail explaining this increase is shown on lines 8 through 11 below.
Line 8 - Other income decreased by $200,020 as compared to 2008 when the Company reported gains from the settlement of various outstanding claims.
Line 9 - The acquisition financing for the Short Junction Field required that certain hedges be put in place during the term of the loan. Retired at the end of 2008, these hedges are marked to market every reporting period, the outcome of which resulted in a loss of $7,986,097 during the first half of 2008.
Line 10 - Interest expense decreased by $325,195.

11

EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2008

Line	Description		Three Months Ended June 30,		Differences	Percent
			2009	2008		Change

1	Revenues		$ 200,088	$ 1,128,434	$ (928,346)	-82.27%
2	Cost of Revenues		$ 90,437	$ 399,120	$ (308,683)	-77.34%
3	Costs and Expenses		$ 386,445	$ 563,248	$ (176,803)	-31.39%
4		General and Administrative Expense	$ 156,445	$ 339,707	$ (183,262)	-53.95%
5		Salaries and Wages	$ 230,000	$ 198,000	$ 32,000	16.16%
6		Shareholder Services	--	$ 25,541	$ (25,541)	-100.00%
7	Other Income and (Expenses)		$ (546,159)	$ (4,473,136)	$ 3,926,977	-87.79%
8		Interest and Other Income	$ 2	$ 200,000	$ (199,998	-100.00%
9		Hedging Loss	--	$ (3,683,816)	$ 3,683,816)	-100.00%
10		Interest Expense	$ (546,162)	$ (945,525)	$ 399,363	-42.24%
11		Shareholder roundup expense	--	$ (43,795)	$ 43,795	-100.00%

Analysis of Three Months Comparison

Line 1 - Revenue decreased overall by $928,346 during the second quarter of 2009 as compared to 2008. This is due to the combined effect of: 1) lower production from the Short Junction field (including the WSJU #109StH being shut-in awaiting repairs) and 2) unfavorable changes in oil and gas pricing during the period.
Line 2 - Costs of revenues decreased overall $308,683 due to lower LOE, production taxes and depletion.
Line 3 - Total costs and expenses decreased overall $176,803 during the second quarter of 2009 as compared to same quarter in 2008. The detail explaining this decrease is shown on lines 4 and 6 below.
Line 4 - This decrease of $183,262 is due to the greater use by the Company of external financial consultants and accounting services during the quarter.
Line 5 - Salaries and wages were higher by $32,000 as compared to the previous year.
Line 6 - This is due to a timing difference.
Line 7 - The Company reports a favorable change in other income and expenses of $3,926,977 in the current period. The detail explaining this increase is shown on lines 8 through 11 below.
Line 8 - Other income decreased by $199,998 as compared to 2008 when the Company reported gains from the settlement of various outstanding claims.
Line 9 - The acquisition financing for the Short Junction Field required that certain hedges be put in place during the term of the loan. Retired at the end of 2008, these hedges are marked to market every reporting period, the outcome of which resulted in a loss of $3,683,816 during the second quarter of 2008.
Line 10 - Interest expense increased by $399,363.

12

EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash		Six Months Ended June 30,
		2009	2008

Net cash provided by/(used in)
	Operating activities	$ (644,428)	$ (285,995)
	Investing activities	632	--
	Financing activities	605,969	285,837
Increase/(decrease) in cash and cash equivalents		$ (37,827)	$ (158)
		==========	==========
Cash and cash equivalents		$ 8,564	$ 977
		==========	==========

Cash Flow from Operating Activities

2009
Cash used by operating activities totaled $644,428 during 2009. Cash used by operating activities during 2008 was $285,995. Contributing to this difference was a decrease in accounts receivable of $61,681, an increase in accounts payable of $100,847, an increase in accrued liabilities of $419,686 and an increase in payable to related party of $145,780.

2008
Cash used by operating activities totaled $285,995 during 2008. Cash used by operating activities during 2007 was $756,767. Contributing to this difference was an increase in accounts receivable of $75,767, a cash overdraft decrease of $26,571, a prepaid expense decrease of $1,364, a revenue payable increase of $36,175, an increase in accrued liabilities of $219,095 and an increase in payable to related party of $1,012,182 due to the termination of the farm-out agreement with AEC.

Cash Flow from Investing Activities

2009
The gross value of property, plant and equipment decreased by $632 during the first half of 2009.

2008
As a result of the termination of the farm-out agreement with AEC, the Company acquired oil and gas property during 2008 in the amount of $5,660,529 and assumed liabilities of $5,660,529 for the WSJU #109StH well and the Short Junction Field.

EnDevCo, Inc. and Subsidiaries
June 30, 2009

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

LIQUIDITY AND CAPITAL RESOURCES (cont)

Cash Flow from Financing Activities

2009
The Company increased its note payable for the Short Junction project by $605,969.

2008
The Company increased its note payable for the Short Junction project by $285,837.

Directors and Officers Compensation

The Company currently has nominal cash reserves and cash flow from operations. Until such time as the financial condition of the Company improves, the Company's Directors and Officers have agreed to have their salaries accrued.

Project Development Guidelines

In recognition of the status of current financial resources available to the Company, executive management is committed to identifying and implementing projects that can be primarily project financed. This strategy reduces financial risk to the Company, but necessarily adds additional lead time before projects can be secured and announced to the shareholders.

There are no assurances, however, that the Company will be able to identify and implement financing to develop its projects or that it will be able to generate sufficient revenue growth and improvements in working capital.

The Company intends to raise working capital through the sale of its Common stock. No assurance can be given that funds will be available from any source when needed by the Company or, if available upon terms and conditions reasonably acceptable to the Company.

The Company is exploring debt and equity financing.

EnDevCo, Inc. and Subsidiaries
June 30, 2009

ITEM 3. CONTROLS AND PROCEDURES

As required by Rule 13a-15(b), Company's executive management, including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Rule 13a-15(d), the Company's executive management, including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, also conducted an evaluation of the Company's internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Based on that evaluation, there has been no such change during the period covered by this report.

EnDevCo, Inc. and Subsidiaries
June 30, 2009

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Legal Proceedings for the Quarter ended June 30, 2009:

As of June 1, 2007, the law firm of Phillips & Akers, P.C. ("P&A"), are the attorneys of record for the Company in a case styled: Cause No: 2006-34662; Farzad Askari v. EnDevCo, Inc.

Mr. Askari filed a breach of contract case claiming the Company (the Defendant) had not paid Mr. Askari (the Plaintiff) for work he did as an alleged consultant in 2002 for John W. Adair and Adair International Oil & Gas, Inc. The Company believed that Mr. Askari was never a consultant for the Company and never performed any work for the Company and therefore was not entitled to receive any compensation from the Company.

The case went to trial and the jury's verdict was that Mr. Askari was not entitled to any compensation and that judgment was entered on January 11, 2008. All of Mr. Askari's post trial motions to date have been unsuccessful; however, he filed notice of appeal in the 14th Court of Appeals. Appellate briefs were filed by by both parties and after receiving them the Court declined to hear oral arguments.

On July 02, 2009, the 14th Court of Appeals ruled that the trial court judgment in all things and in all ways was affirmed.

P&A are the attorneys of record for the Company in a case styled: Cause No: CJ 07 1859 L; Basic Energy Services, LP v. EnDevCo Eureka, LLC. et al.

Basic Energy Services has filed a breach of contract case claiming EnDevCo Eureka, LLC (the Defendant) has not paid for goods and services, totaling $1,315,910, that are in dispute between the parties. Following a review of all disputed invoices, the Company signed a settlement agreement on July 07, 2008 with the Plaintiff. The Company has paid 60 percent of the settlement amount, but remains in default until the remaining balance is paid.

As of May 15, 2008, P&A and J. John Hager, are the attorneys of record for the Company in a case styled: Cause No: CIV-08-0395-HE; KAL Drilling Inc. v. EnDevCo Eureka, LLC. et al.

KAL Drilling has filed a breach of contract case claiming EnDevCo Eureka, LLC (the Defendant) has not paid for goods and services that are in dispute between the parties. The Company has denied all of Plaintiff's allegations and filed a counterclaim against the Plaintiff on May 15, 2008 for breach of contract, misrepresentations, fraud, negligence and gross negligence.

The Company is a party to various claims, but is not a party to any other litigation at this time. Although no assurances can be given, the Company believes based on its experience to date, that the ultimate resolution of such items, individually or in the aggregate, would not have a material adverse impact on the Company's financial position or results of operations.

ITEM 2. CHANGES IN SECURITIES
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

EnDevCo, Inc. and Subsidiaries
June 30, 2009

ITEM 3. DEFAULTS UPON SENIOR SECURITIES (cont)

The Forbearance, is subject to the following conditions to be fulfilled:

4) EnDevCo shall escrow one 5% net profits interest conveyance and five 1% net profits interest conveyances to ensure it's delivery of any potential obligations under paragraphs 2 and 3, above;

6) The Borrowers must ensure that its hydrocarbon purchasers make payments relating to any of GasRock's overriding royalty interests in the Short Junction Field directly to GasRock.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8 -K

(a)Exhibits

31.1 Certification by CEO and CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.2 Certification by CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

(b)Reports on Form 8-K

None.

EnDevCo, Inc. and Subsidiaries
June 30, 2009

In accordance with the requirements of Section 13 of 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 19, 2009.

ENDEVCO, INC.

CHRIS A. DITTMAR
CHRIS A. DITTMAR
CHIEF EXECUTIVE OFFICER AND DIRECTOR

RICHARD G. BOYCE
RICHARD G. BOYCE
CHIEF OPERATING OFFICER AND DIRECTOR

JOSEPH LESSARD
JOSEPH LESSARD
CHIEF FINANCIAL OFFICER

JOHN A. BRUSH
JOHN A. BRUSH
NON-EXECUTIVE DIRECTOR

FREDERICK CEDOZ
FREDERICK CEDOZ
NON-EXECUTIVE DIRECTOR

CHARLES R. CLOSE
CHARLES R. CLOSE
NON-EXECUTIVE DIRECTOR

EnDevCo, Inc. and Subsidiaries
June 30, 2009

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of EnDevCo, Inc. (the "Company") on Form 10Q (the "Report") for the quarter ended June 30, 2008 (the "Reporting Period"), as filed with the Securities Exchange Commission on the date hereof under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the undersigned, Chris A. Dittmar, Chief Executive Officer of the Company, certifies pursuant to Rule 13a-14(a) or 15d-14(a) under the Exchange Act that:

1. I have reviewed the Report.

2. Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they are made, not misleading with respect to the Reporting Period.

3. Based on my knowledge, the consolidated financial statements and other financial information included in the Report fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of the date and for the periods reported therein.

4.   The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Company and internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) for the Company, and we have:

     (a) designed those disclosure controls and procedures, or caused them to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by other personnel employed by the Company and its subsidiaries, particularly within the Reporting Period;

     (b) designed those internal controls over financial reporting, or caused them to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of those disclosure controls and procedures, as of the end of the Reporting Period based on that evaluation; and

(d) disclosed in the Report any change in the Company's internal control over financial reporting that occurred during the last fiscal quarter of the Reporting Period that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.

5. Based on our most recent evaluation of internal control over financial reporting, the Company's other certifying officer and I have disclosed to the Company's auditors and the audit committee of the Company's board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

CHRIS A. DITTMAR
CHRIS A. DITTMAR
CHIEF EXECUTIVE OFFICER
August 19, 2009

EnDevCo, Inc. and Subsidiaries
June 30, 2009

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) OR 15D-14(A) UNDER THESECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of EnDevCo, Inc. (the "Company") on Form 10Q (the "Report") for the quarter ended June 30, 2008 (the "Reporting Period"), as filed with the Securities Exchange Commission on the date hereof under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the undersigned, Joseph Lessard, Chief Financial Officer of the Company, certifies pursuant to Rule 13a-14(a) or 15d-14(a) under the Exchange Act that:

1. I have reviewed the Report.

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

JOSEPH LESSARD
JOSEPH LESSARD
CHIEF FINANCIAL OFFICER
August 19, 2009

EnDevCo, Inc. and Subsidiaries
June 30, 2009

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(B) OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

In connection with the Quarterly Report of EnDevCo, Inc. (the "Company") on Form 10Q (the "Report") for the quarter ended June 30, 2008, as filed with the Securities Exchange Commission on the date hereof under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the undersigned, Chris A. Dittmar, Chief Executive Officer, certifies pursuant to Rule 13a-14(b) or 15d-14(a) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the date and for the periods reported therein.

CHRIS A. DITTMAR
CHRIS A. DITTMAR
CHIEF EXECUTIVE OFFICER
August 19, 2009

EnDevCo, Inc. and Subsidiaries
June 30, 2009

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

In connection with the Quarterly Report of EnDevCo, Inc. (the "Company") on Form 10Q (the "Report") for the quarter ended June 30, 2008, as filed with the Securities Exchange Commission on the date hereof under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the undersigned, Joseph Lessard, Chief Financial Officer of the Company, certifies pursuant to Rule 13a-14(b) or 15d-14(a) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

JOSEPH LESSARD
JOSEPH LESSARD
CHIEF FINANCIAL OFFICER
August 19, 2009

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	7th grade Avg

Endevco (ENDE) Inactive 10-Q2009 Q2 Quarterly report

Content analysis

GENERAL COMMENTS ON BUSINESS PLAN

OIL AND GAS EXPLORATION AND DEVELOPMENT

RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

ITEM 3. CONTROLS AND PROCEDURES

ITEM 6. EXHIBITS AND REPORTS ON FORM 8 -K