UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2009
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: None
PINNACLE ENERGY CORP.
------------------------------------------------
(Exact name of Registrant as specified in its charter)
Nevada 36-4613360
- --------------------------- ---------------------
State or other jurisdiction (IRS) Employer
of incorporation Identification Number
Suite 153, 333 River Front Ave., S.E.
Calgary, Alberta
Canada T2G 5R1
-------------------------------------
Address of principal executive offices
(866) 822-0325
--------------------------------------
Registrant's telephone number, including area code
Not Applicable
--------------------------------------
(Former name, former address and formal 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) had 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, and
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. (Check One):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in
Exchange Act Rule 12b-2 of the Exchange Act).
Yes ____ No __X__
-
Class of Stock No. Shares Outstanding Date
-------------- ---------------------- ----
Common 15,840,000 February 25, 2009
PINNACLE ENERGY CORPORATION
(A Development Stage Company)
Balance Sheet
January 31, October 31,
2009 2008
---------------------------
ASSETS (Unaudited)
Current Assets
Cash at bank $ 10,112 $ 9,366
Accounts Receivable - 19,006
----------- -----------
Total Current Assets $ 10,112 $ 28,372
----------- -----------
Property and Equipment
Equipment 100,000 100,000
Accumulated Depreciation (12,500) (10,000)
----------- -----------
Total property & Equipment 87,500 90,000
----------- -----------
Other Assets
Oil & Gas Leasehold Interest 1,190,000 1,190,000
----------- -----------
Total Assets $1,287,612 $1,308,372
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued Interest Payable 33,333 13,333
----------- -----------
Notes Payable 1,000,000 1,000,000
----------- -----------
Total Liabilities 1,033,333 1,013,333
----------- -----------
Stockholders' Equity
Common Stock, par value $0.001, authorized
150,000,000 shares; issued and outstanding:
15,840,000 shares as at October 31, 2008
15,840,000 shares as at January 31, 2009 15,840 15,840
Additional Paid-In Capital 340,461 340,461
Deficit accumulated during the development
stage (102,022) (61,262)
----------- -----------
Total Stockholders' Equity 254,279 295,039
----------- -----------
Total Liabilities and Stockholders' Equity $1,287,612 $1,308,372
=========== ===========
The accompanying Notes are an integral part of these financial statements.
2
PINNACLE ENERGY CORPORATION
(A Development Stage Company)
Statement of Operations
(Unaudited)
For the Period
of Inception
For the three from June 5,
months ended 2007, through
January 31, January 31,
----------------------- --------------
2009 2008 2009
-------- -------- --------------
Revenues $ 9,480 $ 4,563 $ 60,131
Cost of Sales - - -
---------- ---------- ----------
Operating Income 9,480 4,563 60,131
---------- ---------- ----------
General and Administrative Expenses
Professional Fees 1,125 15,050 30,590
Consulting Fees 21,356 14,864 57,690
Occupancy Costs 1,452 3,500 11,357
Repairs & Maintenance - - 1,231
Depreciation 2,500 1,250 12,500
Other General and adminkistrative
expenses 3,807 2,965 15,452
---------- ---------- ----------
Total General and administrative
expenses 30,240 37,629 128,820
---------- ---------- ----------
Net Loss before other expenses (20,760) (33,066) (68,689)
Interest (20,000) - (33,333)
---------- ---------- ----------
Net Income (Loss) (40,760) (33,066) (102,022)
---------- ---------- ----------
Basic and dilutive earnings per share $ (0.001) $ (0.002)
========== ==========
Weighted average number of shares
outstanding, Basic and Diluted: 15,840,000 15,840,000
========== ==========
The accompanying Notes are an integral part of these financial statements.
3
PINNACLE ENERGY CORPORATION.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
For the Period
For the three months of Inception
ended January 31, from June 5,
----------------------- 2007, through
2009 2008 Oct. 31, 2009
----------------------- --------------
Cash flows from operating activities:
Net (Loss) $ (40,760) $ (33,066) $ (102,022)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non-cash depreciation 2,500 1,250 12,500
Change in operating assets and
liabilities:
(Increase) Decrease in Accts Receivable 19,006 (3,133) -
Increase (Decrease) in Accounts Payable -
Increase (Decrease) in Accrued Interest 20,000 - 33,333
----------- ----------- -----------
Net cash provided by (used in)
operating activities 746 (34,949) (56,189)
----------- ----------- -----------
Cash flows from investing activities
Acquisition of equipment - - (100,000)
Acquistion of oil & gas working interest - - (1,190,000)
----------- ----------- -----------
Net cash (used by) investing activities - - (1,290,000)
----------- ----------- -----------
Cash flows from financing activities:
Decrease Subscriptions Receivable - 18,000 -
Proceeds of Note Payable - - 1,000,000
Common stock issued for assets - - 90,000
Common stock issued for cash - - 266,301
----------- ----------- -----------
Net cash provided by financing activities - 18,000 1,356,301
----------- ----------- -----------
Net increase (decrease) in cash 746 (16,949) 10,112
Cash, beginning of the period 9,366 36,169 -
----------- ----------- -----------
Cash, end of the period $ 10,112 $ 19,220 $ 10,112
=========== =========== ===========
Supplemental cash flow disclosure:
Interest paid $ - $ - $ -
=========== =========== ===========
Taxes paid $ - $ - $ -
=========== =========== ===========
The accompanying Notes are an integral part of these financial statements.
4
PINNACLE ENERGY CORPORATION
(A Development Stage Company)
Statement of Shareholders' Equity
(Unaudited)
Deficit
Common Stock Accumulated Total
------------------------ Additional during the Shareholders'
Number of Paid-In Development Equity
Shares Amount Capital Stage (Deficit)
---------- ------- ---------- ----------- -------------
Inception, June 5, 2007 - $ - $ - $ - $ -
Common stock issued for cash
at $0.096 per share
September 5, 2007 2,580,000 2,580 245,721 248,301
Common stock issued for cash
at $0.01 per share
September 5, 2007 1,800,000 1,800 16,200 18,000
Common stock issued for oil
and gas working interest at
$0.10 per share Sep. 5, 2007 900,000 900 89,100 90,000
Net loss for the period ended
Oct. 31, 2007 (13,363) (13,363)
---------- ---------- ---------- ---------- ----------
Balances, October 31, 2007 5,280,000 $ 5,280 $ 351,021 $ (13,363) $ 342,938
Forward stock split 3 for 1
July 27, 2008 10,560,000 10,560 (10,560) -
Net loss for the year ended
October 31, 2008 (47,899) (47,899)
---------- ---------- ---------- ---------- ----------
Balances, October 31, 2008 15,840,000 $ 15,840 $ 340,461 $ (61,262) $ 295,039
Net loss for the 3 mo. ended
Jan. 31, 2009 (40,760) (40,760)
---------- ---------- ---------- ---------- ----------
Balances, January 31, 2009 15,840,000 $ 15,840 $ 340,461 $(102,022) $ 254,279
=========== ========== ========== ========== ==========
The accompanying Notes are an integral part of these financial statements.
5
Pinnacle Energy Corporation
(A Developmental Stage Company)
Notes to Financial Statements
January 31, 2009
1. Organization
Gas Salvage Inc. (the "Company") was incorporated under the laws of the
State of Nevada June 5, 2007. The Company was organized for the purpose of
engaging in any activity or business not in conflict with the laws of the
State of Nevada or of the United States of America. The Company became
engaged in the oil and gas industry. In July, 2008 the Company changed its
name from Gas Salvage Corporation to Pinnacle Energy Corporation.
Current Business of the Company
The Company purchased a 44.5% leasehold interest (35.6% net revenue
interest) in a producing gas well on 40 acres in Lincoln County, Oklahoma,
known as Holmes #1. The well was initially shut in awaiting repairs to its
Nitrogen Rejection Unit. The well was put into production in November,
2007. A geologist's report on December 18, 2007 indicated that the lease
is selling between 85 and 100 MCF per day, however volumetric calculations
of the Holmes Lease reservoir have not yet been performed. An examination
as to whether the well warrants impairment based on expected revenue was
not done at October 31, 2008 pending volumetric calculations.
On September 1, 2008 the Company acquired working interests in six oil and
gas wells located in Pawnee County, Oklahoma for $1,000,000, payable
September 1, 2013. Interest at an annual rate of 8% is due monthly. The
working interests consist of a 25.5% working interest (20.4% net revenue
interest) in two wells, a 20% working interest (16% net revenue interest)
in three wells and a 17% working interest (13.6% net revenue interest) in
the remaining well.
Property Acquisition Costs: Unproved
Holmes Lease $ 190,000
Pawnee County Lease $ 1,000,000
-----------
$ 1,190,000
===========
2. Summary of Significant Accounting Policies
Basis of Presentation
---------------------
The financial statements of the Company have been prepared using the accrual
6
basis of accounting in accordance with generally accepted accounting
principles in the United States.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements, and reported amounts of revenue and expenses during the
reporting period. Actual results could differ materially from those
estimates. Significant estimates made by management are, among others,
realizability of long-lived assets, deferred taxes and stock option
valuation.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance
with the accounting principles generally accepted in the United States of
America. All adjustments are of a normal recurring nature.
Cash and equivalents
--------------------
Cash and equivalents include investments with initial maturities of three
months or less.
Fair Value of Financial Instruments
-----------------------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to estimate
that value. The carrying amounts of the Company's financial instruments as
of January 31, 2009 approximate their respective fair values because of the
short-term nature of these instruments. Such instruments consist of cash,
accounts payable and accrued expenses. The fair value of related party
payables is not determinable.
Income Taxes
------------
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns, including loss carryforwards. Under
this method, deferred tax assets and liabilities are determined based on the
difference between the tax basis of assets and liabilities and their
financial reporting amounts based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. The
Company generated a deferred tax credit through net operating loss
carryforward. However, a valuation allowance of 100% has been established,
as the realization of the deferred tax credits is not reasonably certain,
based on going concern considerations outlined as follows.
7
Going Concern
-------------
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. The company
experienced a loss of $40,760, however a minimal cash flow of $746 from
operations in the first quarter ended January 31, 2009. The ability of the
Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes profitable. If
the Company is unable to obtain adequate capital, it could be forced to
cease development of operations.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish its plans to generate revenue from
well head machinery and oil and gas leases. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classifications
or liabilities or other adjustments that might be necessary should the
Company be unable to continue as a going concern.
Development-Stage Company
-------------------------
The Company is considered a development-stage company, with limited
operating revenues during the periods presented, as defined by Statement of
Financial Accounting Standards ("SFAS") No. 7. SFAS. No. 7 requires
companies to report their operations, shareholders deficit and cash flows
since inception through the date that revenues are generated from
management's intended operations, among other things. Management has defined
inception as June 5, 2007. Since inception, the Company has incurred an
operating loss of $102,022. The Company's working capital has been generated
through the sales of common stock. Management has provided financial data
since June 5, 2007, "Inception", in the financial statements, as a means to
provide readers of the Company's financial information to make informed
investment decisions.
Basic and Diluted Net Loss Per Share
------------------------------------
Net loss per share is calculated in accordance with SFAS 128, Earnings Per
Share for the period presented. Basic net loss per share is based upon the
weighted average number of common shares outstanding. Diluted net loss per
share is based on the assumption that all dilative convertible shares and
stock options were converted or exercised. Dilution is computed by applying
the treasury stock method. Under this method, options and warrants are
assumed exercised at the beginning of the period (or at the time of
issuance, if later), and as if funds obtained thereby we used to purchase
common stock at the average market price during the period.
The Company has no potentially dilutive securities outstanding as of January
31, 2009.
8
The following is a reconciliation of the numerator and denominator of the
basic and diluted earnings per share computations for the three months ended
January 31, 2009 and 2008.
2009 2008
---- ----
Numerator:
----------
Basic and diluted net loss per share:
Net Loss $ (40,760) $ (33,066)
Denominator
-----------
Basic and diluted weighted average
number of shares outstanding 15,840,000 15,840,000
Basic and Diluted Net Loss Per Share $ (0.001) $ (0.002)
------------------------------------
Accounting for Oil and Gas Producing Activities
-----------------------------------------------
The Company uses the successful efforts method of accounting for oil and
gas producing activities. Under this method, acquisition costs for proved
and unproved properties are capitalized when incurred.
Acquisition costs are capitalized when incurred pending the determination
of whether a well has found proved reserves. A determination of whether a
well has found proved reserves is made within a year of acquisition.
If after that year has passed, a determination that proved reserves exist
cannot be made, the well is assumed to be impaired, and its costs are
charged to expense. It's costs can however, continue to be capitalized if
a sufficient quantity of reserves are discovered in the well to justify
its completion as a producing well and sufficient progress is made
assessing the reserves and the well's economic and operating feasibility.
The impairment of unamortized capital costs is measured at a lease level
and is reduced to fair value if it is determined that the sum of expected
future net cash flows is less than the net book value.
The Company determines if impairment has occurred through either adverse
changes or as a result of the annual review of all fields. Since
acquisition of the fields in September 2007 and September 2008 the company
has not recorded any impairment, pending volumetric calculations.
Development costs of proved oil and gas properties, including estimated
dismantlement, restoration and abandonment costs and acquisition costs,
are depreciated and depleted on a field basis by the units-of-production
method using proved reserves, respectively.
The costs of unproved oil and gas properties are generally combined and
impaired over a period that is based on the average holding period for
such properties and the company's experience of successful operations.
9
Oil and Gas Revenue Recognition
-------------------------------
The Company applies the sales method of accounting for natural gas
revenue. Under thus method, revenues are recognized based on the actual
volume of natural gas sold to purchasers. Revenue from the sale of gas is
reported by the gas gathering company monthly and paid two months in
arrears.
3. Property and Equipment
Equipment $100,000
The Company purchased a 50% interest in a skid mounted Nitrogen Rejection
unit in October, 2005. The unit strips out excessive nitrogen and oxygen
from gas wells to an acceptable level of contaminants in the gas stream. The
unit is intended for use on the Company's gas wells. The unit commenced
operations in November, 2007 under the control of the gas collection
operator.
4. Note Payable
The Company issued a promissory note to Futures Investment Corporation on
September 1, 2008 for $1,000,000 in payment for an oil and gas working
interest in Pawnee County, Oklahoma. The note is payable on September 1,
2013. Interest is payable monthly at the rate of 8% simple interest.
5. Commitments and Contingencies
The Company is committed to the following financial commitment over the next
five years:
$1,000,000, 8% Note Payable:
Annual interest: $80,000
Repayment September 1, 2013: $1,000,000
6. Capital Structure
During the period from inception through July 31, the Company entered into
the following equity transactions:
September 5, 2007: Sold 2,580,000 shares of common stock at $.096
per share realizing $248,301.
September 5, 2007: Sold 1,800,000 shares of common stock at $.01
per share realizing $18,000.
10
September 5, 2007: Issued 900,000 shares of common stock at $.10
per share in payment of $90,000 toward 44.5% working
interest in an oil and gas lease.
In July 2008 a three-for-one forward split of the Company's common stock was
approved by the Company's directors. The par value of the Company's common
stock remained unchanged at $0.001. At the same time authorized capital was
increased to 150,000,000 common shares.
As at January 31, 2009 the Company was authorized to issue 150,000,000
shares of $0.001 par common stock, of which 15,840,000 shares were issued
and outstanding.
The Company was also authorized to issue 5,000,000 shares of preferred
stock, of which none were issued and outstanding at January 31, 2009.
7. Legal Proceedings
There were no legal proceedings against the Company with respect to matters
arising in the ordinary course of business. Neither the Company nor any of
its officers or directors is involved in any other litigation either as
plaintiffs or defendants, and have no knowledge of any threatened or pending
litigation against them or any of the officers or directors.
8. Stock Split
The issued and outstanding shares and weighted average shares outstanding in
the financial statements as of January 31, 2008 were restated to reflect
retroactively the three-for-one forward stock split of July 27, 2008.
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
notes to the consolidated financial statements, which are included elsewhere in
this report.
Pinnacle was incorporated on June 5, 2007. In September 2007 Pinnacle
acquired a 44.5% working interest (35.6% net revenue interest) in a gas well
located in Lincoln County, Oklahoma for $100,000 in cash and 900,000 shares of
its restricted common stock. At the time it acquired its interest in the gas
well, Pinnacle also acquired, for $100,000, a 50% interest in a portable unit
which reduces the amount of nitrogen and oxygen from the gas produced by the
well. The gas well was put into production in November 2007. As of January 31,
2009 the well was shut in and awaiting repairs.
On August 27, 2008 Pinnacle acquired working interests in six oil and gas
wells located in Pawnee County, Oklahoma. Pinnacle has a 25.5% working interest
(20.4% net revenue interest) in two wells, a 20% working interest (16% net
revenue interest) in three wells , and a 17% working interest (13.6% net revenue
interest) in the remaining well.
As of January 31, 2009 five wells were producing ten barrels of oil and
eight MCF of gas per day, net to Pinnacle's interest. The sixth well is being
used as a salt water disposal well.
The price for Pinnacle's interest in the six wells was $1,000,000. The
purchase price requires monthly interest payments at 8% per year until September
1, 2013, at which time the entire $1,000,000 is due.
RESULTS OF OPERATIONS
The factors that most significantly affect Pinnacle's results of
operations will be (i) the sale prices of crude oil and natural gas, (ii) the
amount of production from oil or gas wells in which Pinnacle has an interest,
and (iii) and lease operating expenses. Pinnacle's revenues will also be
significantly impacted by its ability to maintain or increase oil or gas
production through exploration and development activities.
Prices received by Pinnacle for sales of crude oil and natural gas may
fluctuate significantly from period to period. The fluctuations in oil prices
during these periods reflect market uncertainty regarding the inability of the
Organization of Petroleum Exporting Countries ("OPEC") to control the production
of its member countries, as well as concerns related to the global supply and
demand for crude oil. Gas prices received by Pinnacle will fluctuate with
changes in the spot market price for gas.
Changes in natural gas and crude oil prices will significantly affect the
revenues and cash flow of the wells and the value of the oil and gas properties.
Declines in the prices of crude oil and natural gas could have a material
adverse effect on the success of Pinnacle's operations and activities,
recoupment of the costs of acquiring, developing and producing its wells and
profitability. Pinnacle is unable to predict whether the prices of crude oil and
natural gas will rise, stabilize or decline in the future.
12
Other than the foregoing, Pinnacle does not know of any trends, events or
uncertainties that have had or are reasonably expected to have a material impact
on Pinnacle's net sales, revenues or expenses.
LIQUIDITY AND CAPITAL RESOURCES
It is expected that Pinnacle's principal source of cash flow will be from
the production and sale of crude oil and natural gas reserves which are
depleting assets. Cash flow from the sale of oil and gas production depends upon
the quantity of production and the price obtained for the production. An
increase in prices will permit Pinnacle to finance its operations to a greater
extent with internally generated funds, may allow Pinnacle to obtain equity
financing more easily or on better terms, and lessens the difficulty of
obtaining financing. However, price increases heighten the competition for oil
and gas prospects, increase the costs of exploration and development, and,
because of potential price declines, increase the risks associated with the
purchase of producing properties during times that prices are at higher levels.
A decline in oil and gas prices (i) will reduce the cash flow internally
generated by Pinnacle which in turn will reduce the funds available for
exploring for and replacing oil and gas reserves, (ii) will increase the
difficulty of obtaining equity and debt financing and worsen the terms on which
such financing may be obtained, (iii) will reduce the number of oil and gas
prospects which have reasonable economic terms, (iv) may cause Pinnacle to
permit leases to expire based upon the value of potential oil and gas reserves
in relation to the costs of exploration, (v) may result in marginally productive
oil and gas wells being abandoned as non-commercial, and (vi) may increase the
difficulty of obtaining financing. However, price declines reduce the
competition for oil and gas properties and correspondingly reduce the prices
paid for leases and prospects.
Between June and September 2007 Pinnacle sold 2,580,000 shares of its
common stock at a price of $0.10 CDN per share to a group of private investors.
In September 2007 Pinnacle acquired a 44.5% working interest (35.6% net
revenue interest) in a gas well located in Lincoln County, Oklahoma for $100,000
in cash and 900,000 shares of its restricted common stock.
In August 2008 Pinnacle acquired working interests in six oil and gas
wells located in Pawnee County, Oklahoma. The price for Pinnacle's interest in
the six wells was $1,000,000. The purchase price requires monthly interest
payments at 8% per year until September 1, 2013, at which time the entire
$1,000,000 is due.
Pinnacle's material sources and (uses) of cash during the three months
ended January 31, 2009 and 2008 were:
2008 2007
---- ----
Cash provided by (used in) operations $746 $(34,949)
Sale of common stock -- 18,000
Use of cash on hand at beginning of period n/a 16,949
13
As of January 31, 2009 Pinnacle had cash on hand of approximately
$10,000.
Pinnacle does not anticipate that it will need to hire any employees
during the twelve month period ending January 31, 2010.
Pinnacle's future plans will be dependent upon the amount of capital
Pinnacle is able to raise. Pinnacle may attempt to raise additional capital
through the private sale of its equity securities or borrowings from third party
lenders. Pinnacle does not have any commitments or arrangements from any person
to provide Pinnacle with any additional capital. If additional financing is not
available when needed, Pinnacle may continue to operate in its present mode or
Pinnacle may need to cease operations. Pinnacle does not have any plans,
arrangements or agreements to sell its assets or to merge with another entity.
Pinnacle plans to generate profits by drilling productive oil or gas
wells. However, Pinnacle will need to raise the funds required to drill new
wells from third parties willing to pay Pinnacle's share of drilling and
completing the wells. Pinnacle may also attempt to raise needed capital through
the private sale of its securities or by borrowing from third parties. Pinnacle
may not be successful in raising the capital needed to drill oil or gas wells.
In addition, any future wells which may be drilled by Pinnacle may not be
productive of oil or gas. The inability of Pinnacle to generate profits may
force Pinnacle to curtail or cease operations.
Contractual Obligations
- -----------------------
As of January 31, 2009 Pinnacle did not have any material capital
commitments, other than funding its operating losses. It is anticipated that any
capital commitments that may occur will be financed principally through the sale
of shares of Pinnacle's common stock or other equity securities. However, there
can be no assurance that additional capital resources and financings will be
available to Pinnacle on a timely basis, or if available, on acceptable terms.
Item 4.T. CONTROLS AND PROCEDURES
The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting as required by Sarbanes-Oxley
(SOX) Section 404.A. The Company's internal control over financial reporting is
a process designed under the supervision of its Chief Executive and Financial
Officer to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of its financial statements for external purposes
in accordance with Generally Accepted Accounting Principles.
There were no changes in the Company's internal controls over financial
reporting that occurred during the quarter ended January 31, 2009 that have
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
Nolan Weir, the Company's President and Principal Financial Officer,
evaluated the effectiveness of the Company's disclosure controls and procedures
as of the end of the period covered by this report; and in his opinion the
Company's disclosure controls and procedures were effective.
14
PART II
Item 6. (a) Exhibits
Number Exhibit
- ------ -------
31 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
15
SIGNATURES
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.
PINNACLE ENERGY CORP.
Date: March 3, 2009 /s/ Nolan Weir
------------------------------
Nolan Weir, President, Principal
Financial Officer and Principal
Accounting Officer
16