UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10Q
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended July 31, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-27485
SUN RIVER ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1491159
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(State of Incorporation) (IRS Employer ID Number)
7609 Ralston Road, Arvada, CO 80002
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(Address of principal executive offices)
303-422-8127
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(Registrant's Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, 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 share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of September 16, 2009, there were 17,546,050 shares of the registrant's
common stock issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
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Balance Sheets - July 31, 2009 and April 30, 2009 (Audited) F-1
Statements of Operations -
Three months ended July 31, 2009 and 2008 and
From October 22, 2002 (Inception) to July 31, 2009 F-2
Statements of Changes in Shareholders' Deficit -
From October 22, 2002 (Inception) to July 31, 2009 F-3
Statements of Cash Flows -
Three months ended July 31, 2009 and 2008 and
From October 22, 2002 (Inception) to July 31, 2009 F-4
Notes to the Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable 4
Item 4. Controls and Procedures 4
Item 4T. Controls and Procedures 5
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities - Not Applicable 8
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 8
Item 5. Other Information - Not Applicable 8
Item 6. Exhibits 8
SIGNATURES 9
PART I
ITEM 1. FINANCIAL STATEMENTS
SUN RIVER ENERGY, INC.
(A Development Stage Company)
BALANCE SHEETS
July 31, April 30,
2009 2009
--------------- ---------------
(Unaudited) (Audited)
Assets
Current Assets:
Cash $ 41,104 $ 38,851
--------------- ---------------
Total Current Assets 41,104 38,851
--------------- ---------------
Fixed Assets, net of depreciation $1,200 540 540
Other assets:
Leases 220,000 220,000
Mineral rights 100,000 100,000
Wells in process and advances 678,781 675,310
--------------- ---------------
Total Other Assets 998,781 995,310
--------------- ---------------
Total Assets $ 1,040,425 $ 1,034,701
=============== ===============
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable $ 542,800 $ 320,589
Accrued interest payable 187,686 168,866
Accrued litigation expense 400,000 400,000
Drilling bonds payable 37,508 37,508
Notes payable 1,136,625 1,350,780
--------------- ---------------
Total Current Liabilities 2,304,619 2,277,743
Stockholders' Deficit
Common stock, $0.0001 par value; 100,000,000 shares
authorized, 17,306,050 and 16,317,423 shares issued and
outstanding at July 31, 2009 and April 31, 2009, respectively 1,731 1,632
Additional paid-in capital 3,668,792 3,135,132
APIC unexercised warrants 2,063,080 1,996,060
Deficit accumulated during the development stage (6,997,797) (6,375,866)
--------------- ---------------
Total Stockholders' Deficit (1,264,194) (1,243,042)
--------------- ---------------
Total Liabilities and Stockholders' Deficit $ 1,040,425 $ 1,034,701
=============== ===============
See the notes to these financial statements.
F-1
SUN RIVER ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended October 22, 2002
July 31, (inception) to
2009 2008 July 31, 2009
----------------- ----------------- ----------------------
Revenue: $ - $ - $ -
----------------- ----------------- ----------------------
Operational expenses:
Consulting expenses 426,597 7,880 3,365,423
Director fees - - 112,500
Depreciation - 60 660
Lease expenses - 2,189 689,521
Litigation expense - - 400,000
General and administrative expenses 164,658 2,507 324,256
----------------- ----------------- ----------------------
Total operational expenses 591,255 12,636 4,892,360
----------------- ----------------- ----------------------
Net loss from operations (591,255) (12,636) (4,892,360)
----------------- ----------------- ----------------------
Other Income (Expenses):
Interest income - 3 2,112
Interest expense (30,676) (14,971) (992,852)
Debt relief - - 429,645
Loss on claim release - - (1,298,603)
Realized loss on sale of assets - (44,035) (245,739)
Unrealized gain (loss) on investments - 40,765 -
----------------- ----------------- ----------------------
(30,676) (18,238) (2,105,437)
----------------- ----------------- ----------------------
Net loss $ (621,931) $ (30,874) $ (6,997,797)
================= ================= ======================
Per share information
Net loss per common share
Basic $ (0.04) $ *
Fully diluted (0.04) *
================= =================
Weighted average number of common
stock outstanding 16,707,858 15,637,423
================= =================
* Less than $(0.01) per share.
See the notes to these financial statements.
F-2
SUN RIVER ENERGY, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
From October 22, 2002 (Inception) through July 31, 2009
(Unaudited)
Deficit
COMMON STOCK Additional APIC Accum. During Total
Paid-in Unexercised Development Stockholders'
# of Shares Amount Capital Warrants Stage Deficit
----------- ---------- ---------- ----------- ---------- -----------
Balance - October 22, 2002 - $ - $ - $ - $ - $ -
Stock issued for cash 1,000 1 49 - - 50
Net Loss for Period - - - - (50) (50)
----------- ---------- ---------- ----------- ---------- -----------
Balance - December 31, 2002 1,000 1 49 - (50) -
----------- ---------- ---------- ----------- ---------- -----------
Net Loss for Year - - - - - -
----------- ---------- ---------- ---------- ---------- -----------
Balance - December 31, 2003 1,000 1 49 - (50) -
----------- ---------- ---------- ---------- ---------- -----------
Net Loss for Year - - - - - -
----------- ---------- ---------- ---------- ---------- -----------
Balance - December 31, 2004 1,000 1 49 - (50) -
----------- ---------- ---------- ---------- ---------- -----------
Issuance of shares for Merger 9,033,333 903 436,763 - - 437,666
Merger accounting 484,500 48 (20,923) - - (20,875)
Value of subsidiary in excess
of related party's basis - - (866,667) - - (866,667)
Net Loss for Year - - - - (350,050) (350,050)
----------- ---------- ---------- ---------- ---------- -----------
Balance - April 30, 2006 9,518,833 952 (450,778) - (350,100) (799,926)
----------- ---------- ---------- ---------- ---------- -----------
Issuance of Stock for Cash 795,000 80 397,420 - - 397,500
at $0.50 per share plus
warrant at $0.75
Issuance of Stock for Debt 242,935 24 149,976 - - 150,000
at $0.62 per share
Issuance of Stock for Marketable
Securities 800,000 80 399,920 - - 400,000
at $0.50 per share
Issuance of Stock for Services 309,000 31 154,469 - - 154,500
at $0.50 per share
Issuance of Stock for Lease
acquisition 880,000 88 439,912 - - 440,000
Issuance of Stock for Cash 2,200,000 220 1,099,780 - - 1,100,000
Net Loss for Year - (661,339) (661,339)
----------- ---------- ---------- ---------- ---------- -----------
Balance - April 30, 2007 14,745,768 1,475 2,190,699 - (1,011,439) 1,180,735
----------- ---------- ---------- ---------- ---------- -----------
Issuance of Stock for Services 310,000 31 468,969 - - 469,000
at $1.51 per share
Issuance of Stock for Interest 20,000 2 50,998 - - 51,000
at $2.55 per share
Options issued - - 43,340 - - 43,340
Net Loss for Year - - - - (2,537,051) (2,537,051)
----------- ---------- ---------- ---------- ---------- -----------
Balance - April 30, 2008 15,075,768 1,508 2,754,006 - (3,548,490) (792,976)
----------- ---------- ---------- ---------- ---------- -----------
Issuance of Stock for Services
at average price of $0.47 485,000 48 228,202 - - 228,250
Issuance of Stock for Interest
at average price of $0.28 100,000 10 27,990 - - 28,000
Issuance of Stock in exchange for
debt at an average price of
$0.25 500,000 50 124,950 - - 125,000
Exchange stock for cashless warrants 156,655 16 (16) - - -
Warrants issued for services - - - 36,060 - 36,060
Warrants issued to directors - - - 1,960,000 - 1,960,000
Net loss for year - - - - (2,827,376) (2,827,376)
----------- ---------- ---------- ---------- ---------- -----------
Balance - April 30, 2009 16,317,423 1,632 3,135,132 1,996,060 (6,375,866) (1,243,042)
----------- ---------- ---------- ---------- ---------- -----------
Issuance of stock for debt
($0.25 per share 824,036 82 205,927 - - 206,009
Issuance of stock for services 149,500 15 327,735 - - 327,750
Issuance of stock for cashless -
warrant exercise 15,091 2 (2) - - -
Issuance of warrants for services - - - 67,000 - 67,020
Net loss for period - - - - (621,931) (621,931)
----------- ---------- ---------- ---------- ---------- -----------
Balance - July 31, 2009 17,306,050 $ 1,731 $3,668,792 $2,063,080 $(6,997,797)$(1,264,194)
=========== ========== ========== ========== ============ ===========
See the notes to these financial statements.
F-3
SUN RIVER ENERGY, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
October 22, 2002
For the Three Months Ended (Inception) to
July 31, July 31,
2009 2008 2009
-------------- -------------- -------------------
Cash Flows from Operating Activities:
Net Loss $ (621,931) $ (30,874) $ (6,997,797)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation - 60 660
Unrealized gain on marketable securities - (40,765) -
Equity issued for services and interest 394,770 - 3,249,920
Amortization of consulting stock - 7,880 115,000
Changes in current assets and liabilities:
Decrease in current assets - 52,600 -
Increase in accounts payable 197,947 20,658 1,177,711
-------------- -------------- -------------------
Net Cash (Used) Received by Operating Activities (29,214) 9,559 (2,454,506)
-------------- -------------- -------------------
Cash Flows from Investing Activities:
Increase in fixed assets - - (1,200)
Increase in other assets - (19,166) (611,311)
Acquisition - net of cash acquired - - (813,001)
-------------- -------------- -------------------
Net Cash used in investing activities - (19,166) (1,425,512)
-------------- -------------- -------------------
Cash Flows from Financing Activities:
Common stock issued for cash - - 1,444,750
Common stock issued for debt/assets - - 1,115,000
Proceeds (Payments) from advances 51,467 51,467
Proceeds (Payments) from notes payable (20,000) - 1,330,780
Merger accounting - - (20,875)
-------------- -------------- -------------------
Net Cash Provided by Financing Activities 31,467 - 3,921,122
-------------- -------------- -------------------
Net increase (decrease) in Cash 2,253 (9,607) 41,104
Cash and Cash Equivalents - Beginning of Period 38,851 12,038 -
-------------- -------------- -------------------
Cash and Cash Equivalents - End of Period $ 41,104 $ 2,431 $ 41,104
============== ============== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense $ - $ - $ -
============== ============== ===================
Cash paid for income taxes $ - $ - $ -
============== ============== ===================
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Issuance of common stock for payment of
debt $ 206,009 $ - $ 481,009
============== ============== ===================
Issuance of common stock for marketable
securities $ - $ - $ 400,000
============== ============== ===================
Issuance of common stock for other assets $ - $ - $ 440,000
============== ============== ===================
Issuance of equity for services $ 394,770 $ - $ 777,520
============== ============== ===================
See the notes to these financial statements.
F-4
SUN RIVER ENERGY, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Three Months Ended July 31, 2009
(Unaudited)
Note 1 - Organization, Basis of Presentation and Summary of Significant
Accounting Policies:
Organization:
Sun River Energy, Inc. (the Company) was incorporated on April 30, 1998, under
the laws of the State of Colorado.
The Company is an independent energy company engaged in the, exploration of
North American unconventional natural gas properties and conventional oil and
gas exploration. Its intended operations are principally energy prospects in the
Rocky Mountain region including a coal bed methane prospect located in the Raton
Basin in Northern New Mexico and the Company is seeking other opportunities.
Basis of Presentation:
- ----------------------
Development Stage Company
The Company has not earned any significant revenues from its limited principal
operations. Accordingly, the Company's activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by
SFAS 7 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operation, stockholders'
equity (deficit) and cash flows disclose activity since the date of the
Company's inception.
Interim Presentation
In the opinion of the management of the Company, the accompanying unaudited
financial statements include all material adjustments, including all normal and
recurring adjustments, considered necessary to present fairly the financial
position and operating results of the Company for the periods presented. The
unaudited financial statements and notes do not contain certain information
included in the Company's financial statements for the year ended April 30,
2009. It is the Company's opinion that when the interim financial statements are
read in conjunction with the April 30, 2009 Audited Financial Statements, the
disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any
future period.
Going Concern
The Company's financial statements for the three months ended July 31, 2009 have
been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $621,931 for the three months ended
July 31, 2009 and an accumulated deficit during the development stage of
$6,997,797 as of July 31, 2009. At July 31, 2009, the Company's total current
liabilities exceed total current assets by $2,263,515.
The Company is in the development stage and has not earned any revenue from
operations. The Company's ability to continue as a going concern is dependent
upon its ability to develop additional sources of capital or locate a merger
candidate and ultimately, achieve profitable operations. The accompanying
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. Management is seeking new capital to revitalize
the Company.
F-5
Significant Accounting Policies
- -------------------------------
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
Marketable Securities
On August 17, 2006, in exchange for 800,000 shares of the Company's restricted
common stock, the Company acquired 200,000 shares of the common stock of
Momentum BioFuels, Inc. ("Momentum") from a non-affiliate. At the time of the
acquisition, the Momentum shares had a market value of $400,000 ($0.50 per
share). The 800,000 shares of the Company's stock issued for the shares had a
value of $400,000 ($0.50 per share).
During the three months ended July 31, 2008, the Company had liquidated all of
the shares of common stock of Momentum. These securities are no longer carried
on the books of the Company.
Unrealized gains and losses are computed on the basis of specific identification
and are reported as a component of other income (loss), included as a separate
item on the Company's statement of operations. The Company reported an
unrealized gain on marketable securities of $40,765 during the three months
ended July 31, 2008.
Realized gains, realized losses, and declines in value, judged to be
other-than-temporary, are included in other income (expense). The Company
recognized a loss on the sale of these shares of $44,035 during the three months
ended July 31, 2008.
Fair Value of Financial Instruments
The carrying amount of cash, accounts payable and notes payable is considered to
be representative of its fair value because of the short-term nature of this
financial instrument.
F-6
Stock-Based Compensation
The Company has adopted the provisions of and accounts for stock-based
compensation in accordance with Statement of Financial Accounting Standards No.
123 - revised 2004 ("SFAS 123R"), "Share-Based Payment", which replaced
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock-based Compensation", and supersedes APB Opinion No. 25 ("APB 25"),
Accounting for Stock Issued to Employees". Under the fair value recognition
provisions of this statement, stock-based compensation cost is measured at the
grant date based on the fair value of the award and is recognized as expenses on
a straight-line basis over the requisite service period, which is the vesting
period. The Company elected the modified-prospective method, under which prior
periods are not revised for comparative purposes. The valuation provisions of
SFAS 123R apply to new grants and to grants that were outstanding as of the
effective date and are subsequently modified. All options granted prior to the
adoption of SFAS 123R and outstanding during the periods presented were
fully-vested.
Prior to May 1, 2009, the Company entered into a Consulting Agreement with a
third party for services. Payment for such services includes a monthly payment
of 20,000 shares of the Company's common stock and a warrant exercisable for
20,000 shares of the Company's common stock (see below). During the three months
ended July 31, 2009, the Company issued 60,000 shares of the Company's common
stock to such consultant. The Company recognized an expense of $119,000 (a range
of $1.80 to $2.25 per share, based on closing market prices on the date of
issuance.) During the three months ended July 31, 2009, the Company issued
warrants exercisable for a total of 60,000 shares of the Company's stock. The
Company recognized a total expense of $119,000 in connection with the warrants.
The warrants have a term of two years and exercise prices ranging from $1.90 to
$2.30 per share. The warrants were valued using the Black-Scholes model.
Other Comprehensive Income
The Company has no material components of other comprehensive income (loss), and
accordingly, net loss is equal to comprehensive loss in all periods.
Loss Per Share
SFAS No. 128, Earnings per Share, requires dual presentation of basic and
diluted earnings or loss per share (EPS) with a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
Income Taxes
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable of deductive amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.
F-7
Recently Issued Accounting Pronouncements
- -----------------------------------------
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon acquisitions at that time. We are still assessing the
impact of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160".
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
In March 2008, the FASB issued Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities--an amendment of FASB Statement No. 133"
(SFAS 161). The Statement requires companies to provide enhanced disclosures
regarding derivative instruments and hedging activities. It requires companies
to better convey the purpose of derivative use in terms of the risks that such
company is intending to manage. Disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under SFAS No. 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect a company's financial
position, financial performance, and cash flows are required. This Statement
retains the same scope as SFAS No. 133 and is effective for fiscal years and
interim periods beginning after November 15, 2008. The Company does not expect
the adoption of SFAS 161 to have a material effect on its results of operations
and financial condition.
In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3,
"Determination of the Useful Life of Intangible Assets." This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, "Goodwill and Other Intangible Assets." The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under Statement 142 and the period of expected cash flows used
to measure the fair value of the asset under FASB Statement No. 141 (Revised
2007), "Business Combinations," and other U.S. generally accepted accounting
principles (GAAP). This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. Early adoption is prohibited. The Company does not expect the
adoption of FAS 142-3 to have a material effect on its results of operations and
financial condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
F-8
In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities." This
FSP provides that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether paid or
unpaid) are participating securities and shall be included in the computation of
earnings per share pursuant to the two-class method. The FSP is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Upon adoption, companies are
required to retrospectively adjust earnings per share data (including any
amounts related to interim periods, summaries of earnings and selected financial
data) to conform to provisions of this FSP. The Company does not anticipate the
adoption of FSP EITF 03-6-1 will have a material impact on its results of
operations, cash flows or financial condition.
There were various other accounting standards and interpretations issued in
2009, none of which are expected to have a material impact on the Company's
financial position, operations or cash flows.
Note 2 - Leases and Mineral Rights:
Mineral Rights - New Mexico
The Mineral rights in New Mexico are valued at $100,000, which is based on the
predecessor basis in mineral rights.
Note 3 - Notes Payable:
In March 2009, the Company issued a 4.0% unsecured corporate promissory note to
a vendor for outstanding amounts owed totaling $88,230. The note is due on
demand and requires a monthly payment of $10,000. At July 31, 2009, the note has
a principal balance of $68,230 and accrued interest of $1,145.
In February 2008, the Company issued an 18% unsecured corporate promissory note
to a vendor for outstanding amounts owed totaling $373,540. The note is due on
demand. At July 31, 2009, the note has a principal balance of $373,540 and
accrued interest of $79,948.
In December 2007, the Company issued a 7.5% unsecured corporate promissory note
in exchange for $75,000 to support operations. In June 2009, the Company issued
100,000 shares of its common stock in payment of $25,000 of the outstanding
principal ($0.25 per share). The note is due on demand. At July 31, 2009, the
note has an outstanding principal balance of $50,000 and accrued interest of
$5,610. In September 2009, the Company issued 200,000 shares its common stock in
payment of the remaining $50,000 in principal ($0.25 per share).
In October 2007, the Company issued a 7.5% unsecured corporate promissory note
in exchange for $40,627 to support operations. The note has a due on demand. At
July 31, 2009, the note has an outstanding principal balance of $40,627 and
accrued interest of $3,832.
In October 2007, the Company issued a 7.5% unsecured corporate promissory note
for $211,855. The note is due on demand. During the three months ended July 31,
2009, $69,154 in principal of the promissory note was converted into 324,036
shares of the Company's common stock ($0.25 per share). At July 31, 2009, the
note has an outstanding balance of $142,701 and accrued interest of $15,505.
F-9
In April 2006, in exchange for $150,000, the Company issued a 6% secured
corporate promissory note. The note is secured by certain leases held by the
Company. At July 31, 2009, the note has an outstanding principal balance of
$6,637 and accrued interest of $897.
On April 10, 2006, the Company issued a 6% secured corporate promissory note for
$600,000, to a shareholder of the Company, Mr. Robert A. Doak, Jr. The
promissory note had an original due date of March 31, 2007 and it has been
assigned to unrelated parties, the due date extended several times and now been
divided into several notes. The new unsecured promissory notes have an annual
interest rate of 7.5% and are due on demand. During the three months ended July
31, 2009, principal in the amount of $100,000 was converted into 400,000 shares
of the Company's common stock ($0.25 per share). At July 31, 2009, the notes
have an unpaid principal balance of $338,290 and accrued interest of $57,729.
Note Payable - LPC Investments, LLC
On October 24, 2008, the Company received notice from LPC Investment, LLC
("LPC") of a demand of payment in connection with $74,600 in unsecured
promissory notes held by LPC. LPC is demanding payment of the outstanding
principal and accrued interest. The promissory note had a due date of September
30, 2008. A payment of $70,000 has been made on the note.
On December 12, 2008, LPC Investments, LLC (LPC Investments) filed a lawsuit, in
the Jefferson County District Court, against the Company. The lawsuit alleges a
breach of contract against the Company in connection with the payment of a
$74,600 unsecured, 8.75% promissory note and conversion of 2,200,000 shares of
the Company's common stock into a preferred note. LPC Investments sought not
only payment of the promissory note and accrued interest but also attorney fees.
LPC dismissed its lawsuit, but never withdrew its Notice and Demand for
conversion of promissory note into 2,200,000 shares of the Company. The Company
continues to record a $400,000 liability in connection with this event.
Note 4 -Stockholders' Deficit:
Preferred Stock
At a Special Meeting of the Shareholders of the Company on June 23, 2008, the
shareholders voted to authorized the creation of 25,000,000 shares of Preferred
Stock with a par value of $0.0001, to be issued in such classes or series and
with such rights, designations, privileges and preferences as to be determined
by the Company's Board of Directors at the time of the issuance of any preferred
shares. No shares have been issued at this time, nor have any classes been
established.
Common Stock
Prior to May 1, 2009, the Company entered into a Consulting Agreement with a
third party for services. Payment for such services includes a monthly payment
of 20,000 shares of the Company's common stock and a warrant exercisable for
20,000 shares of the Company's common stock (see Warrants below). During the
three months ended July 31, 2009, the Company issued 60,000 shares of the
Company's common stock to such consultant. The Company recognized an expense of
$119,000 (a range of $1.80 to $2.25 per share, based on closing market prices on
the date of issuance.) In addition, the Consulting Agreement provides for a
one-time payment of 50,000 shares of the Company's restricted common stock.
These shares were issued during the three months ended July 31, 2009 and the
Company recognized an expense of $110,000 ($2.20 per share based on closing
market prices on the date of issuance.)
F-10
During the three months ended July 31, 2009, the Company issued 35,000 shares of
its restricted common stock to two individuals in return for their services on
the Company's advisory board. The Company recognized an expense of $87,500
($2.50 per share based on closing market prices at the date of issuance.)
During the three months ended July 31, 2009, the Company issued 4,500 shares of
its restricted common stock to an unrelated third party for services in the
maintenance of the Company's website. The Company has recognized an expense of
$11,250 ($2.50 per share based on closing market prices at the date of
issuance.)
During the three months ended July 31, 2009, the Company issued 824,036 shares
of its common stock to holders of promissory notes as payment of principal of
$194,154 and accrued interest of $11,855 ($0.25 per share.) (See Note 3)
During the three months ended July 31, 2009, the Company issued 15,091 shares of
its restricted common stock as a result of the cashless exercise of a warrant
for 20,000 shares of the Company's common stock.
Warrants
During the year ended April 30, 2009, the Company entered into a Consulting
Services Agreement with a third party for services. Payment for such services
includes a monthly payment of 20,000 shares of the Company's common stock and a
warrant exercisable for 20,000 shares of the Company's common stock. During the
three months ended July 31, 2009, the Company issued 60,000 shares of the
Company's common stock to such consultant. The Company recognized an expense of
$119,000 in connection with the issuance of the common stock. During the three
months ended July 31, 2009, warrants exercisable for 60,000 shares were issued
by the Company. The warrants have a term of 2 years, exercises prices based on
closing market price on the last day of the month of issuance and provide for a
cashless exercise.
During the three months ended April 30, 2009, the warrants exercisable for
60,000 shares had exercise prices ranging from $1.90 to $2.30 per share. The
total fair value of the options at the date of grant was $67,020 and was
recorded as consulting expense. The Company used the following assumptions to
determine the fair value of warrant grants during the three months ended July
31, 2009:
2009
----
Expected life 1 year
Volatility 130% - 151%
Risk-free interest rate 4.5% - 4.75%
Dividend yield 0
The expected term of the warrants represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. The expected volatility is based on the historical price volatility of
the Company's common stock. The risk-free interest rate represents the U.S.
Treasury bill rate for the expected life of the related warrants.
The dividend yield represents our anticipated cash dividend over the expected
life of the warrants.
A summary of warrant activity for the three months ended July 31, 2009 is
presented below:
F-11
Weighted Average
Shares Under Weighted Remaining
Warrant Average Contractual Life Aggregate
Exercise Price Intrinsic Value
Outstanding at May 1, 2009 1,440,000 $ 2.00 1.93 years $ -
Granted 60,000 - 1.92 years -
Exercised (20,000) 0.54 - -
Expired - - - -
--------- -------- ---------- --------
Outstanding at July 31, 2009 1,500,000 $ 2.00 1.93 years $ -
========= ======== ========== ========
During the three months ended July 31, 2009, the Company issued 15,091 shares of
its restricted common stock in connection with the cashless exercise of a
warrant exercisable for 20,000 shares.
Note 5. Subsequent Events.
Litigation
Note Payable - LPC Investments, LLC
On December 12, 2008, LPC Investments, LLC (LPC Investments) filed a lawsuit, in
the Jefferson County District Court, against the Company. The lawsuit alleges a
breach of contract against the Company in connection with the payment of an
unsecured, 8.75% promissory note and conversion of 2,200,000 shares of the
Company's common stock into a preferred note. LPC Investments sought not only
payment of the unsecured, 8.75% promissory note and accrued interest but also
attorney fees. A payment of $70,000 has been made on the promissory note.
On August 18, 2009, the Court granted the Motion to Dismiss filed by LPC in July
2009. The case has been dismissed without prejudice and all claims against the
Company have been dropped, however LPC has not withdrawn its conversion notice
and demand. Therefore, the Company has recorded a $400,000 litigation liability
in connection with the conversion notice and demand.
F-12
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements.
The independent registered public accounting firm's report on the Company's
financial statements as of April 30, 2009, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph
that describes substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to the factors prompting the
explanatory paragraph are discussed below and also in Note 1 to the unaudited
quarterly financial statements.
OVERVIEW
The Company had no revenues during the three months ended July 31, 2009. The
Company has minimal capital and minimal cash.
During the years ended April 30 2009 and 2008, our operations were focused
exploring a coal bed methane prospect located in the Raton Basin in Northern New
Mexico. During the year ended April 30, 2008, we drilled 3 coal bed methane
wells in the Raton Basin, Myers #1, #2 and #3. All three wells have shown
multiple coal zones, which will be completed to seek methane gas.
Over the next twelve months, we intend to frac the Myers #1 and #2 in order to
test production thereafter. We have perforated multiple zones and intend to frac
these zones.
The Company intends to operate all of our prospects in the Raton Basin and hold
working interests of 100% on an 80% NRI on our leases, except that the Company
has a 25% working interest in the Sun River #1, LLC, a drilling syndication for
the Myers #1 and #2 wells, which was assembled in early 2007.
The Company will still need substantial additional capital to support our
proposed future operations. The Company has no revenues. The Company has no
committed source for any funds as of the date herein. No representation is made
that any funds will be available when needed. In the event funds cannot be
raised when needed, the Company may not be able to carry out its business plan,
may never achieve sales or royalty income, and could fail in business as a
result of these uncertainties.
In addition, the United States, during the last year has experienced severe
instability in the commercial and investment banking systems and the energy
industry is suffering from low energy prices, which these factors are likely to
continue to have far-reaching effects on the economic activity in the country
for an indeterminable period. The long-term impact on the United States economy
and the Company's operating activities and ability to raise capital cannot be
predicted at this time, but may be substantial and adverse.
1
RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended July 31, 2009 compared to the
Three Months Ended July 31, 2008.
During the three months ended July 31, 2009 and 2008, the Company did not
recognize any revenues from its operating activities.
During the three months ended July 31, 2009, operating expenses were $591,255
compared to $12,636 during the three months ended July 31, 2008. The $578,619
increase is a result of the $418,717 increase in consulting expenses and
increase of $162,151 in general and administrative expenses. Consulting expenses
increased as a result of the expenses associated with the issuance of the
Company's common stock and warrants for services, as discussed below. The
increase of $162,151 in general and administrative expenses was a result of the
Company's increased legal activities and increased administrative activities.
The Company recognized interest expense of $30,676 during the three months ended
July 31, 2009 compared to $14,791 for the same period in 2008.
During the three months ended July 31, 2009, the Company recognized a net loss
of $621,931, compared to a net loss of $30,874 for the comparable three months
in 2008. The increase of $591,057 was due to the $418,171 increase in operating
expenses combined with the $15,885 increase in interest expense discussed above.
There was also an unrealized gain on investment of $40,765 during the three
months ended July 31, 2008.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 2009, the Company had cash and cash equivalents of $41,104
constituting all of the Company's current assets. At July 31, 2009, the Company
had total liabilities of $2,304,619, all current. Total liabilities at July 31,
2009, included accounts payable of $542,800, accrued interest payable of
$187,686, accrued litigation expense of $400,000, $37,508 in drilling bonds
payable and $1,136,625 in notes payable. At July 31, 2009, the Company had a
working capital deficit of $2,263,515.
The Company will need to either borrow or make private placements of stock in
order to fund operations. No assurance exists as to the ability to achieve loans
or make private placements of stock.
During the three months ended July 31, 2009, the Company used cash of $29,214.
Net losses of $621,931 were adjusted for the non-cash item of $394,770 in
expenses paid for by the issuance of the Company's stock and warrants. During
the three months ended July 31, 2008, the Company received cash of $9,559 from
its operational activities. Net losses of $30,874 during the three months ended
July 31, 2008 were adjusted for non-cash items of $60 in depreciation expenses,
an unrealized gain on investment of $40,675, and amortization expense of $7,880
for consulting stock.
During the three months ended July 31, 2009, the Company did not receive or use
cash in its investing activities. During the three months ended July 31, 2008,
the Company used $19,166 in its investing activities for the purchase of other
assets.
During the three months ended July 31, 2009, the Company received $31,467 from
its financing activities. During the three months ended July 31, 2008, the
Company did not receive or use any funds in its financing activities.
2
Prior to May 1, 2009, the Company entered into a Consulting Agreement with a
third party for services. Payment for such services includes a monthly payment
of 20,000 shares of the Company's common stock and a warrant exercisable for
20,000 shares of the Company's common stock. During the three months ended July
31, 2009, the Company issued 60,000 shares of the Company's common stock to such
consultant. The Company recognized an expense of $119,000 (a range of $1.80 to
$2.25 per share, based on closing market prices on the date of issuance.) During
the three months ended July 31, 2009, the Company issued warrants exercisable
for a total of 60,000 shares of the Company's stock. The Company recognized a
total expense of $67,020 in connection with the warrants. The warrants have a
term of two years and exercise prices ranging from $1.90 to $2.30 per share. The
warrants were valued using the Black-Scholes model.
In addition, the Consulting Agreement provides for a one-time payment of 50,000
shares of the Company's restricted common stock. These shares were issued during
the three months ended July 31, 2009 and the Company recognized an expense of
$110,000 ($2.20 per share based on closing market prices on the date of
issuance.)
During the three months ended July 31, 2009, the Company issued 35,000 shares of
its restricted common stock to two individuals in return for their services on
the Company's advisory board. The Company recognized an expense of $87,500
($2.50 per share based on closing market prices at the date of issuance.)
During the three months ended July 31, 2009, the Company issued 4,500 shares of
its restricted common stock to an unrelated third party for services in the
maintenance of the Company's website. The Company has recognized an expense of
$11,250 ($2.50 per share based on closing market prices at the date of
issuance.)
During the three months ended July 31, 2009, the Company issued 15,091 shares of
its restricted common stock as a result of the cashless exercise of a warrant
for 20,000 shares of the Company's common stock.
In March 2009, the Company issued a 4.0% unsecured corporate promissory note to
a vendor for outstanding amounts owed totaling $88,230. The note is due on
demand and requires a monthly payment of $10,000. During the three months ended
July 31, 2009, cash payments totaling $20,000 were made on the principal of the
note. At July 31, 2009, the note has a principal balance of $68,230 and accrued
interest of $1,145.
In December 2007, the Company issued a 6.0% unsecured corporate promissory note
in exchange for $75,000 to support operations. In June 2009, the Company issued
100,000 shares of its common stock in payment of $25,000 of the outstanding
principal ($0.25 per share). The note is due on demand. At July 31, 2009, the
note has an outstanding principal balance of $50,000 and accrued interest of
$5,610. In September 2009, the Company issued 200,000 shares of its common stock
in payment of the remaining $50,000 in outstanding principal ($0.25 per share).
In October 2007, the Company issued a 7.5% unsecured corporate promissory note
for $211,855. The note is due on demand. During the three months ended July 31,
2009, $69,154 in principal of the promissory note was converted into 324,036
shares of the Company's common stock ($0.25 per share). At July 31, 2009, the
note has an outstanding balance of $142,701 and accrued interest of $15,505.
On April 10, 2006, the Company issued a 6% secured corporate promissory note for
$600,000, to a shareholder of the Company, Mr. Robert A. Doak, Jr. The
promissory note had an original due date of March 31, 2007 and it has been
assigned to unrelated parties, the due date extended several times and now been
divided into several notes. The new unsecured promissory notes have an annual
interest rate of 7.5% and are due on demand. During the three months ended July
31, 2009, principal in the amount of $100,000 was converted into 400,000 shares
of the Company's common stock ($0.25 per share). At July 31, 2009, the notes
have an unpaid principal balance of $338,290 and accrued interest of $57,729.
3
GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Company is in the development stage. The Company's ability to continue as a
going concern is dependent upon its ability to develop additional sources of
capital or locate a merger candidate and ultimately, achieve profitable
operations. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties. Management is seeking
new capital to revitalize the Company.
ADDITIONAL FINANCING
- --------------------
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash needs,
including the costs of compliance with the continuing reporting requirements of
the Securities Exchange Act of 1934. The Company will have to seek loans or
equity placements to cover such cash needs. In the event the Company is able to
complete a business combination during this period, lack of its existing capital
may be a sufficient impediment to prevent it from accomplishing the goal of
completing a business combination. There is no assurance, however, that without
funds it will ultimately allow the Company to carry out its business.
The Company will need to raise additional funds to conduct any business
activities in the next twelve months.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover its expenses as they may
be incurred.
Irrespective of whether the Company's cash assets prove to inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our Chief Executive Officer, as appropriate, to allow for timely
decisions regarding required disclosure.
4
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
ITEM 4T. CONTROLS AND PROCEDURES
The information in this Item 4T of this Quarterly Report on Form 10-Q is
furnished pursuant to Item 308T of Regulation of S-K and shall be deemed "filed"
for all purposes, including for the purposes of Section 18 of the Exchange Act,
or otherwise subject to the liabilities of the Section. The information in this
Quarterly Report on Form 10-Q shall be deemed incorporated by reference into any
filing under the Securities Act of the Exchange Act by this reference.
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended July 31,
2009. We believe that internal control over financial reporting is effective. We
have not identified any, current material weaknesses considering the nature and
extent of our current operations and any risks or errors in financial reporting
under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
5
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended July 31, 2009, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
Note Payable - LPC Investments, LLC
On December 12, 2008, LPC Investments, LLC (LPC Investments) filed a lawsuit, in
the Jefferson County District Court, against the Company. The lawsuit alleges a
breach of contract against the Company in connection with the payment of an
unsecured, 8.75% promissory note and conversion of 2,200,000 shares of the
Company's common stock into a preferred note. LPC Investments sought not only
payment of the unsecured, 8.75% promissory note and accrued interest but also
attorney fees. A payment of $70,000 has been made on the promissory note.
On August 18, 2009, the Court granted the Motion to Dismiss filed by LPC in July
2009. The case has been dismissed without prejudice and all claims against the
Company have been dropped, however LPC has not withdrawn its conversion notice
and demand. Therefore, the Company has recorded a $400,000 litigation liability
in connection with the conversion notice and demand.
6
ITEM 2. CHANGES IN SECURITIES
The Company made the following unregistered sales of its securities from May 1,
2009 through July 31, 2009.
DATE OF SALE TITLE OF SECURITIES NO. OF SHARES CONSIDERATION CLASS OF PURCHASER
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
5/14/09 Common Stock 50,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
5/15/09 Common Stock 124,036 Payment of principal Business Associate
and accrued interest
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
5/29/09 Common Stock 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
5/31/09 Warrant 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/8/09 Common Stock 35,000 Consulting Fee Business Associates
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/9/09 Common Stock 100,000 Payment of $25,000 on Business Associate
promissory note
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/11/09 Common Stock 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/18/09 Common Stock 4,500 Website Services Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/18/09 Common Stock 200,000 Payment of $50,000 on Business Associate
promissory note
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/29/09 Common Stock 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
6/29/09 Warrant 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
7/22/09 Common Stock 400,000 Payment of $100,000 Business Associate
on promissory note
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
7/23/09 Common Stock 15,091 Cashless exercise of Business Associate
warrant
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
7/31/09 Warrant 20,000 Consulting Fee Business Associate
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
7
Exemption From Registration Claimed
All of the sales by the Company of its unregistered securities were made by the
Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). All of the individuals and/or entities listed above that
purchased the unregistered securities were almost all existing shareholders, all
known to the Company and its management, through pre-existing business
relationships, as long standing business associates and employees. All
purchasers were provided access to all material information, which they
requested, and all information necessary to verify such information and were
afforded access to management of the Company in connection with their purchases.
All purchasers of the unregistered securities acquired such securities for
investment and not with a view toward distribution, acknowledging such intent to
the Company. All certificates or agreements representing such securities that
were issued contained restrictive legends, prohibiting further transfer of the
certificates or agreements representing such securities, without such securities
either being first registered or otherwise exempt from registration in any
further resale or disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers
correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive and Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
8
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SUN RIVER ENERGY, INC.
(Registrant)
Dated: September 18, 2009 By: /s/Redgie Green
-------------------
Redgie Green, Chief Executive Officer
& Accounting Officer
9