Radiant Oil & Gas (ROGI) 10-Q 2011 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 quarterly period ended June 30, 2011

or

 .

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

For the transition period from_____________ to ___________________

Commission File Number 000-24688

Radiant Oil & Gas, Inc.

(Exact name of registrant as specified in its charter)

Nevada	27-2425368
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
9700 Richmond Avenue, Suite 124	77042
Houston, Texas	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (832) 242-6000

NONE

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X  . No.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  X  . No.

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

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	.(Do not check if a smaller reporting company)	Smaller reporting company	X.

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

Yes. No  X  .

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

Class	Outstanding as of August 3, 2011
Common Stock	13,301,813

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	INDEX
		Page No.
	Cautionary Statements Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995	3
	PART I FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements -
	Consolidated Statement of Income for the Three and Six Months Ended June 30, 2011, and 2010	4
	Consolidated Balance Sheet at June 30, 2011, and December 31, 2010	5
	Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2011, and 2010	6
	Statement of Consolidated Shareholders’ Deficit	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 5.	Other Information	10
Item 6.	Exhibits	10
Signature		11
EX-31.1	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Executive Officer
EX-31.2	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Financial Officer
EX-32.1	Section 1350 Certification by the company’s Chief Executive Officer
EX-32.2	Section 1350 Certification by the company’s Chief Financial Officer

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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This quarterly report on Form 10-Q of Radiant Oil & Gas, Inc. contains forward-looking statements relating to Radiant’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries.  Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimates,” “budgets” and similar expressions are intended to identify such forward-looking statements.  These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.  The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report.  Unless legally required, Radiant undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices; changing refining, marketing and chemical margins; actions of competitors or regulators; timing of exploration expenses; timing of crude oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company’s future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” on page 9 of the company’s 2010 Annual Report of Form 10-K.  In addition, such statements could be affected by general domestic and international economic and political conditions.  Other unpredictable or unknown factors not discussed in this report could also have material adverse effects on forward-looking statements.

The accompanying financial statements, related footnotes and other information contained in this Form 10-Q have not been reviewed by our Independent Registered Public Accounting Firm.

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PART I.

FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

RADIANT OIL & GAS AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Not Reviewed)

			Three Months Ended				Six Months Ended
			30-Jun				30-Jun
			2011		2010		2011		2010
			(actual dollars)				(actual dollars)
Revenue
Oil and gas sales		$	58,178	$	48,905	$	109,568	$	93,759
Operating Expenses
Lease operating expenses			17,464		20,550		22,513		42,719
Selling, general and administrative expenses			412,414		386,925		773,331		500,729
Depreciation, depletion, and amortization			10,486		14,026		19,768		28,541
Accretion expense			1,859		1,858		3,717		4,371
Total Operating Expenses			442,223		423,359		819,329		576,360
Operating Income (Loss)			(384,045)		(374,454)		(709,761)		(482,601)
Gain (Loss) on derivative			239,857		-		(520,988)		-
Interest expense			362,821		93,495		706,812		188,877
Total Other Expenses			805,044		516,854		1,526,141		765,237
Net Income (Loss) Before Income Tax Expense			(507,009)		(467,949)		(1,937,561)		(671,478)
Income Tax Expense			-		-		-		-
Net Income (Loss)			(507,009)		(467,949)		(1,937,561)		(671,478)
	Unrealized gain (loss) on available for sale securities		-		(22,587)		-		(13,657)
Comprehensive Income (Loss)		$	(507,009)	$	(490,536)	$	(1,937,561)	$	(685,135)
Per Share of Common Stock:
	Net Income (Loss) Attributable to Radiant Oil & Gas	$	(0.04)		-	$	(0.15)		-
	Dividends		-		-		-		-
	Weighted Average Number of Shares Outstanding		13,288,813		-		13,288,813		-

See accompanying notes to consolidated financial statements.

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RADIANT OIL & GAS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Not Reviewed)

			At June 30, 2011		At December 31, 2010
			(actual dollars)
ASSETS
Cash and cash equivalents		$	54,790	$	32,453
Accounts and notes receivable, net			43,645		17,371
Other current assets			5,256		8,736
Deferred finance charge			18,141		-
Due from related parties			360,778		382,343
	Total Current Assets		482,610		440,903
Evaluated property, accounted for using the full cost method of accounting, net of accumulated depletion of $118,946 and $90,647, respectively Property and equipment, net of accumulated depreciation of $178,927 and $177,304, respectively			2,775,000		2,825,968
			8,284		7,752
	Total Property and Equipment		2,783,284		2,833,720
	Total Assets	$	3,265,894	$	3,274,623
LIABILITIES AND EQUITY
Accounts payable and accrued expenses		$	1,894,376	$	1,664,673
Notes payable, net of unamortized discount of $316,666 and $104,855, respectively			3,355,937		2,769,950
Accrued interest			343,461		239,649
Due to related parties			1,211,644		1,309,135
Derivative liability			752,514		231,526
	Total Current Liabilities		7,557,931		6,214,933
Deferred gain			303,005		313,159
Asset retirement obligation			94,643		97,512
	Total Liabilities		7,955,579		6,625,604
Preferred stock (authorized 5,000,000 shares, $0.01 par value, none issued)			-		-
Common stock (authorized 100,000,000 shares, $0.01 par value, 13,288,813 shares issued at June 30, 2011)			132,888		108,138
Additional paid in capital			3,089,603		2,515,497
Accumulated other comprehensive loss			(7,912,177)		(5,974,616)
	Total Radiant Oil & Gas Stockholders’ Equity (Deficit)		94,689,686)		(3,350,981)
	Total Liabilities and Stockholders’ Equity (Deficit)	$	3,265,894	$	3,274,623

See accompanying notes to consolidated financial statements.

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RADIANT OIL & GAS AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Not Reviewed)

					Six Months Ended June 30
					2011		2010
					(actual dollars)
Cash Flows from Operating Activities
	Net Income (Loss)			$	(1,937,561)	$	(671,478)
	Adjustments
		Depreciation, depletion and amortization			19,768		28,541
		Amortization of deferred financing charge			52,534		17,212
		Amortization of debt discount			524,152		-
		Accretion of asset retirement obligation			3,717		4,371
		Change in derivative liability			520,988		-
		Accounts receivable			(26,274)		27,759
		Accounts payable and accrued expenses			166,743		393,599
		Due from related party			21,565		(182,065)
		Prepaid expenses and other current assets			3,480		(4,285)
		Accrued interest payable			126,754		-
			Net Cash Used in Operating Activities		(524,134)		(386,346)
Cash Flows from Investing Activities
		Acquisition of oil and gas properties			-		(82,074)
		Proceeds from sale of oil and gas properties			-		271,675
		Proceeds from oil and gas property reimbursement			16,084		-
		Purchases of securities (dividends reinvested)			-		(2,104)
		Purchases of other assets			(2,155)		-
			Net Cash Provided by (Used in) Investing Activities		13,929		187,497
Cash Flows from Financing Activities
		Borrowings of short-term obligations			628,000		65,897
		Payments on borrowings – related party			(474)		20,603
		Repayments of debt and other financing obligations			(24,309)		(14,412)
		Deferred financing costs			(70,675)		-
			Net Cash Provided by Financing Activities		532,542		72,088
Net Increase in Cash					22,337		(126,761)
Cash at Beginning of Year					32,453		198,854
Cash at End of Period				$	54,790	$	72,093
Supplemental Disclosures
Interest paid in cash				$	3,382		-
Non-Cash Investing and Financing
Discount on notes payable					475,000		-
Discount on debentures issued					123,856		-
Asset retirement obligation incurred and changes in estimates					6,585		-

See accompanying notes to consolidated financial statements.

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RADIANT OIL & GAS AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED SHAREHOLDERS’ DEFICIT

(Not Reviewed)

							Accumulated		Retained
	Common Stock						Other		Earnings
					Paid-In		Comprehensive		(Accumulated
	Shares		Amount		Capital		Income		Deficit)		Total
Balance at December 31, 2009	4,166,667	$	$41,667	$	($2,693)	$	$28,764	$	($1,950,193)	$	($1,882,455)
Common shares issued by JOG prior to merger	833,335		8,333		484,899		-		-		493,232
Common shares retained by Registrant	2,492,639		24,926		(252,285)		-		-		(227,359)
Dividend to shareholder	-		-		-				(1,049,001)		(1,049,001)
Warrants on 18% debenture	-		-		197,338		-		-		197,338
Common shares issued to placement agent	1,000,000		10,000		(10,000)		-		-		-
Common shares issued for services	593,205		5,932		592,432		-		-		598,364
Employee stock option expense	-		-		38,381		-		-		38,381
Common shares issued November 2010	1,727,967		17,280		1,704,258		-		-		1,721,538
Warrants issued to placement agent	-		-		(119,464)		-		-		(119,464)
Employee stock option expense	-		-		65,312		-		-		65,312
Stock issuance costs	-		-		(159,235)		-		-		(159,235)
Loss on sale of available for sale securities	-		-		-		(28,764)		-		(28,764)
Overriding royalty interest transferred to stockholder	-		-		(23,446)		-		-		(23,446)
Net Loss	-		-		-		-		(2,975,422)		(2,975,422)
Balance at December 31, 2010	10,813,813	$	$108,138	$	$2,515,497	$	-	$	($5,974,616)	$	($3,350,981)
Relative fair value of common shares issued	475,000		4,750		324,096		-		-		328,846
Beneficial conversion feature associated with conversion option into preferred stock	-		-		146,154		-		-		146,154
Relative fair value of warrants issued	-		-		123,856		-		-		123,856
Net loss	-	$	-	$	-	$	-	$	($1,937,561)	$	(1,937,561)
Balance at June 30, 2011	11,288,813	$	$112,888	$	$3,109,603	$	-	$	($7,912,177)	$	($4,689,686)

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Interim Financial Statements

The accompanying consolidated financial statements of Radiant Oil & Gas and its subsidiaries (the company) have not been reviewed by our independent registered public accounting firm.  In the opinion of the company’s management, the interim data include all adjustments necessary for a fair statement of the results for the interim periods.  These adjustments were of a normal recurring nature. The results for the three-month period ended June 30, 2011, are not necessarily indicative of future financial results.  The term “earnings” is defined as net income attributable to Radiant Oil & Gas.

Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q.  Therefore, these financial statements should be read in conjunction with the company’s 2010 Annual Report on Form 10-K.

Note 2.  Credit Agreements, Amber Energy LLC and Rampant Lion Energy LLC

On March 20, 2011, the credit agreements between Amber Energy LLC and Macquarie Bank Limited; and Rampant Lion Energy LLC and Macquarie Bank Limited, were amended.  The maturity date was extended to September 9, 2011, and minimum monthly amortization payments were suspended until maturity.

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

Principles of Consolidation

We consolidate all investments in which we have exclusive control.  In accordance with established practices in the oil and gas industry, our financial statements include our pro-rata share of assets, liabilities, income and lease operating costs and general and administrative expenses of Amber Energy LLC, in which we have a 51% interest.

Going Concern

Our current financial conditions raise doubt as to our ability to continue as a going concern.  The strategy of management is to raise equity and/or debt financing during the third quarter of 2011, and further restructure or payoff our credit facility with Macquarie.  Our ability to continue as a going concern is dependent on our ability to raise additional capital, as well as refinance our credit facility with Macquarie.  There can be no assurance we will be successful.  If we do not raise sufficient capital to fund our business plan during the third quarter of 2011, we may not survive.

Results of Operations

Radiant seeks to acquire, develop and produce oil and natural gas properties along Gulf Coast Texas and Louisiana.  We seek to acquire and develop properties with proved undeveloped reserves, or properties located in legacy fields where large volumes of hydrocarbons have been produced.  These fields are also in close proximity to existing infrastructure, allowing us to quickly get new production to market.

One of our primary strategies is to gather leasehold positions in fields that have produced large volumes of hydrocarbons, and find additional development opportunities while applying modern technologies. Our management team has extensive geological, geophysical, technical and engineering expertise in successfully developing and operating properties in our core areas of operation.

Rampant Lion.  During the initial drilling of the 758 B-1 well, we had an agreement with Challenger Minerals, Inc. to be carried up to 105% of the AFE.  The operator of this well is Medco Energi US, LLC (“Medco”).  The AFE had significant cost overruns, and Medco is netting our production revenue against the AFE balance.  Rampant Lion owns a before payout WI of 11.25% and NRI of 6.625%.  JOG Holdings, owned by John M. Jurasin, also owns an ORRI in this well.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The market risk associated with the company’s portfolio of financial and derivative instruments is discussed below. The estimates of financial exposure to market risk discussed below do not represent the company’s projection of future market changes. The actual impact of future market changes could differ materially due to factors discussed elsewhere in this report.

Radiant is exposed to market risks related to the price volatility of crude oil, refined products, natural gas, natural gas liquids, liquefied natural gas and refinery feedstocks.  The company does not currently use derivative commodity instruments to manage these exposures, nor do we use derivative commodity instruments for limited trading purposes.

Item 4.  Controls and Procedures

(a)  Evaluation of disclosure controls and procedures

The company’s management has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the company’s disclosure controls and procedures as of the end of the period covered by this report.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company’s disclosure controls and procedures were effective as of June 30, 2011.

(b)  Changes in internal control over financial reporting

During the quarter ending June 30, 2011, there were no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

NONE

Item 1A.  Risk Factors

Information about risk factors for the three months ended June 30, 2011, does not differ materially from that set forth in Part I, Item IA, of Radiant’s 2010 Annual Report on Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

NONE

Item 3.  Defaults Upon Senior Securities

NONE

Item 4.  (Removed and Reserved)

Item 5.  Other Information

On April 19, 2011, Radiant announced that it has agreed to buy production in Louisiana from WLE, Inc. for $50,000 per flowing barrel as it seeks to expand production in the region.  The cash and stock transaction involves three fields on approximately 3,000 acres, and includes a Texaco legacy field with 15 pay sands that has produced since 1929; Radiant will be the operator.  The properties have current output equivalent to approximately 180 barrels of oil per day and are near existing Radiant acreage.  The deal is expected to close by August 31, 2011.

In addition to immediately establishing cash flow for our company, we are establishing a partnership with a 50 year-old well-servicing company that owns completion rigs and can provide oilfield services to our properties. Radiant will receive a 25% discount to market when choosing to use their services.

Item 6.  Exhibits

Exhibit Number	Description
(31.1)	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Executive Officer
(31.2)	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Financial Officer
(32.1)	Section 1350 Certification by the company’s Chief Executive Officer
(32.2)	Section 1350 Certification by the company’s Chief Financial Officer

10

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 22, 2011

RADIANT OIL & GAS

(REGISTRANT)

/s/ JOHN M. JURASIN

John M. Jurasin

Chairman of the Board and

Chief Executive Officer

(Duly Authorized Officer)

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EXHIBIT INDEX

Exhibit Number	Description
(31.1)*	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Executive Officer
(31.2)*	Rule 13a-14(a)/15d-14(a) Certification by the company’s Chief Financial Officer
(32.1)*	Section 1350 Certification by the company’s Chief Executive Officer
(32.2)*	Section 1350 Certification by the company’s Chief Financial Officer

* Filed herewith.

Copies of above exhibits not contained herein are available to any security holder upon written request to the Corporate Governance Department, Radiant Oil & Gas, 9700 Richmond Avenue, Suite 124, Houston TX  77042.

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