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 March 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 333-151398
GULFSTAR ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 02-0511381
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(State of Incorporation) (IRS Employer ID Number)
8950 Scenic Pine Drive, Suite 100, Parker, Colorado 80134
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(Address of principal executive offices)
303-794-4398
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(Registrant's Telephone number)
Bedrock Energy, Inc.
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(Former name, address and former fiscal year, if changed from 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 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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] 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 May 13, 2010, there were 1,401,251 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 - March 31, 2010 and December 31, 2009 F-1
Statements of Operations -
Three months ended March 31, 2010 and 2009 and
From March 17, 1999 (Inception) to March 31, 2010 F-2
Statements of Stockholders' Equity (Deficit)
From March 17, 1999 (Inception) to March 31, 2010 F-3
Statements of Cash Flows -
Three months ended March 31, 2010 and 2009 and
From March 17, 1999 (Inception) to March 31, 2010 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 3
Item 4. Controls and Procedures 4
Item 4T. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 5
Item 1A. Risk Factors - Not Applicable 5
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 5
Item 3. Defaults Upon Senior Securities - Not Applicable 6
Item 4. Removed and Reserved 6
Item 5. Other Information - Not Applicable 6
Item 6. Exhibits 6
SIGNATURES 7
PART I
ITEM 1. FINANCIAL STATEMENTS
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Eenrgy, Inc.)
( A Company in the Development Stage)
BALANCE SHEETS
March 31, December 31,
2010 2009
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ASSETS (Unaudited) (Audited)
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CURRENT ASSETS:
Cash $ 470 $ 780
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Total Current Assets 470 780
PROPERTY:
Oil and Gas Lease 1,122 1,122
--------------- ----------------
TOTAL ASSETS $ 1,592 $ 1,902
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts Payable $ 6,162 $ 9,156
Loan from Shareholders - 6,930
--------------- ----------------
Total Liabilities 6,162 16,086
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred shares, no par value, non voting: 10,000,000
shares authorized; no shares issued and outstanding - -
Common shares, $.001 par value, voting: 200,000,000
shares authorized; 4,255,524 and 3,955,524 issued and
outstanding, respectively 4,255 3,955
Additional paid in capital 476,818 449,819
Deficit accumulated during the development stage (485,643) (467,958)
--------------- ----------------
Total Shareholders' Equity (Deficit) (4,570) (14,184)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 1,592 $ 1,902
=============== ================
The accompanying notes are an integral part of these statements.
F-1
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Eenrgy, Inc.)
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
(Unaudited)
Period From
(Inception)
March 17, 1999
For the Three Months Ended Through
March 31, 2010 March 31, 2009 March 31, 2010
----------------------- ----------------------- -----------------
OPERATING EXPENSES:
Salaries and related expenses $ - $ - $ 112,128
Professional fees 9,375 2,804 125,379
Service fees 8,000 16,750 238,275
Travel and entertainment 24 1,251 36,081
General and administrative 286 1,468 37,671
----------------------- ----------------------- -----------------
Total Operating Expenses 17,685 22,273 549,534
----------------------- ----------------------- -----------------
Operating loss (17,685) (22,273) (549,534)
OTHER INCOME:
Other, net - - 63,891
----------------------- ----------------------- -----------------
NET LOSS
BEFORE INCOME TAXES (17,685) (22,273) (485,643)
Provision for income taxes - - -
----------------------- ----------------------- -----------------
NET LOSS (17,685) (22,273) (485,643)
======================= ======================= =================
Basic and diluted
(loss) per common share $ (0.01) $ (0.01)
======================= =======================
Basic and diluted
weighted-average number
of common shares outstanding 4,105,524 3,203,857
======================= =======================
The accompanying notes are an integral part of these statements.
F-2
GULFSTAR ENERGY CORPORATION
(Formerly Bedroeck Energy, Inc.)
(A Company in the Development Stage)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
Common Shares Preferred Shares Additional
$.001 Par Value No Par Value Paid-in
Shares Amount Shares Amount Capital Deficit
---------------------------- ---------------------------- ------------ ----------
BALANCES, Inception, March 17, 1999 - $ - - $ - $ $
Issuance of shares for services and cash 950,706 950 - - 43,825 -
Net loss - - - - - (29,784)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 1999 950,706 950 - - 43,825 (29,784)
Issuance of shares for debt, services and
cash 39,818 40 - - 140,960 -
Net loss - - - - (215,994)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2000 990,524 990 - - 184,785 (245,778)
Net income - - - - - 9,233
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BALANCES, December 31, 2001 990,524 990 - - 184,785 (236,545)
Net income - - - - - 49,137
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BALANCES, December 31, 2002 990,524 990 - - 184,785 (187,408)
Net loss - - - - - (890)
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BALANCES, December 31, 2003 990,524 990 - - 184,785 (188,298)
Net loss - - - - - (5,657)
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BALANCES, December 31, 2004 990,524 990 - - 184,785 (193,955)
Net loss - - - - - (36,000)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2005 990,524 990 - - 184,785 (229,955)
Net loss - - - - - (36,000)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2006 990,524 990 - - 184,785 (265,955)
Issuance of shares for debt, services and
cash 1,245,000 1,245 - - 165,255 -
Net loss - - - - - (78,097)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2007 2,235,524 2,235 - - 350,040 (344,052)
Issuance of shares for services and cash 610,000 610 - - 37,890 -
Net loss - - - - - (48,109)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2008 2,845,524 2,845 - - 387,930 (392,161)
Issuance of shares for services 1,110,000 1,110 - - 61,889 -
Net loss - - - - - (75,797)
---------------------------------------------- ---------- ------------------------
BALANCES, December 31, 2009 3,955,524 3,955 - - 449,819 (467,958)
Issuance of shares for debt and services 300,000 300 - - 26,999 -
Net loss - - - - - (17,685)
---------------------------------------------- ---------- ------------------------
BALANCES, March 31, 2010 4,255,524 $ 4,255 - $ - $ 476,818 $(485,643)
================ ========== ================ ========== ============ ===========
The accompanying notes are an integral part of these statements.
F-3
(continued)
GULFSTAR ENERGY CORPORATION
(Formerly Bedroeck Energy, Inc.)
(A Company in the Development Stage)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
Total
Shareholders'
Equity
(Deficit)
--------------
BALANCES, Inception, March 17, 1999 $ -
Issuance of shares for services and cash 44,775
Net loss (29,784)
---------------
BALANCES, December 31, 1999 14,991
Issuance of shares for debt, services and
cash 141,000
Net loss (215,994)
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BALANCES, December 31, 2000 (60,003)
Net income 9,233
---------------
BALANCES, December 31, 2001 (50,770)
Net income 49,137
---------------
BALANCES, December 31, 2002 (1,633)
Net loss (890)
---------------
BALANCES, December 31, 2003 (2,523)
Net loss (5,657)
---------------
BALANCES, December 31, 2004 (8,180)
Net loss (36,000)
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BALANCES, December 31, 2005 (44,180)
Net loss (36,000)
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BALANCES, December 31, 2006 (80,180)
Issuance of shares for debt, services and
cash 166,500
Net loss (78,097)
---------------
BALANCES, December 31, 2007 8,223
Issuance of shares for services and cash 38,500
Net loss (48,109)
---------------
BALANCES, December 31, 2008 (1,386)
Issuance of shares for services 62,999
Net loss (75,797)
---------------
BALANCES, December 31, 2009 (14,184)
Issuance of shares for debt and services 27,299
Net loss (17,685)
---------------
BALANCES, March 31, 2010 $ (4,570)
===============
The accompanying notes are an integral part of these statements.
F-4
GULFSTAR ENERGY CORPORATION
(Formerly Bedroeck Energy, INc.)
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
Period From
(Inception)
March 17, 1999
For the Three Months Ended Through
March 31, 2010 March 31, 2009 March 31, 2010
---------------------- ---------------------- -----------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (17,685) $ (22,273) $ (485,643)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Issuance of common shares for services 14,676 32,500 190,951
Issuance of debt for services - - 12,000
Debt forgiveness - - (66,259)
(Increase) in current assets - (15,750) -
Increase in accounts payable 2,699 1,096 135,431
---------------------- ---------------------- -----------------
Net cash used in operating activities (310) (4,427) (213,520)
---------------------- ---------------------- -----------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Lease - (1,122) (1,122)
---------------------- ---------------------- -----------------
Net cash used in investing activities - - (1,122)
---------------------- ---------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party payable - - 21,612
Sale of common shares - 193,500
---------------------- ---------------------- -----------------
Net cash provided by financing activities - - 215,112
---------------------- ---------------------- -----------------
NET (DECREASE) INCREASE IN CASH (310) (5,549) 470
CASH, BEGINNING OF PERIOD 780 11,662 -
---------------------- ---------------------- -----------------
CASH, END OF PERIOD $ 470 $ 6,113 $ 470
====================== ====================== =================
NONCASH ACTIVITIES:
Issuance of common shares for debt $ 12,622 $ - $ 105,920
====================== ====================== =================
The accompanying notes are an integral part of these statements.
F-5
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Energy, Inc.)
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated in Colorado on August 11, 2004 and its name changed
to Bedrock Energy, Inc. on October 18, 2007 from CellTouch, Inc. Enviromart.com,
Inc. was incorporated in New Hampshire in March of 1999. On September 21, 2004,
CellTouch, Inc. and Enviromart.com, Inc. (collectively the "Company") were
merged under the laws of the State of Colorado and CellTouch, Inc. became the
surviving entity. The Company has been in the development stage since its
inception. Activities through March 31, 2010 include the raising of equity
capital and the formation of a previous business plan to sell environmental
products over the Internet as well as the current business plan to merge with or
acquire and develop assets from a company in the oil and gas industry (See Note
6).
On May 5, 2010, the Company's Board of Directors and a majority of its
Shareholders, by written consent approved proposals to amend the Company's
Articles of Incorporation to give effect to changing the name of the Company
from Bedrock Energy, Inc. to Gulfstar Energy Corporation and to allow for a
reverse split of the Company's issued and outstanding common stock on a one for
eight basis.
On May 5, 2010, the Company entered into Share Exchange Agreement (Share
Agreement) with Talon Energy Corporation (Talon). Talon is a Florida company
engaged in activities in the oil and gas industry.
The Share Agreement provides for the Company to issue 3,500,000 post-split
shares of its restricted common stock to the shareholders of Talon in exchange
for the issued and outstanding shares of Talon. After the exchange of such
shares the Company will own 100% of the issued and outstanding stock of Talon.
The closing of the acquisition of Talon is contingent upon the delivery of
audited financial statements of Talon and the issuance and delivery of the
common stock of the Company and Talon.
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
financial statements and notes are presented as permitted by Form 10-Q, and do
not contain certain information included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2009. It is the Company's opinion
that when the interim financial statements are read in conjunction with the
December 31, 2009 Annual Report on Form 10-K, the disclosures are adequate to
make the information presented not misleading. Interim results are not
indicative of results for a full year or any future period.
Statement of Cash Flows
For purposes of the statements of cash flows, cash includes deposits in
commercial bank accounts.
F-6
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Energy, Inc.)
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)
Income Taxes
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.
Income Per Share
Income per share requires presentation of both basic and diluted income per
common share. Common share equivalents are not included in the weighted average
calculation since their effect would be anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates,
and such differences may be material to the financial statements.
Fair Value of Financial Instruments
The Company's financial instruments, including cash, other assets and payables
approximate fair value due to the short-term nature of those instruments.
Going Concern
The Company's financial statements for the three months ended March 31, 2010
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 an accumulated deficit in the development
stage of $485,643 as of March 31, 2010. The Company did not recognize revenues
from its activities during the three months ended March 31, 2010. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
Recent Accounting Pronouncements
There were accounting standards and interpretations issued during the three
months ended March 31, 2010, none of which are expected to have a material
impact on the Company's financial position, operations or cash flows.
NOTE 2 - SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Share
The Company is authorized to issue 10,000,000 shares of no par value preferred
stock. As of March 31, 2010, the Company has no shares issued and outstanding.
F-7
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Energy, Inc.)
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)
NOTE 2 - SHAREHOLDERS' EQUITY (DEFICIT) (continued)
Common Share
The Company is authorized to issue 200,000,000 shares of $.001 voting common
stock. As of March 31, 2010 and 2009 there were a total of 4,255,524 and
3,495,524 shares of common stock issued and outstanding respectively.
During the three months ended March 31, 2010, the Company issued 146,760 shares
of its common stock for services valued at market as well as 153,240 shares of
its common stock for debt of $12,622 (See Note 3).
During the three months ended March 31, 2009, the Company issued 650,000 shares
of its common stock for services valued at market (See Note 3).
NOTE 3 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2010, the Company issued to its two
Board members 80,000 shares of its common stock in exchange for services for the
quarter ended March 31, 2010 valued at $8,000 as well as 120,000 shares of its
common stock in exchange for debt in the amount of $9,298.
During the three months ended March 31, 2009, the Company issued 350,000 shares
of its common stock to its two Board members in exchange for services to be
rendered during the period March 1, 2009 through December 31, 2009 valued at
$17,500.
NOTE 4 - INCOME TAXES
As of March 31, 2010, the Company had net operating loss carryforwards for
income tax and financial reporting purposes of approximately $393,000 expiring
in the years 2014 through 2029. The deferred tax assets that result from such
operating loss carryforwards of approximately $120,000 as of March 31, 2010 have
been fully reserved for in the accompanying financial statements. During the
three months ended March 31, 2010, the valuation allowance established against
the net operating loss carryforwards increased by $5,000.
NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONTINGENCIES
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company has suffered recurring losses from
operations that raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in this regard are to raise capital
through the issuance of common shares as well as seek a merger partner. The
accompanying financial statement do not include any adjustments relating to the
recovery and classification of recorded asset amounts or the amount and
classification of liabilities that might be necessary should the Company
discontinue operations.
F-8
GULFSTAR ENERGY CORPORATION
(Formerly Bedrock Energy, Inc.)
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)
NOTE 6 - SUBSEQUENT EVENTS
The Company on May 5, 2010 changed its name from Bedrock Energy, Inc. to
Gulfstar Energy Corporation as well as authorized a one share for eight share
reverse stock split. Also, the Company authorized the issuance of 40,000 shares
of its post reverse common stock for services valued at $32,000 or $.80 per
share and the issuance to each of its two Board members of 52,500 shares of its
post reverse common stock for services valued at $42,000 or $.80 per share as
well as the issuance to each of its two Board members of 2,500 shares of its
post reverse common stock for a loan from each of its two Board members during
the month of April 2010 in the amount of $2,000 or $.80 per share.
On May 5, 2010, the Company entered into Share Exchange Agreement (Share
Agreement) with Talon Energy Corporation (Talon). Talon is a Florida company
engaged in activities in the oil and gas industry.
The Share Agreement provides for the Company to issue 3,500,000 post-split
shares of its restricted common stock to the shareholders of Talon in exchange
for the issued and outstanding shares of Talon. After the exchange of such
shares the Company will own 100% of the issued and outstanding stock of Talon.
The closing of the acquisition of Talon is contingent upon the delivery of
audited financial statements of Talon and the issuance and delivery of the
common stock of the Company and Talon.
F-9
ITEM 2. MANAGEMENT'S 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 made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
OPERATIONS
- ----------
We had no operations prior to and we had no revenues during the three months
ended March 31, 2010. We have minimal capital and minimal cash. We are illiquid
and need cash infusions from investors or shareholders to provide capital, or
loans from any sources.
We are an oil and gas exploration and development company focused on creating a
portfolio of North American assets, located in the central and Western United
States that exhibit consistent, predictable, and long-lived production
capabilities. We plan to build value for its shareholders through the
acquisition and development of gas and oil assets that contain proven reserves
in domestic areas where reserves can be economically produced at a low risk to
us relying on joint venture partners to supply most of the funds needed to
explore or develop these properties.
We intend to participate in oil and gas prospects located in the states of Utah,
Wyoming, Kansas, New Mexico, and Colorado. Our main emphasis will be to acquire
production or revenue generating opportunities either by lease purchase or
farmout, when available, with third parties and industry partners.
On May 5, 2010, the Company's Board of Directors and a majority of its
Shareholders, by written consent approved proposals to amend the Company's
Articles of Incorporation to give effect to changing the name of the Company
from Bedrock Energy, Inc. to Gulfstar Energy Corporation and to allow for a
reverse split of the Company's issued and outstanding common stock on a one for
eight basis.
On May 5, 2010, the Company entered into Share Exchange Agreement (Share
Agreement) with Talon Energy Corporation (Talon). Talon is a Florida company
engaged in activities in the oil and gas industry.
The Share Agreement provides for the Company to issue 3,500,000 post-split
shares of its restricted common stock to the shareholders of Talon in exchange
for the issued and outstanding shares of Talon. After the exchange of such
shares the Company will own 100% of the issued and outstanding stock of Talon.
The closing of the acquisition of Talon is contingent upon the delivery of
audited financial statements of Talon and the issuance and delivery of the
common stock of the Company and Talon.
1
We will need substantial additional capital to support our proposed future
energy operations. We have no revenues. We have no committed source for any
funds as of date hereof. No representation is made that any funds will be
available when needed. In the event funds cannot be raised when needed, we may
not be able to carry out our business plan, may never achieve sales or royalty
income, and could fail in business as a result of these uncertainties.
Decisions regarding future participation in exploration wells or geophysical
studies or other activities will be made on a case-by-case basis. We may, in any
particular case, decide to participate or decline participation. If
participating, we may pay our proportionate share of costs to maintain our
proportionate interest through cash flow or debt or equity financing. If
participation is declined, we may elect to farmout, non-consent, sell or
otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
RESULTS OF OPERATIONS
- ---------------------
For the Three Months Ended March 31, 2010 Compared to the Three Months Ended
March 31, 2009
During the three months ended March 31, 2010 and 2009, we did not recognize any
revenues from our business activities.
During the three months ended March 31, 2010, we incurred total operating
expenses of $17,685 compared to $22,273 during the three months ended March 31,
2009. The decrease of $4,588 was a result of $8,750 decrease in service fees, a
$1,227 decrease in travel and entertainment expense and a $1,200 decrease in
general and administrative expenses offset by an increase of $6,751 in
professional fees.
During the three months ended March 31, 2010, we incurred a net loss of $17,685
compared to a net loss of $22,273 during the three months ended March 31, 2009.
The decrease of $4,588 is a result of $8,750 decrease in service fees, a $1,227
decrease in travel and entertainment expense and a $1,200 decrease in general
and administrative expenses offset by an increase of $6,751 in professional
fees, as discussed above.
LIQUIDITY
- ---------
At March 31, 2010, we had total current assets of $470 consisting solely of
cash. At March 31, 2010, we had total liabilities of $6,162, consisting solely
of accounts payables. At March 31, 2010, we had an accumulated deficit of
$485,643.
During the three months ended March 31, 2010, we used net cash of $310 in
operational activities. During the three months ended March 31, 2009, we used
net cash of $4,427 in operational activities.
During the three months ended March 31, 2010, we recognized a net loss of
$17,685, which was adjusted for a non-cash activity of $14,676 in common stock
that was issued for services. During the three months ended March 31, 2009, we
recognized a net loss of $22,273, which was adjusted for a non-cash activity of
$32,500 in common stock that was issued for services.
During the three months ended March 31, 2010, the Company neither received nor
used funds in its investing activities. During the three months ended March 31,
2009, the Company used $1,122 in its investing activities. The funds were used
to purchase a 100% net revenue interest in 240 acres in Morgan County, Colorado.
2
During the three months ended March 31, 2010 and 2009, the Company did not
receive or use any funds from its financing activities.
During the three months ended March 31, 2010, the Company issued 146,760 shares
of its common stock for services valued at market as well as 153,240 shares of
its common stock for debt of $12,622.
During the three months ended March 31, 2009, the Company issued 650,000 shares
of its common stock for services valued at market.
We have minimal cash at March 31, 2010 and no other assets, and we will be
reliant upon shareholder loans or private placements of equity to fund any kind
of operations. We have secured no sources of loans or private placements at this
time.
Capital Resources
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for participation, investigation, exploration, acquisition and working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. Once exploration commences,
our needs for additional financing is likely to increase substantially.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
In addition, the United States is experiencing severe instability in the
commercial and investment banking systems which is 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.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
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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 management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief
Financial Officer for the quarter ended March 31, 2010, 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, Messrs. Nichols and
Sears have 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 and Chief Financial 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
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 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:
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
our assets;
(2) 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
(3) 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 registrant's internal
control over financial reporting is as of the quarter ended March 31, 2010. 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.
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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.
This annual 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 March 31, 2010, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 1A. RISK FACTORS
NONE
ITEM 2. CHANGES IN SECURITIES
The Company made the following unregistered sales of its securities from January
1, 2010 through March 31, 2010.
DATE OF SALE TITLE OF SECURITIES NO. OF SHARES CONSIDERATION CLASS OF PURCHASER
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
March 2010 Common Stock 146,760 Services Business Associates
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
March 2010 Common Stock 153,240 $12,622 in Debt Business Associates
- ------------------ -------------------- ---------------- ----------------------- -----------------------------
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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. REMOVED AND RESERVED
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 31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
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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.
GULFSTAR ENERGY CORPORATION
(Registrant)
Dated: May 17, 2010 By: /s/ Robert McCann
---------------------
Robert McCann,
Chief Executive Officer
By: /s/ Stephen Warner
-----------------
Stephen Warner,
Chief Financial Officer
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