We valued the 1,000,000 shares issued with the note at $40,000 based on our stock trading price on the date of the promissory note. We allocated the proceeds from the issuance of the note and common stock based on the proportional fair value for each item. Consequently, we recorded a discount of $37,000 on the promissory notes, which is being amortized over the term of the note. For the six months ended June 30, 2010, amortization of the discount amounted to $18,193, which was recorded as interest expense. The Company also recorded an additional interest expense of $22,500 during 2010 which was accrued at June 30, 2010.
Carr Miller Modification and Consolidation Agreement – Related Party
As of December 31, 2009 the Company had obligations due to Carr Miller Capital, LLC (“Carr Miller”) aggregating $7,246,218 under multiple agreements previously entered into with Carr Miller, the details of which are included in our Form 10-K for the year ended December 31, 2009 filed on April 15, 2010. Prior to the Modification and Consolidation Agreement discussed below, the Company recognized amortization and interest related to these Carr Miller obligations totaling $716,867 for the six months ended June 30, 2010.
On March 12, 2010, the Parties agreed to enter into a Global Financing Agreement Extension with Carr Miller, whereby Carr Miller’s commitment to provide the Company with the remaining funding shall be extended to June 30, 2010. In satisfaction of its commitment under the GFA, Carr Miller shall, prior to June 30, 2010, have the option to (a) return an aggregate of 14,250,000 shares of the Company’s common stock currently registered under Carr Miller’s name to the Company for cancellation; (b) cancel and forgive certain debts owed by the Company to Carr Miller in the amount of $1,425,000; or (c) provide the Company with the remaining funding as set forth under the December 2008 GFA. On July 30, 2010, Carr Miller agreed to return the 14,250,000 shares of the Company’s common stock and the Parties agreed that Carr Miller will return the shares no later than September 30, 2010.
Additionally, on March 25, 2010, the Company entered into a Modification and Consolidation Agreement with Carr Miller whereby all outstanding Carr Miller promissory notes in the aggregate principal amount of $7,321,218, plus all accrued interest and penalties thereon, were consolidated into one new promissory note (“New Note”). The New Note has a principal amount of $8,376,169 and states that commencing March 25, 2012, the Company is required to make equal monthly installment payments of principal and interest on the note. The New Note has a maturity date of March 25, 2014 and bears interest at the rate of 10% per annum. In the event this note is unpaid within ten days of its maturity date, the Company will incur a late charge equal to 10% of the note amount. As an inducement to enter into the Modification and Consolidation Agreement, within thirty days of the agreement, the lender is also to receive one share of the Company’s common stock for every dollar of the principal amount of the loan. In accordance therewith, Carr Miller was issued 8,376,169 shares of the Company’s common stock in March 2010.
This transaction has been accounted for as a Troubled Debt Restructuring (“TDR”). The transaction was determined to be a TDR based on the creditor being deemed to have granted a concession since the debtor’s effective borrowing rate on the restructured debt is less than the effective borrowing rate of the old debt immediately prior to the restructuring. In addition, on the modification date it was determined that the total future cash payments under the terms of the modified note were greater than the carrying amount of the original note. Accordingly, the effects of the restructuring were accounted for prospectively from the time of the restructuring, and the difference between the total future cash payments under the terms of the modified note and the carrying amount of the original note were amortized to interest expense. Accordingly, the Company recorded interest expense in the amount of $98,125 for the six months ending June 30, 2010.
Summary
The following summarizes the Company’s notes and loan payable as of June 30, 2010:
| Instrument | | Maturity Dates | | Principal Amount Owed | | | Debt Discount | | | Amount Reflected on Balance Sheet | |
| Convertible Notes | | | | | | | | | | | | | | |
| Convertible Notes Series 1 | | September - October 2009 | | $ | 666,667 | | | $ | - | | | $ | 666,667 | |
| Other Convertible Notes | | March - June 2011 | | | 500,000 | | | | (400,000 | ) | | | 100,000 | |
| Non-Convertible Notes | | | | | | | | | | | | | | |
| Other Promissory Notes | | January 2008 - December 2010 | | | 565,000 | | | | (16,756 | ) | | | 548,244 | |
| Long-Term Notes Payable | | | | | | | | | | | | | | |
- related party | | March 2014 | | | 8,376,169 | | | | (3,788,290 | ) | | | 4,587,879 | |
| | | | | | | | | | | | | | | |
| Total | | | | $ | 10,107,836 | | | $ | (4,205,046 | ) | | $ | 5,902,790 | |
| | | Less long-term portion | | | | | | | | | | | 4,587,879 | |
| | | Current portion | | | | | | | | | | $ | 1,314,911 | |
The current portion is reflected in the balance sheet as follows:
| | | June 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| Notes payable, net | | $ | 548,244 | | | $ | 1,218,334 | |
| Notes payable, net – related party | | | - | | | | 375,000 | |
| Convertible notes, net | | | 766,667 | | | | 666,667 | |
| Current portion of long term notes payable – related party | | | - | | | | 987,761 | |
| | | $ | 1,314,911 | | | $ | 3,247,762 | |
NOTE 5 - STOCKHOLDERS’ EQUITY - NOT DISCLOSED ELSEWHERE
Common Stock
In February 2010, the Company issued 803,137 shares of common stock for legal services performed in 2009 valued at $0.02 per share.
On February 26, 2010, the Company settled the remaining monthly payments to the partners of Indigo-Energy Partners, LP aggregating $1,350,000 by issuing 54,000,000 shares of the Company’s common stock at $0.025 per share, a 50% discount to the closing share price on the date of the agreement. The shares were issued in March 2010.
On June 17, 2010, the Company issued 250,000 shares of common stock to certain of its board members, Brad Hoffman, Everett Miller and Hercules Pappas. The shares were valued based on the closing price of the Company’s common stock on the date of issuance resulting in a compensation expense of $22,500 for the six months ended June 30, 2010.
During the six months ended June 30, 2010, the Company issued an aggregate of 19,029,107 shares of common stock to settle outstanding professional fees.
Shares Issued Pursuant to Various Consulting Agreements
On January 5, 2010, the Company entered into an agreement with a consultant to provide various services in exchange for 1,000,000 shares of its restricted common stock. The term of this agreement is three months commencing January 1, 2010. The shares were issued in March 2010. For the six months ending June 30, 2010, the Company recorded $60,000 of general and administrative expenses related to such issuance.
On March 24, 2010, the Company entered into an agreement with a consultant to provide various services in exchange for a consulting fee of $20,000 for each three month period and 250,000 shares of its restricted common stock. The shares were issued in April 2010. The term of this agreement is three months commencing March 1, 2010 and shall automatically renew for subsequent three month terms unless terminated with 30 days notice by either party. For the six months ending June 30, 2010, the Company recorded $35,000 of general and administrative expenses.
On April 20, 2010, the Company entered into an agreement with a consultant to provide various services in exchange for a consulting fee of $500 per month and 100,000 shares of its restricted common stock. The shares were issued in April 2010. The term of this agreement is three months commencing April 21, 2010 and shall automatically renew month to month unless terminated with 30 days notice by either party. For the six months ending June 30, 2010, the Company recorded $6,000 of general and administrative expenses related thereto.
NOTE 8 - GOING CONCERN
The Company has incurred significant losses since its inception and is delinquent on many of its obligations to its creditors. Also, its current liabilities exceed its current assets. The Company has been borrowing money and has assigned certain net revenue interests in oil and gas properties as collateral or consideration for these loans. The Company needs to raise a significant amount of cash to fund current operations and current capital commitments. There are no assurances the Company will receive funding necessary to implement its business plan. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.
The Company plans to raise funds from private offerings of equity and debt securities in addition to expected revenue from its gas wells in order to fund its operations through June 30, 2011. The Company will need to raise additional funds in the event it locates additional prospects for acquisition, experiences cost overruns at its current prospects, or fails to generate projected revenues.
The Company’s ability to continue as a going concern is dependent upon the Company raising additional financing on terms desirable to the Company. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on terms favorable to the Company, management may be required to delay, scale back or eliminate its well development program or even be required to relinquish its interest in one or more properties or in the extreme situation, cease operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 8 - RELATED PARTY TRANSACTIONS - NOT DISCLOSED ELSEWHERE
On March 25, 2010, the Company entered into an agreement with Everett Miller to provide various services including assisting in the raising short and long-term financing, the development of the Company’s Strategic Marketing and Business Plan, and other duties in his role as Chief Operating Officer. As compensation, Everett Miller will be reimbursed for all approved business-related expenses. In addition, he will receive an annual consulting fee of $250,000, which will be phased in, in accordance with available cash flow and operational considerations. The term of this agreement is six months commencing April 1, 2010 and shall automatically renew for subsequent three month terms unless terminated with 30 days notice by either party. For the six months ended June 30, 2010, the company recorded compensation expense and a corresponding accrued expense in the amount of $62,500.
On June 15, 2010, the Company entered into an agreement with Infinity Investments, LLC (“Infinity”), an entity controlled by James Walter, Jr., to provide various services including assisting in the raising of short and long-term financing, and acting as a liaison with key shareholders and investors of the Company. As compensation, Infinity will be reimbursed for all approved business-related expenses. In addition, Infinity will receive 10,000,000 of the Company’s restricted common stock. The shares were issued in June 2010. The term of this agreement is six months commencing April 1, 2010. For the six months ended June 30, 2010, the company recorded compensation expense in the amount of $150,000.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties, and other factors, many of which are beyond our control. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and we cannot assure you that the actual results or developments anticipated by us will be realized or, even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise. Unless otherwise indicated or the context otherwise requires, all references to “Indigo,”” the” Company,” “we,” “us” or “our” and similar terms refer to Indigo-Energy, Inc.
General
We are an independent energy company, currently engaged in the exploration of natural gas and oil. Our strategy is to profitably grow reserves and production, primarily through acquiring oil and gas leasehold interests and participating in or actively conducting drilling operations in order to exploit those interests.
We have incurred losses since our inception. We are delinquent on many of our obligations to our creditors. Our current liabilities exceed our current assets and we will need additional capital to fund operations. There are no assurances that we will receive funding to implement our business plan and our independent registered accountant indicated in their opinion on our 2009 annual financial statements that there was substantial doubt about our ability to continue as a going concern.
The Company has enjoyed substantial progress in development of its strategic operating plan as developed at the last shareholders’ meeting. We had set target goals in three specific areas: (1) new drilling and operating wells; (2) improving our balance sheet and improving our cash flow; and (3) securing sufficient capital to move the Company forward through a combination of debt and equity instruments.
| | · | In new well development, our hub and spoke gas well is in the final stages of completion. We have connected the wells to the gas cleaning plant which is also connected to the purchasing pipeline. We believe this well is within weeks of production and early indications are very promising. Also in the Dubois field in the Illinois basin, we have successfully drilled a vertical oil well which is just coming into production and is generating revenue. |
| | · | As to balance sheet improvements, we have restructured a number of toxic promissory notes, worked out settlements with 2 of our 3 operating drillers to improve cash flow, and converted a number of notes to equity at a favorable exchange rate. The Company continues to restructure notes and obligations to favorable longer term liabilities. |
| | · | Regarding the search for partnership in development of additional drilling opportunities, the Company is in various stages of securing commitments to follow the successful Dubois drilling program with similar programs as well as the potential acquisition of a current operating field. |
The Company needs to raise significant funds for future drilling and operating costs. Any fundraising conducted by the Company will most likely result in the issuance of additional shares of common stock which will dilute the ownership interests of the Company’s current shareholders. The Company’s expectation of its cash needs is approximately $9,000,000 to fund its current obligations under the various agreements to which the Company is a party.
During the next 12 months, we do not anticipate any significant changes in the number of our employees other than to add adequate field operating personnel to enable us to monitor and further develop our drilling and operating opportunities.
Results of Operations for the Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
We incurred a net loss for the six months ended June 30, 2010 in the amount of $3,917,831 compared to a net loss of $3,432,929 for the six months ended June 30, 2009. The increase in net loss of $484,902 was primarily attributable to a $1,845,839 decrease in general and administrative expenses offset by an increase of $256,011 in interest and forbearance expense, an increase of $772,162 in loss on settlement of payables, an increase of $850,789 on loss on extinguishment of debt, an increase of $373,531 in loss on derivatives and an increase of $111,071 in excess derivative value expense.
Revenues
We had revenue in the amount of $129,971 for the six months ended June 30, 2010 compared to $109,576 for the six months ended June 30, 2009. The increase in revenue of $20,395 was primarily attributable to the commencement of production on the DuBois wells which was offset by reduced oil and gas production as well as a decrease in the demand and pricing for gas from the Company’s other operating wells.
Depletion Expense
We recorded a depletion expense on our proved properties of $13,722 for the six months ended June 30, 2010 compared to $27,469 for the six months ended June 30, 2009. The decrease of $13,747 in depletion expense was primarily due to our reduced oil and gas production, as well as a decrease in oil and gas carrying costs at June 30, 2010.
General and Administrative Expenses
General and administrative expenses for the six months ended June 30, 2010 was $1,195,082 compared to $3,040,921 for the six months ended June 30, 2009. The decrease of $1,845,839 in general and administrative expenses was primarily due to a $2,000,000 decrease in professional fees to a related party. General and administrative expenses of $1,195,082 for the six months ended June 30, 2010 were primarily comprised of $451,499 of consulting fees, $347,205 of accounting and auditing fees, and $118,417 of salaries.
Interest and Forbearance Expense
Interest expense for the six months ended June 30, 2010 was $1,478,287 compared to $1,222,276 for the six months ended June 30, 2009. Interest expense of $1,478,287 for the six months ended June 30, 2010 was primarily comprised of $568,668 on amortization of deferred loan fees and $852,178 of interest on various notes payable, including amortization of discounts on the notes.
Loss on the Settlement of Payable
Loss on the settlement of payable for the six months ended June 30, 2010 was $772,162 compared to $0 for the six months ended June 30, 2009. The loss related to the settlement of accounts payable through the exchange of common stock.
Loss on Extinguishment of Debt
Loss on the extinguishment of debt for the six months ended June 30, 2010 was $731,289 compared to a gain on extinguishment of debt in the amount of $119,500 for the six months ended June 30, 2009. The loss was the result of extinguishment of notes payable and other debt through the exchange of common stock.
Gain / Loss on Derivative
We incurred a gain on derivatives in the amount of $297,299 for the six months ended June 30, 2010 compared to a gain on derivative in the amount of $670,830 for the six months ended June 30, 2009. The change in value is a result of the change in the quoted market price for our common stock partially offset by the shortening of the remaining term for conversion.
Results of Operations for the Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
We incurred a net loss for the three months ended June 30, 2010 in the amount of $505,754 compared to a net loss of $745,444 for the three months ended June 30, 2009. The decrease in net loss of $239,690 was primarily attributable to an $876,708 increase in gain on derivatives and a $122,414 decrease in interest and forbearance expense, offset by a $159,784 increase in general and administrative expenses, a $146,172 increase in loss on settlement of payables, and an increase of $350,094 on net loss on extinguishment of debt.
Revenues
We had revenue in the amount of $99,599 for the three months ended June 30, 2010 compared to $15,487 for the three months ended June 30, 2009. The increase in revenue of $84,112 was primarily attributable to the commencement of production on the DuBois wells.
Depletion Expense
We recorded a depletion expense on our proved properties of $7,698 for the three months ended June 30, 2010 compared to $10,749 for the three months ended June 30, 2009. The decrease of $3,051 in depletion expense was primarily due to our reduced oil and gas production, as well as a decrease in oil and gas carrying costs at June 30, 2010.
General and Administrative Expenses
General and administrative expenses for the three months ended June 30, 2010 was $626,660 compared to $466,876 for the three months ended June 30, 2009. The increase of $159,784 in general and administrative expenses was primarily due to an increase in professional fees. General and administrative expenses of $606,660 for the three month ended June 30, 2010 were primarily comprised of $315,500 of consulting fees, $61,583 of salaries, $55,552 of accounting and auditing fees, and 51,083 of legal fees.
Interest and Forbearance Expense
Interest expense for the three months ended June 30, 2010 was $434,588 compared to $557,002 for the three months ended June 30, 2009. Interest expense of $434,588 for the three months ended June 30, 2010 was primarily comprised of $121,200 on amortization of deferred loan fees and $307,829 of interest on various notes payable, including amortization of discounts on the notes.
Loss on the Settlement of Payable
Loss on the settlement of payable for the three months ended June 30, 2010 was $146,172 compared to $0 for the three months ended June 30, 2009. The loss related to the settlement of accounts payable through the exchange of common stock.
Loss on Extinguishment of Debt
Loss on the extinguishment of debt for the three months ended June 30, 2010 was $230,594 compared to an $119,500 gain on extinguishment of debt for the three months ended June 30, 2009. The loss and gain were the result of extinguishment of notes payable and other debt through the exchange of common stock.
Gain / Loss on Derivative
We incurred a gain on derivative in the amount of $876,708 for the three months ended June 30, 2010 compared to a gain on derivative in the amount of $170,921 for the three months ended June 30, 2009. The change in value is a result of the change in the quoted market price for our common stock partially offset by the shortening of the remaining term for conversion.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private sales of our common stock and the use of debt and convertible debt. As of June 30, 2010, we had a cash balance of $127,028.
We require a minimum of approximately $9,000,000 for the next 12 months, which includes approximately $510,000 to pay for our outstanding professional fees, $1,530,000 to pay for outstanding drilling costs to various drillers, $1,320,000 to pay our notes payable obligations, including convertible notes and $300,000 to pay accrued interest, and $740,000 to fund other operating costs. In addition to the minimum amount required, the Company expects to spend approximately $4,600,000 for drilling activities. Moreover, in the event we locate additional prospects for acquisition, experience cost overruns at our current prospects, or fail to generate projected revenues, we will need additional funds during the next month. We currently do not have sufficient resources to fund our current operations or capital calls, pay our debts and other liabilities, and operate at our current levels for the next twelve months. Accordingly, we need to raise additional funds through sales of our securities or otherwise, immediately.
If we are unable to obtain additional funds on terms favorable to us, if at all, we may be required to delay, scale back or eliminate some or all of our exploration and well development programs and may be required to relinquish our interest in one or more of our projects or, in the extreme case, cease operations.
Critical Accounting Estimates
There have been no material changes in our critical estimates from those contained in our Form 10-K for the year ended December 31, 2009 filed on April 15, 2010.
Off Balance Sheet Reports
The Company had no off balance sheet transactions during the six months ended June 30, 2010.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There have been no significant changes in our market risks since the year ended December 31, 2009. For more information, please read the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on April 15, 2010.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have carried out an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of June 30, 2010.
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure
Material Weaknesses
In our Form 10-K for the fiscal year ended December 31, 2009 under Item 9-A- Controls and Procedures, we identified material weaknesses in our system of internal control over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Changes in Internal Control over Financial Reporting
There were no significant changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting in the six months ending June 30, 2010.
We are committed to improving our financial organization. As part of this commitment, we intend to create a position to segregate duties consistent with control objectives and further intend to increase our personnel resources and technical accounting expertise within the accounting function as soon as funds become available to us for such purpose. We intend to prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any litigation. However, on May 6, 2009, Akerman Construction Co., Inc., (“Akerman”) a subcontractor of Epicenter, filed a Mechanic’s Lien against Indigo and two other parties on the four wells drilled by it on the Dubois Field of Indiana (the “Wells”) for claims aggregating $875,969. Such claim was predicated on Epicenter’s failure to pay obligations for the drilling costs.
On July 30, 2009, Akerman filed a Complaint against the Company for Breach of Contract and to Foreclose Mechanic’s Lien. On September 14, 2009, Akerman filed a Motion for Leave to Amend its complaint, seeking judgment against the defendants, jointly and severally, in the sum of $875,969, plus interest thereon as well as reasonable attorney’s fees and costs of action. The complaint further seeks an order foreclosing the plaintiff’s mechanic’s lien on the Wells and an order for the sale of the defendant’s interest therein, the improvements thereon and the defendant’s leasehold mineral interest to satisfy the amounts allegedly owing and due to Akerman. Such Motion for Leave to Amend the complaint was granted on September 14, 2009.
The Company has engaged counsel to resolve the above claims and a trial date has been set for December 2010.
On May 12, 2009, M&M Pump & Supply, Inc., a subcontractor of Epicenter, filed a Mechanic’s Lien against Indigo, Epicenter and four other parties on the four wells drilled on the Dubois Field of Indiana for claims aggregating $125,160. Such claim was predicated on Epicenter’s failure to pay obligations for the drilling costs. The Company has engaged counsel to resolve these lien claims. To date, no further action has been taken by M&M Pump & Supply Co.
On July 15, 2010, M&M Pump & Supply, Inc. filed a Motion to Consolidate its claims with that filed by Akerman. A hearing on such Motion to Consolidate is scheduled for September 9, 2010.
Our address for service of process in Nevada is 2857 Sumter Valley Dr., Henderson, NV 89052.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In April, May and June 2010, the Company issued an aggregate of 9,904,306 shares of common stock to settle outstanding professional fees in the amount of $175,000.
In April, May and June 2010, the Company issued an aggregate of 4,505,000 shares of common stock as part of the consideration for convertible promissory notes previously issued by the Company in the amount of $612,000.
In May and June 2010, the Company issued 17,983,333 shares of common stock to convert convertible promissory notes previously issued by the Company in the amount of $362,000.
In April, May and June 2010, the Company issued 16,900,000 shares of common stock to settle promissory notes previously issued by the Company in the amount of $500,000.
In April and June 2010, the Company issued 10,350,000 shares of common stock as part of the consideration for a consulting agreements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of August 13, 2010, the Company was in default of the following senior securities:
| Name of Debtor | | Type of Obligation | | Principal Amount | | | Amount Outstanding As of August 10, 2010 | |
| | | | | | | | | |
| Convertibles Note - Series 1 | | | | | | | | |
| James Walgreen | | Promissory Note | | $ | 300,000 | | | $ | 385,743 | |
| Mary Walgreen | | Promissory Note | | $ | 100,000 | | | $ | 128,581 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other Promissory Notes | | | | | | | | | | |
| Robert Rosania | | Promissory Note | | $ | 25,000 | | | $ | 35,458 | |
| Raymond & Gerri Garonski | | Promissory Note | | $ | 40,000 | | | $ | 67,605 | |
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| | Identification of Exhibit |
| 3.1 | | Articles of Incorporation* |
| | | |
| 3.2 | | By-Laws* |
| | | |
| 10.1 | | Promissory Note issued to David C. Stang dated April 9, 2010 |
| | | |
| 10.2 | | Promissory Note issued to James C. Walter dated May 18, 2010 |
| | | |
| 10.3 | | Promissory Note issued to James and Joan Spears dated June 2, 2010 |
| | | |
| 10.4 | | Extension Agreement between Indigo-Energy, Inc. and Carr Miller Capital, LLC dated July 30, 2010 |
| | | |
| 10.5 | | Consulting Agreement between Indigo-Energy, Inc. and Gary A. Greenberg, LLC dated April 21, 2010 |
| | | |
| 10.6 | | Consulting Agreement between Indigo-Energy, Inc. and J. Cory Martelli dated March 1, 2010 |
| | | |
| 10.7 | | Consulting Agreement between Indigo-Energy, Inc. and Infinity Investments, LLC dated April 1, 2010 |
| | | |
| 31.1 | | Sarbanes Oxley Section 302 Certification |
| | | |
| 31.2 | | Sarbanes Oxley Section 302 Certification |
| | | |
| 32.1 | | Sarbanes Oxley Section 906 Certification |
| | | |
| 32.2 | | Sarbanes Oxley Section 906 Certification |
| | | |
SIGNATURE
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, there unto duly authorized.
| | INDIGO-ENERGY, INC. | |
| | | | |
| By: | /s/ Steven P. Durdin | |
| | | Steven P. Durdin | |
| | | President and Chief Executive Officer | |
| | | (Principal executive officer) | |
Date: August 16, 2010
Exhibit Index
| Exhibit No. | | Identification of Exhibit |
| 3.1 | | Articles of Incorporation* |
| | | |
| 3.2 | | By-Laws* |
| | | |
| 10.1 | | Promissory Note issued to David C. Stang dated April 9, 2010 |
| | | |
| 10.2 | | Promissory Note issued to James C. Walter dated May 18, 2010 |
| | | |
| 10.3 | | Promissory Note issued to James and Joan Spears dated June 2, 2010 |
| | | |
| 10.4 | | Extension Agreement between Indigo-Energy, Inc. and Carr Miller Capital, LLC dated July 30, 2010 |
| | | |
| 10.5 | | Consulting Agreement between Indigo-Energy, Inc. and Gary A. Greenberg, LLC dated April 21, 2010 |
| | | |
| 10.6 | | Consulting Agreement between Indigo-Energy, Inc. and J. Cory Martelli dated March 1, 2010 |
| | | |
| 10.7 | | Consulting Agreement between Indigo-Energy, Inc. and Infinity Investments, LLC dated April 1, 2010 |
| | | |
| 31.1 | | Sarbanes Oxley Section 302 Certification |
| | | |
| 31.2 | | Sarbanes Oxley Section 302 Certification |
| | | |
| 32.1 | | Sarbanes Oxley Section 906 Certification |
| | | |
| 32.2 | | Sarbanes Oxley Section 906 Certification |
| | | |
| * Previously filed |
