UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
AMENDMENT No. 1
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2012
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____________ to ___________________.
Commission file number: 000-51425
---------
Rancher Energy Corp.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 98-0422451
------ ----------
(State or other jurisdiction (I.R.S. Employer Identi-
or organization) fication No.)
999 18th Street, Suite 2700
Denver, CO 80202
(Address of principal executive offices)
(303) 629-1125
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (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 [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Small 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 by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [x]
As of August 17, 2012, 119,316,723 shares of Rancher Energy Corp. common stock,
$.00001 par value, were outstanding.
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 2012 (unaudited) and March 31, 2012...............................3
Statements of Operations (Unaudited) for the Three Months Ended
June 30, 2012 and 2011 ...................................................................4
Statement of Changes in Stockholders' Equity for the Three Months Ended
June 30, 2012 (unaudited).................................................................6
Statements of Cash Flows (Unaudited) for the Three Months Ended June 30, 2012 and 2011 .....7
Notes to Financial Statements (Unaudited)...................................................8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.................................23
Item 4. Controls and Procedures....................................................................23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................24
Item 1A. Risk Factors...............................................................................25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds................................25
Item 3. Defaults Upon Senior Securities............................................................25
Item 4. Mine and Safety Disclosures................................................................25
Item 5. Other Information..........................................................................25
Item 6. Exhibits...................................................................................25
SIGNATURES 27
EXPLANATORY NOTE
Rancher Energy Corp. is filing this amendment to its quarterly report on Form
10-Q for the period ended June 30, 2012 filed with the Securities and Exchange
Commission on August 20, 2012, for the purpose of furnishing XBRL Interactive
Data Files as Exhibit 101 in accordance with Rule 405 of Regulation S-T.
This amendment does not reflect events occurring after the original filing.
Except for the foregoing amended information, this Form 10-Q/A continues to
speak as of the date of the original filing and the Company has not otherwise
updated disclosures contained therein or herein to reflect events that occurred
at a later date.
2
Item 1. Financial Statements
Rancher Energy Crop.
(Debtor-in-Possession)
Balance Sheets
June 30, March 31,
2012 2012
(unaudited) (audited)
--------------- ---------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,263,133 $ 3,229,858
Restricted cash 500,641 500,641
Accounts receivable 30,958 30,958
Accounts receivable, settlement 525,000 525,000
Prepaid expenses and other 277,645 303,104
Current assets of discontinued operations - -
--------------- ---------------
Total current assets 4,597,377 4,589,561
--------------- ---------------
Furniture and equipment, net of accumulated depreciation of $173,614
and $164,998 respectively 164,068 172,684
Deposits and other assets 200,350 200,350
Long-term assets of discontinued operations - -
--------------- ---------------
Total other assets 364,418 373,034
--------------- ---------------
Total assets $ 4,961,795 $ 4,962,595
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabiliites - post petition $ 527,641 $ 449,224
Accounts payable, settlement 500,000 500,000
Current liabilities of discontinued operations 112,620 112,620
--------------- ---------------
Total current liabilities, not subject to compromise 1,140,261 1,061,844
Liabilities subject to compromise 1,259,827 1,259,827
--------------- ---------------
Total liabilities $ 2,400,088 $ 2,321,671
--------------- ---------------
Stockholders' Equity
Common stock, $0.00001 par value; 275,000,000 shares
authorized, 119,316,723 shares issued and outstanding
at June 30, 2012 and March 31, 2012, respectively 1,194 1,194
Additional paid-in capital 93,193,008 93,193,008
Accumulated deficit (90,632,495) (90,553,278)
--------------- ---------------
Total stockholders' equity 2,561,707 2,640,924
--------------- ---------------
Total liabilities and stockholders' equity $ 4,961,795 $ 4,962,595
=============== ===============
See the notes to these unaudited financial statements.
3
Rancher Energy Corp.
(Debtor-in-Possession)
Statements of Operations
(Unaudited)
For the Three Months Ended
June 30,
2012 2011
---------------------- ----------------------
Revenue: $ - $ -
---------------------- ----------------------
Operating expenses:
General and administrative expenses 104,887 222,814
Depreciaiton and amortization 26,286 11,488
---------------------- ----------------------
Total operating expenses 131,173 234,302
---------------------- ----------------------
Loss from operations (131,173) (234,302)
---------------------- ----------------------
Other income (expense):
Interest expense and financing costs (6,064) (5,934)
Interest and other income 88,396 100,485
---------------------- ----------------------
Total other income 82,332 94,551
---------------------- ----------------------
Loss before reorganization items and discontinued operations (48,841) (139,751)
Reorganization items:
Professional and legal fees (30,376) (97,596)
---------------------- ----------------------
Total reorganization items (30,376) (97,596)
---------------------- ----------------------
Loss from continuing operations (79,217) (237,347)
---------------------- ----------------------
Discontinued operations:
Loss from discontinued operations - (6,323)
Gain on sale of discontinued operations - -
---------------------- ----------------------
Total discontinued operations - (6,323)
---------------------- ----------------------
Net loss $ (79,217) $ (243,670)
====================== ======================
Net loss per share from continuing operations $ 0.00* $ 0.00*
====================== ======================
Net income (loss) per share from discontinued operations $ 0.00* $ 0.00*
====================== ======================
Basic and diluted net loss per share $ 0.00* $ 0.00*
====================== ======================
Basic and diluted weighted average shares outstanding 119,316,723 119,316,723
====================== ======================
* Less lan $0.01 per share.
See the notes to these unaudited financial statements.
4
Rancher Energy Corp.
(Debtor-in-Possession)
Statements of Cash Flows
(Unaudited)
For The Three Months Ended
June 30,
2012 2011
---------------- ----------------
Cash flows from (used in) operating activities:
Net Loss $ (79,217) $ (243,670)
Adjustments to reconcile net loss from continuing operations to
cash used from operating activities, before reorganization items
Loss (income) from discontinued operations - 6,323
Reoganization items, net 30,376 97,596
Depreciation and amortization 26,286 11,488
Changes in operating assets and liabilities:
Accounts receivable and prepaid expenses 62,697 (3,610)
Accounts payable and accrued liabiliites (78,417) (329,980)
---------------- ----------------
Net cash used for operating activities, before reorganization items (38,275) (461,853)
---------------- ----------------
Payments for reorganization items -
professional fees for services rendered in connection with
the Chapter 11 proceeding - (262,057)
---------------- ----------------
Net cash used for operating activities (38,275) (723,910)
---------------- ----------------
Cash flows from (used in) investing activites
Cash flows from (used in) financing activities:
Discontinued operations:
Cash flows from (used in) discontinued operating activities: - 159,913
Cash flows from (used in) discontinued investing activities: - -
Cash flows from (used in) discontinued financing activities: - -
---------------- ----------------
Net cash provided by (used for) discontinued operations - 159,913
---------------- ----------------
Decrease in cash and cash equivalents (38,275) (563,997)
Cash and cash equivalents, beginning of period 3,229,858 3,883,228
---------------- ----------------
Cash and cash equivalents, end of period $ 3,263,133 $ 3,319,231
================ ================
See the notes to these unauditedfinancial statements.
5
Rancher Energy Corp.
(Debtor-in-Possession)
Statement of Changes in Stockholders' Equity
(Unaudited)
Additional
paid-in Accumulated
Shares Amount Capital Deficit Total
------------------ ------------ ---------------- -------------- --------------
Balance March 31, 2012 119,316,723 $ 1,194 $ 93,193,008 $(90,553,278) $2,640,924
Net loss - - - (79,217) (79,217)
------------------ ------------ ---------------- -------------- --------------
Balance - June 30, 2012 119,316,723 $ 1,194 $ 93,193,008 $(90,632,495) $2,561,707
================== ============ ================ ============== ==============
See the Notes to these Financial Statements.
6
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Note 1 - Business Organization
Organization
------------
Rancher Energy Corp. ("Rancher Energy" or the "Company"), formerly
known as Metalex Resources, Inc. ("Metalex"), was incorporated in Nevada on
February 4, 2004. The Company acquires, explores for, develops and produces oil
and natural gas, concentrating on applying secondary and tertiary recovery
technology to older, historically productive fields in North America.
Metalex was formed for the purpose of acquiring, exploring and
developing mining properties. On April 18, 2006, the stockholders of Metalex
voted to change its name to Rancher Energy Corp. and announced that it changed
its business plan and focus from mining to oil and gas.
Bankruptcy Filing
On October 28, 2009, the Company filed a voluntary petition (the
"petition") for relief in the United States Bankruptcy Court, District of
Colorado (the "Bankruptcy Court") under Chapter 11 of Title 11 of the U.S.
Bankruptcy Code (the "Bankruptcy Code"). The Company will continue to operate
its business as "debtor-in-possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the Code and orders of
the Bankruptcy Court. See Note 2 "Proceedings Under Chapter 11 of the Bankruptcy
Code" for details regarding the bankruptcy filing and the Chapter 11 case.
The accompanying financial statements have been prepared on the basis of
accounting principles applicable to a going concern, which contemplates the
realization of assets and extinguishment of liabilities in the normal course of
business. However, the petition raises substantial doubt about the Company's
ability to remain a going concern. The Company's continuation as a going concern
may be contingent upon, among other things, its ability (i) to reduce
administrative, operating and interest costs and liabilities through the
bankruptcy process; (ii) to generate sufficient cash flow from operations; (iii)
to obtain confirmation of a plan of reorganization under the Bankruptcy Code;
and (iv) to obtain financing to facilitate an exit from bankruptcy. The Company
is currently evaluating various courses of action to address the operational and
liquidity issues it is facing. There can be no assurance that any of these
efforts will be successful. The accompanying financial statements do not include
any adjustments that might result should we be unable to continue as a going
concern. In the event the Company's restructuring activities are not successful
and it is required to liquidate, additional significant adjustments in the
carrying value of assets and liabilities, the revenues and expenses reported and
the balance sheet classifications used may be necessary.
Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 852 "Financial Reporting During Reorganization Proceedings,"
which is applicable to companies in Chapter 11, generally does not change the
manner in which financial statements are prepared. However, it does require that
the financial statements for periods subsequent to the filing of a Chapter 11
case distinguish transactions and events that are directly associated with the
reorganization from the ongoing operations of the business. Revenues, expenses,
realized gains and losses, and provisions for losses that can be directly
associated with the reorganization and restructuring of the business must be
reported separately as reorganization items in the statements of operations. The
balance sheet must distinguish Prepetition liabilities subject to compromise
from both those Prepetition liabilities that are not subject to compromise and
from post-petition liabilities. Liabilities that may be affected by a plan of
reorganization must be reported at the amounts expected to be allowed, even if
they may settled for lesser amounts. In addition, cash provided by
reorganization items, if any, must be disclosed separately in the statement of
cash flows. The Company adopted ASC 852-10 effective on October 28, 2010 and
will segregate those items as outlined above for all reporting periods
subsequent to such date.
7
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Note 2 - Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of oil and gas reserves, assets
and liabilities, 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.
Estimates of oil and gas reserve quantities provide the basis for calculations
of depletion, depreciation, and amortization (DD&A) and impairment, each of
which represents a significant component of the financial statements.
Cash and Cash Equivalents
-------------------------
The Company considers all liquid investments purchased with an initial maturity
of three months or less to be cash equivalents. Cash and cash equivalents
include demand deposits and money market funds carried at cost which
approximates fair value. The Company maintains its cash in institutions insured
by the Federal Deposit Insurance Corporation ("FDIC"). At June 30, 2012, the
Company had $3,013,133 in cash deposits in excess of FDIC insured limits.
Restricted cash
---------------
At June 30, 2012, the Company had $500,641 of restricted cash which was
classified as a current asset. As of the June 30, 2012 balance sheet date, a
payable in this amount was recorded as it was deemed more likely than not that
this amount would be paid out subsequently under an adversary proceeding in
process (see Note 7).
The restricted cash held in an escrow account was released on July 18, 2012 as
part of an agreed upon and bankruptcy court approved settlement agreement. See
further details of the ultimate disposition of monies and other released items
as set forth in Notes 8 and 14 to this report.
Accounts Receivable
-------------------
Accounts receivable as of June 30, 2012 is composed of a royalty fee arrangement
income under a contract expiring at the end of 2012 and $525,000 due from Linc
Energy related to a settlement agreement among Rancher Energy, GasRock and Linc
Energy executed on June 15, 2012. The bankruptcy court subsequently approved the
settlement agreement and the $525,000 was received by the Company as of July 18,
2012.
Oil and Gas Producing Activities
--------------------------------
The Company uses the successful efforts method of accounting for its oil and gas
properties. Under this method of accounting, all property acquisition costs and
costs of exploratory and development wells are capitalized when incurred,
pending determination of whether the well has found proved reserves. If an
exploratory well does not find proved reserves, the costs of drilling the well
are charged to expense. Exploratory dry hole costs are included in cash flows
from investing activities as part of capital expenditures within the
consolidated statements of cash flows. The costs of development wells are
capitalized whether or not proved reserves are found. Costs of unproved leases,
which may become productive, are reclassified to proved properties when proved
reserves are discovered on the property. Unproved oil and gas interests are
carried at the lower of cost or estimated fair value and are not subject to
amortization.
8
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Geological and geophysical costs and the costs of carrying and retaining
unproved properties are expensed as incurred. DD&A of capitalized costs related
to proved oil and gas properties is calculated on a property-by-property basis
using the units-of-production method based upon proved reserves. The computation
of DD&A takes into consideration restoration, dismantlement, and abandonment
costs and the anticipated proceeds from salvaging equipment.
The Company complies with ASC 932, "Extractive Activities - Oil and Gas". The
Company currently does not have any existing capitalized exploratory well costs,
and has therefore determined that there are no suspended well costs that should
be impaired.
The Company reviews its long-lived assets for impairments when events or changes
in circumstances indicate that impairment may have occurred. The impairment test
for proved properties compares the expected undiscounted future net cash flows
on a property-by-property basis with the related net capitalized costs,
including costs associated with asset retirement obligations, at the end of each
reporting period. Expected future cash flows are calculated on all proved
reserves using a discount rate and price forecasts selected by the Company's
management. The discount rate is a rate that management believes is
representative of current market conditions. The price forecast is based on
NYMEX strip pricing, adjusted for basis and quality differentials, for the first
three to five years and is held constant thereafter. Operating costs are also
adjusted as deemed appropriate for these estimates. When the net capitalized
costs exceed the undiscounted future net revenues of a field, the cost of the
field is reduced to fair value, which is determined using discounted future net
revenues. An impairment allowance is provided on unproved property when the
Company determines the property will not be developed or the carrying value is
not realizable. The sale of substantially of the Company's assets in March, 2011
resulted in the Company having no oil and gas properties at June 30, 2012 or
2011.
Sales of Proved and Unproved Properties
---------------------------------------
The sale of a partial interest in a proved oil and gas property is accounted for
as normal retirement, and no gain or loss is recognized as long as this
treatment does not significantly affect the units-of-production DD&A rate. A
gain or loss is recognized for all other sales of producing properties and is
reflected in results of operations. The sale of a partial interest in an
unproved property is accounted for as a recovery of cost when substantial
uncertainty exists as to recovery of the cost applicable to the interest
retained. A gain on the sale is recognized to the extent the sales price exceeds
the carrying amount of the unproved property. A gain or loss is recognized for
all other sales of nonproducing properties and is reflected in results of
operations. See the description of the sale of all oil and gas properties as of
March 1, 2011 contained in the Item 2 of Part I of this document as a result of
the current Bankruptcy filing.
Property and Equipment
----------------------
Property and equipment, such as office furniture and equipment, and computer
hardware and software, are recorded at cost. Costs of renewals and improvements
that substantially extend the useful lives of the assets are capitalized.
Maintenance and repair costs are expensed when incurred. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
assets from three to seven years. When other property and equipment is sold or
retired, the capitalized costs and related accumulated depreciation are removed
from their respective accounts.
Deferred Financing Costs
------------------------
Costs incurred in connection with the Company's debt issuances are capitalized
and amortized over the term of the debt, which approximates the effective
9
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
interest method. As of June 30, 2012 and 2011 there were no deferred financing
costs on the balance sheet and there was no amortization for the six and three
months ended June 30, 2012 and 2011.
Fair Value of Financial Instruments
-----------------------------------
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, and accounts payable, are carried at cost, which
approximates fair value due to the short-term maturity of these instruments.
Revenue Recognition
-------------------
The Company currently has no revenue from continuing or discontinued operations,
other than payments received for the resale of carbon dioxide under a supply and
sales agreement that is due to expire at the end of 2012.
Income Taxes
------------
The Company uses the liability method of accounting for income taxes under which
deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the accounting bases and the tax
bases of the Company's assets and liabilities. The deferred tax assets and
liabilities are computed using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.
The Company adopted the provisions of ASC 740, "Income Taxes" on April 1, 2007.
FASB ASC 740 provides detailed guidance for the financial statement recognition,
measurement and disclosure of uncertain tax positions recognized in the
financial statements. Tax positions must meet a "more-likely-than-not"
recognition threshold at the effective date to be recognized upon the adoption
of FASB ASC 740 and in subsequent periods. The adoption of ASC 740 had an
immaterial impact on the Company's financial position and did not result in
unrecognized tax benefits being recorded. Subsequent to adoption, there have
been no changes to the Company's assessment of uncertain tax positions.
Accordingly, no corresponding interest and penalties have been accrued. The
Company's policy is to recognize penalties and interest, if any, related to
uncertain tax positions as general and administrative expense. The Company files
income tax returns in the U.S. Federal jurisdiction and various states.
Net Loss per Share
------------------
Basic net (loss) per common share of stock is calculated by dividing net loss
available to common stockholders by the weighted-average of common shares
outstanding during each period.
Diluted net income per common share is calculated by dividing adjusted net loss
by the weighted-average of common shares outstanding, including the effect of
other dilutive securities. The Company's potentially dilutive securities consist
of in-the-money outstanding options and warrants to purchase the Company's
common stock. Diluted net loss per common share does not give effect to dilutive
securities as their effect would be anti-dilutive.
10
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
The treasury stock method is used to measure the dilutive impact of stock
options and warrants. The following table details the weighted-average dilutive
and anti-dilutive securities related to stock options and warrants for the
periods presented:
For the Three Months Ended
June 30,
-------------------------------------
2012 2011
----------------- ----------------
Dilutive - -
Anti-dilutive 60,111,454 66,073,564
Stock options and warrants were not considered in the detailed calculations
below as their effect would be anti-dilutive. The following table sets forth the
calculation of basic and diluted loss per share:
For the Three Months Ended
June 30,
---------------------------------------------
2012 2011
--------------------- ---------------------
Net loss $ (79,217) $ (243,670)
Basic weighted average common shares outstanding 119,316,700 119,316,700
Basic and diluted net loss per common share $ (0.00)* $ (0.00)*
--------------------- ---------------------
* Less Lan $0.01 per share.
Share-Based Payments
--------------------
The Company recognizes compensation cost for stock-based awards based on
estimated fair value of the award and records compensation expense over the
requisite service period. See Note 9 - Share-Based Compensation for further
discussion.
Commodity Derivatives
---------------------
The Company accounts for derivative instruments or hedging activities under the
provisions of ASC 815 "Derivatives and Hedging." FASB ASC 815 requires the
Company to record derivative instruments at their fair value. The Company's risk
management strategy is to enter into commodity derivatives that set "price
floors" and "price ceilings" for its crude oil production. The objective is to
reduce the Company's exposure to commodity price risk associated with expected
crude oil production.
The Company has elected not to designate the commodity derivatives to which they
are a party as cash flow hedges, and accordingly, such contracts are recorded at
fair value on its balance sheets and changes in such fair value are recognized
in current earnings as income or expense as they occur.
The Company does not hold or issue commodity derivatives for speculative or
trading purposes. The Company is exposed to credit losses in the event of
nonperformance by the counterparty to its commodity derivatives. It is
anticipated, however, that its counterparty will be able to fully satisfy its
obligations under the commodity derivatives contracts. The Company does not
obtain collateral or other security to support its commodity derivatives
contracts subject to credit risk but does monitor the credit standing of the
counterparty. The price the Company receives for production in its three fields
is indexed to Wyoming Sweet crude oil posted price. The Company has not hedged
the basis differential between the NYMEX price and the Wyoming Sweet price.
11
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Under the terms of our Term Credit Agreement issued in October 2007 the Company
was required hedge a portion of its expected future production, and it entered
into a costless collar agreement for a portion of its anticipated future crude
oil production. The costless collar contains a fixed floor price (put) and
ceiling price (call). If the index price exceeds the call strike price or falls
below the put strike price, the Company receives the fixed price and pays the
market price. If the market price is between the call and the put strike price,
no payments are due from either party. The table below summarizes the terms of
the Company's costless collar:
The Company's sole derivative instrument expired during the year ended March 31,
2010, and the Company had no hedge positions after that date.
Comprehensive Income (Loss)
---------------------------
The Company does not have revenue, expenses, gains or losses that are reflected
in equity rather than in results of operations. Consequently, for all periods
presented, comprehensive loss is equal to net loss.
Major Customers
---------------
During the year ended March 31, 2012, the Company's only source of income was
from a carbon dioxide resale contract that will expire at the end of 2012. The
Company had no oil and gas operations during the three months ended June 30,
2012 and 2011, and no customers or billings as a result.
Off-Balance Sheet Arrangements
------------------------------
As part of its ongoing business, the Company has not participated in
transactions that generate relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance
or special purpose entities (SPEs), which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. From its incorporation in February 4, 2004 through
June 30, 2012, the Company has not been involved in any unconsolidated SPE
transactions.
Reclassification
----------------
Certain amounts in the 2012 financial statements have been reclassified to
conform to the 2013 financial statement presentation. Such reclassifications had
no effect on the Company's net loss.
Recent Accounting Pronouncements
--------------------------------
The Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or the results of its operations.
Note 3 - Proceedings Under Chapter 11 of the United States Bankruptcy Code
On October 28, 2009 (the "Petition Date"), the Company filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code with the Bankruptcy
Court. The petition was filed in order to enable the Company to pursue
reorganization efforts under Chapter 11 of the Bankruptcy Code. The Company
continues to operate its business as debtor-in-possession under the jurisdiction
of the Bankruptcy Court and in accordance with the applicable provisions of the
12
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Bankruptcy Code and orders of the Bankruptcy Court. In general, as
debtor-in-possession, the Company is authorized under Chapter 11 to continue to
operate as an ongoing business, but may not engage in transactions outside of
the ordinary course of business without the prior approval of the Bankruptcy
Court.
No assurance can be provided as to what values, if any, will be ascribed in the
bankruptcy proceedings to the Company's Prepetition liabilities, common stock
and other securities. Based upon the status of the Company's 2nd amended plan of
reorganization, we currently believe that it is uncertain whether holders of our
securities will receive any payment in respect of such securities. Accordingly,
extreme caution should be exercised with respect to existing and future
investments in any of these liabilities or securities.
Subject to certain exceptions under the Bankruptcy Code, the Bankruptcy Filing
automatically enjoins, or stays, the continuation of any judicial or
administrative proceedings or other actions against the Company or its property
to recover on, collect or secure a claim arising prior to the Petition Date.
Thus, for example, creditor actions to obtain possession of property from the
Company, or to create, perfect or enforce any lien against the property of the
Company, or to collect on or otherwise exercise rights or remedies with respect
to a Prepetition claim are enjoined unless and until the Bankruptcy Court lifts
the automatic stay.
In order to successfully exit Chapter 11 bankruptcy, the Company will need to
propose, and obtain Bankruptcy Court confirmation of, a plan of reorganization
that satisfies the requirements of the Bankruptcy Code. A plan of reorganization
would, among other things, resolve the Debtors' Prepetition obligations, set
forth the revised capital structure of the newly reorganized entity and provide
for corporate governance subsequent to exit from bankruptcy. In addition to the
need for Bankruptcy Court confirmation and satisfaction of Bankruptcy Code
requirements, a plan of reorganization must be accepted by classes of holders of
impaired claims and equity interests in order to become effective.
Under section 365 of the Bankruptcy Code, the Company may assume, assume and
assign, or reject executory contracts and unexpired leases, including real
property and equipment leases, subject to the approval of the Bankruptcy Court
and certain other conditions. Rejection constitutes a court-authorized breach of
the lease or contract in question and, subject to certain exceptions, relieves
the Company of its future obligations under such lease or contract but creates a
deemed Prepetition claim for damages caused by such breach or rejection. Parties
whose contracts or leases are rejected may file claims against the Company for
damages. The Company leased office space under a non-cancelable operating lease
that was scheduled to expire on July 31, 2012. In October 2009, in connection
with the Company's bankruptcy petition the Company rejected the office lease and
relocated its offices in April 2011. The Company reached agreement with the
building owner, to continue to occupy the office space on a month to month basis
at a significantly reduced rental rate and continued to accrue the full amount
of rent expense in accordance with the original lease. In March 2011 an Order
was issued by the Bankruptcy Court specifying the claim amount to be $325,531.
The $122,927 gain, in 2011, on the difference between the amount of rent expense
accrued and the Court specified amount is recognized as provision for executory
contracts rejected in the Statement of Operations.
The ability of the Company to continue as a going concern is dependent upon,
among other things, (i) the ability of the Company to maintain adequate cash on
hand; (ii) the ability of the Company to obtain confirmation of and to
consummate a plan of reorganization under the Bankruptcy Code; and, (iii) the
cost, duration and outcome of the reorganization process. Uncertainty as to the
outcome of these factors raises substantial doubt about the Company's ability to
continue as a going concern. The Company is currently evaluating various courses
of action to address the operational issues it is facing. There can be no
assurance that any of these efforts will be successful. The accompanying
financial statements do not include any adjustments that might result should the
Company be unable to continue as a going concern.
As a result of the Bankruptcy Filing, realization of assets and liquidation of
liabilities are subject to uncertainty. While operating as a
13
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
debtor-in-possession under the protection of Chapter 11, and subject to
Bankruptcy Court approval or otherwise as permitted in the normal course of
business, the Company may sell or otherwise dispose of assets and liquidate or
settle liabilities for amounts other than those reflected in the condensed
financial statements. The Company has recognized a net gain from the settlement
and adjustment of liabilities of $18,042 and $85,750 for the years ended March
31, 2012 and 2011, respectively.
Further, a plan of reorganization could materially change the amounts and
classifications reported in our financial statements. Our historical financial
statements do not give effect to any adjustments to the carrying value of assets
or amounts of liabilities that might be necessary as a consequence of
confirmation of a plan of reorganization.
The adverse publicity associated with the Bankruptcy Filing and the resulting
uncertainty regarding the Company's future prospects may hinder the Company's
ongoing business activities and its ability to operate, fund and execute its
business plan by impairing relations with property owners and potential lessees,
vendors and service providers; negatively impacting the ability of the Company
to attract, retain and compensate key executives and employees and to retain
employees generally; limiting the Company's ability to obtain trade credit; and
limiting the Company's ability to maintain and exploit existing properties and
acquire and develop new properties.
Under the priority scheme established by the Bankruptcy Code, unless creditors
agree otherwise, post-petition liabilities and prepetition liabilities must be
satisfied in full before shareholders of the Company are entitled to receive any
distribution or retain any property under a plan of reorganization. The ultimate
recovery, if any, to creditors and shareholders of the Company will not be
determined until confirmation and consummation of a plan of reorganization. No
assurance can be given as to what values, if any, will be ascribed in the
Bankruptcy Cases to each of these constituencies or what types or amounts of
distributions, if any, they would receive. Accordingly, the Company urges that
extreme caution be exercised with respect to existing and future investments in
any of the Company's liabilities and/or securities.
On October 15, 2010, the Company filed with the Court its proposed Debtor's Plan
of Reorganization and a proposed Disclosure Statement was filed simultaneously
with the Plan. On December 13, 2010, the Company filed with the Court its First
Amended Proposed Plan of Reorganization and Disclosure Statement. The Disclosure
Statement must be first approved by the Bankruptcy Court before creditors and
shareholders are presented with the opportunity to vote on the Plan. Prior to
confirmation and approval by the Court, the Proposed Plan of Reorganization is
subject to amendment.
On December 15, 2010, the Company filed a Motion to approve financing from a
party not affiliated with its present lender. The purpose of the loan is to
repay the existing lender in full and to pay certain past due ad valorem taxes
owed to Converse County, Wyoming. Converse County agreed that if it was paid by
February 1, 2011, it would waive penalties and interest of approximately
$93,000. This loan closed in January 2011, see Note 6 - Short Term Notes
Payable.
On December 20, 2010, the Company filed a Motion to allow the Company to enter
into an agreement and approve the sale of substantially all its assets to the
same party providing the new financing for the price of approximately $20
million. The sale closed effective March 1, 2011 see Note 3 - Discontinued
Operations.
On April 30, 2012, the Company filed its 2nd Amended Plan of Reorganization
("the Plan") and Disclosure Statement for 2nd Amended Plan of Reorganization
with the Court. The Plan provides for the Company to pay the claims of its
creditors as the assets of the Company allow, and permits, but does not
14
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
obligate, the Company to continue in the oil and gas industry with a focus on
the purchase on non-operating interests in oil and gas producing properties, as
discussed below. The Plan has not yet been sent for voting and has not been
confirmed by the Bankruptcy Court A hearing has been scheduled for September 24,
2012 to review the Plan.
Reorganization Items
--------------------
Reorganization items represent the direct and incremental costs related to the
Company's Chapter 11 case, such as professional fees incurred, net of interest
income earned on accumulated cash during the Chapter 11 process. These
restructuring activities may result in additional charges and other adjustments
for expected allowed claims (including claims that have been allowed by the
Court) and other reorganization items that could be material to the Company's
financial position or results of operations in any given period.
Liabilities Subject to Compromise
---------------------------------
Liabilities subject to compromise at June 30, 2012 and 2011 include the
following Prepetition liabilities:
2012 2011
------------------- ------------------
Accounts payable, trade $ 176,726 $ 176,726
Other payables and accrued liabilities 943,101 820,312
Convertible notes payable 140,000 140,000
------------------
-------------------
$1,259,827 $ 1,137,038
------------------- ------------------
Note 4 - Discontinued Operations
In March 2011, we completed the sale of all our oil and gas properties and
substantially all fixed assets for approximately $20 million consisting of cash
of $3,503,000, a receivable of $250,000, secured note and accrued interest
payoff in the amount of $14,829,250, including purchase price adjustments and
allowances of $1,417,750. Significant purchase price adjustments and allowance
included the Company retaining performance bonds for properties in Wyoming of
$814,000, asset valuation adjustments of $130,000 and production tax allowance
of $395,000. For the fiscal year ended March 31, 2011 we recorded a gain on the
sale of discontinued operations of $4,807,221, which was determined as follows:
Total sales price $ 20,000,000
Adjustments to sales price for assets retained
(945,367)
Transaction expenses from sale of assets
(508,195)
---------------------
Adjusted sales price 18,546,438
Summary of assets sold:
Fixed assets, net
126,712
Oil and gas properties, net 13,630,945
Other liabilities
(18,440)
---------------------
Total basis in assets sold 13,739,217
---------------------
Gain on disposition of assets, net $ 4,807,221
---------------------
15
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
The financial results of our business related to oil and gas operations have
been classified as discontinued operations in our Statements of Operations for
all period presented. The following summarizes components of income (loss) from
the Company's discontinued operations for the three months ended June 30, 2012
and 2011:
2012 2011
------------------- -------------------
Revenue $ - $ -
------------------- -------------------
Operating expenses - 2,203
------------------- -------------------
Operating loss from discontinued operations - (2,203)
Other income (expenses) from discontinued operations, net - (4,040)
------------------- -------------------
Net operating loss from discontinued operations $ - $ (6,323)
=================== ===================
The assets and liabilities relating to the Company's discontinued oil and gas
operations are reflected as assets and liabilities of discontinued operations in
the accompanying balance sheets. The following summarizes the components of
these assets and liabilities at June 30, 2012 and 2011:
June 30,
-------------------------------------
2012 2011
--------------- ------------------
Assets:
------
Current assets of discontinued operations -
Accounts receivable $ - $ 3,265
Deposits and other assets 471,354
--------------- ------------------
$ - $ 474,619
--------------- ------------------
Other assets
Long-term assets of discontinued operations -
-
--------------- ------------------
Total assets of discontinued operations $ - $ 474,619
--------------- ------------------
Liabilities:
-----------
Current liabilities of discontinued operations:
Accounts payable and accrued liabilities $ 112,620 $ 39,463
--------------- ------------------
Total current liabilities of discontinued
operations $ 112,620 $ 39,463
--------------- ------------------
Oil and gas properties
----------------------
As previously noted throughout this document, all oil and gas properties were
sold in a transaction as of March 1, 2011. There have been no further
acquisitions or dispositions of oil and gas properties since that date.
16
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
Impairment of Unproved Properties
---------------------------------
As of the balance sheet dates of June 30, 2012 and March 31, 2012, there are no
proved or unproved oil and gas properties. Therefore, there is no impairment to
consider as of these dates or the date of this report.
Note 5 - Fair Value Measurements
On April 1, 2008, the Company adopted ASC 820, "Fair Value Measurements and
Disclosures," which defines fair value, establishes a framework for using fair
value to measure assets and liabilities, and expands disclosures about fair
value measurements. The Statement establishes a hierarchy for inputs used in
measuring fair value that maximizes the use of observable inputs and minimizes
the use of unobservable inputs by requiring that the most observable inputs be
used when available. Observable inputs are inputs that market participants would
use in pricing the asset or liability developed based on market data obtained
from sources independent of the Company. Unobservable inputs are inputs that
reflect the Company's assumptions of what market participants would use in
pricing the asset or liability developed based on the best information available
in the circumstances. The hierarchy is broken down into three levels based on
the reliability of the inputs as follows:
o Level 1: Quoted prices are available in active markets for identical
assets or liabilities;
o Level 2: Quoted prices in active markets for similar assets and
liabilities that are observable for the asset or liability; or
o Level 3: Unobservable pricing inputs that are generally less
observable from objective sources, such as discounted cash flow models
or valuations.
ASC 820 requires financial assets and liabilities to be classified based on the
lowest level of input that is significant to the fair value measurement. The
Company's assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the valuation of the fair value of
assets and liabilities and their placement within the fair value hierarchy
levels. As of June 30, 2012 and March 31, 2012, the Company had no derivative or
other financial assets or liabilities required to be reported at fair value. In
accordance with Financial Staff Position 157-2, the Company has not applied the
provisions of ASC 820 to its asset retirement obligations.
Note 6 - Short Term Notes Payable
On January 28, 2011 the Company received debtor-in-possession financing ("DIP
Financing") pursuant to a credit agreement (the "DIP Credit Agreement") with
Linc Energy. The DIP Credit Agreement provided loan advances up to an aggregate
of $14.7 million and was scheduled to mature on May 28, 2011 (total term of 120
days from the date of closing). The Company borrowed a total of approximately
$14.0 million under the DIP Credit Agreement and the proceeds were used to pay
the allowed, secured claims for certain ad valorem property taxes, amounts due
to under Prepetition Note (defined below) and to fund $100,000 for the Company's
bankruptcy estate if no plan or reorganization is approved.
The DIP Credit Agreement specified interest at the rate of 10% per annum for the
60 days following the date of closing and 12% per annum through loan maturity.
Accumulated interest and principal was due in full at maturity. The DIP
Financing lender obtained a valid and perfected first priority security interest
in and liens on all the collateral including, but not limited to: (a) the
Company's interests in oil and gas producing properties; (b) accounts
receivable; (c) equipment; (d) general intangibles; (e) accounts; (f) deposit
accounts; and (g) all other real and personal property of the Company.
17
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
On February 16, 2011, the Bankruptcy Court approved an order authorizing the
sale of substantially all of the Company's assets to Linc Energy for $20.0
million. Effective March 1, 2011, the Company sold substantially of its assets
to Linc Energy (see Note 4 - Discontinued Operations). On March 14, 2011, all
outstanding principal and accrued interest totaling $14,829,250 were paid and
the DIP Credit Agreement was cancelled.
Through January 28, 2011, the Company had a note payable (the "Prepetition
Note") outstanding under the terms of a Term Credit Agreement with GasRock (the
"Prepetition Lender"). The original principal balance of $12,240,000 outstanding
under the Prepetition Note was initially due and payable on October 31, 2008,
with interest accruing at a rate equal to the greater of (a) 12% per annum; and
(b) the one-month LIBOR rate plus 6% per annum. The Prepetition Note was amended
on October 22, 2008 (the "First Amendment"), to extend the maturity date from
October 31, 2008 to April 30, 2009. In consideration of the six month extension
and other terms included in First Amendment, the Company made a principal
payment on the Prepetition Note in the amount of $2,240,000, resulting in a new
loan balance of $10,000,000. The maturity date of the Prepetition Note was
amended several times after April 30, 2009, with a final maturity date of
October 15, 2009. In connection with these amendments to the maturity date of
the Prepetition Note, the Company granted the GasRock various additional
considerations, including overriding royalty interests and net profits
interests. Payment of the principal balance of approximately $10,188,000, plus
accrued interest, was not made on October 15, 2009, and therefore, an event of
default occurred under the Term Credit Agreement, as amended. In connection with
the DIP financing, the Prepetition Note was paid in full on January 28, 2011.
The Company has filed an adversary action in the Bankruptcy Court against
GasRock in an effort to avoid certain interests previously assigned to the
Prepetition Lender (see Note 8 - Commitments and Contingencies).
Note 7 - Convertible Promissory Notes Payable
On October 27, 2009, the Company issued Convertible Promissory Notes (the
"Promissory Notes") totaling $140,000. One hundred thousand dollars of the
Promissory Notes were issued to officers and/or directors ($25,000 each). The
remainder of the Promissory Notes were issued to existing shareholders. The
Promissory Notes bear interest at an annual rate equal to the greater of (i)
12%, or (ii) the prime rate (as published in the Wall Street Journal) plus 3%.
The Promissory Notes are convertible, at the holder's option, into shares of the
Company's common stock at a conversion price of $0.02 per share, at any time
during the term of the Promissory Notes. The Promissory Notes matured on
November 1, 2010, and all obligations and payments due under the Promissory
Notes are subordinate to the Company's senior debt. As a result of the Company's
Chapter 11 bankruptcy filing described in Notes 1 and 3 above, the Company was
not able to pay principal and accumulated interest on the Promissory Notes when
due. Subject to certain exceptions under the Bankruptcy Code, the Company's
bankruptcy filing automatically enjoins, or stays, the continuation of any
judicial or administrative proceedings or other actions against the Company or
its property to recover on, collect or secure a claim arising prior to the
Petition Date. At June 30, 2012 and March 31, 2011, the principal outstanding on
the Notes was $140,000. As of June 30, 2012, accrued interest on the Notes
totaled $54,016.
Note 8 - Commitments and Contingencies
Commitments
-----------
On February 12, 2010, the Company filed an adversary action in the Bankruptcy
Court against GasRock, the holder of the then senior secured note payable
seeking to avoid certain ownership interests assigned to GasRock in connection
with the Term Credit Agreement and amendments thereto. On March 18, 2010,
18
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
GasRock filed a motion with the Court to dismiss the complaint. On October 21,
2010, the Court issued an order on the Motion to Dismiss dismissing three of the
nine claims made in the adversary action. The Company, GasRock and Linc Energy
have executed a settlement agreement as of June 15, 2012, that would call for
the Company to make a payment of $500,000 to GasRock to dismiss all claims in
the litigation by GasRock and in return the Company would receive a $525,000
payment form Linc Energy to settle other matters in the litigation. The
settlement agreement was approved by the bankruptcy court in July 2012, and the
respective payments to and from the Company were made and other issues in the
agreement were settled as noted in this report as of July 18, 2012.
Bankruptcy Proceedings
----------------------
On October 28, 2009, the Company filed a voluntary petition for reorganization
under Chapter 11 in the United States Bankruptcy Court for the District of
Colorado During the pendency of the Chapter 11 proceedings, the Company operates
the business as a debtor-in-possession in accordance with the provisions of
Chapter 11, and will be subject to the jurisdiction of the Bankruptcy Court. All
pending or threatened litigation or claims involving the Company were
automatically stayed as a result of this Bankruptcy Filing, and all such claims
may be subject to compromise or modification through the terms of any Plan of
Reorganization filed by the Company in the Chapter 11 proceedings.
Litigation
----------
In a letter dated February 18, 2009 sent to each of the Company's Directors,
attorneys representing a group of persons who purchased approximately $1.8
million of securities (in the aggregate) in the Company's private placement
offering commenced in late 2006, alleged that securities laws were violated in
that offering. In April 2009, the Company entered into tolling agreements with
the purchasers to toll the statutes of limitations applicable to any claims
related to the private placement. The Company's Board of Directors directed the
Special Committee to investigate these allegations. The Company denies the
allegations and believes they are without merit. The Company cannot predict the
likelihood of a lawsuit being filed, its possible outcome, or estimate a range
of possible losses, if any, that could result in the event of an adverse verdict
in any such lawsuit. Any suit against the Company is stayed by the Chapter 11
case, and, insofar as these claims are asserted against the Company, they are
subject to the claim process imposed by the Bankruptcy Code and the possible
subordination under Section 510(b) of the Bankruptcy Code. The purchasers have
filed a Proof of Claim with the Bankruptcy Court in the amount of $1,776,050
plus ancillary amounts purported to be damages attributable to the alleged
securities violations. In June 2011, the Bankruptcy Court rendered a decision
that these claims are subordinated to unsecured claims.
If management believes that a loss arising from this matter is probable and can
reasonably be estimated, the Company would record the amount of the loss, or the
minimum estimated liability when the loss is estimated using a range, and no
point within the range is more probable than another. As additional information,
becomes available, any potential liability related to this matter will be
assessed and the treatment revised, if necessary. Based on currently available
information, management is unable to make a determination as to the probability
of a gain or loss regarding this suit at this time.
A former supplier to the Company filed a Proof of Claim with the Bankruptcy
Court for alleged liquidated damages resulting from the Company's filing for
bankruptcy. In November 2010, the Company agreed to a settlement of $375,000
with the former supplier, which the Bankruptcy Court approved as an unsecured
claim in December 2010. This amount is included in loss on discontinued
operations in the accompanying statements of operations.
19
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
A law firm that was formerly counsel to the company filed a Proof of Claim for
Prepetition fees, to which the Company has objected with the Bankruptcy Court.
No hearing on the matter has yet been held.
A former officer of the company filed a Proof of Claim for wages and benefits,
to which the Company has objected with the Bankruptcy Court. The Company agreed
to a settlement of $18,750 with the former officer, which the Court has
approved.
Two of the Company's employees filed proofs of claim and motions to allow
administrative expenses for certain bonus payments. The Company and the
employees reached a settlement, which is still subject to Court approval. This
liability is reflected in current liabilities as reported on the balance sheet
at March 31, 2012.
GasRock filed a Proof of Claim for attorney's fees and costs related to the
Chapter 11 case generally, and to the litigation pending between GasRock and the
Company. The Company objected to these fees on various grounds. Subsequently, as
of June 15, 2012, a Settlement and release Agreement covering these claims and
other issues was executed by the Company, GasRock and Linc Energy. The agreement
was approved by the bankruptcy court in July 2012, and such claims were released
along with certain monetary payments among the parties noted here as of July 18,
2012.
Note 9 - Stockholders' Equity
The Company's capital stock as of June 30, 2012 and March 31, 2011 consists of
275,000,000 authorized shares of common stock, par value $0.00001 per share. As
of June 30, 2012 and March 31, 2012, a total of 119,623,723 common stock shares
were issued and outstanding.
Issuance of Common Stock
------------------------
During the years three months ended June 30, 2012 and 2011, there were no
issuances or cancellations of common stock.
Warrants
--------
During the year ended March 31, 2012, warrants exercisable for 54,632,565 shares
of the Company's common stock expired. No warrants for the purchase of the
Company's common shares were outstanding as of June 30, 2012.
Note 10 - Share-Based Compensation
During the three months ended June 30, 2012 and 2011, the Company did not issue
any stock options and all outstanding stock options were fully-vested.
2006 Stock Incentive Plan
-------------------------
On March 30, 2007, the 2006 Stock Incentive Plan (the 2006 Stock Incentive Plan)
was approved by the shareholders and was effective October 2, 2006. The 2006
Stock Incentive Plan had previously been approved by the Company's Board of
Directors. Under the 2006 Stock Incentive Plan, the Board of Directors may grant
awards of options to purchase common stock, restricted stock, or restricted
stock units to officers, employees, and other persons who provide services to
the Company or any related company. The participants to whom awards are granted,
the type of awards granted, the number of shares covered for each award, and the
purchase price, conditions and other terms of each award are determined by the
Board of Directors, except that the term of the options shall not exceed 10
years. A total of 10,million shares of Rancher Energy common stock are subject
to the 2006 Stock Incentive Plan. The shares issued for the 2006 Stock Incentive
Plan may be either treasury or authorized and unissued shares. During the three
months ended June 30, 2012, no options were granted, expired or exercised under
the 2006 Stock Incentive Plan.
20
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
The following table summarizes information related to the outstanding and vested
options as of June 30, 2012:
Outstanding Options Vested Options
------------------- --------------------
Number of shares
Non-qualified 10,000,000 10,000,000
2006 Plan
Weighted average remaining contractual life
Non-qualified 2.6 years 2.6 years
2006 Plan 2.5 years 2.5 years
Weighted average exercise price
Non-qualified $ 0.035 $ 0.035
2006 Plan $ 0.0875 $ 0.0875
Aggregate intrinsic value
Non-qualified $ - $ -
2006 Plan $ - $ -
At June 30, 2012, all outstanding options were fully vested. No options were
exercised during the three months ended June 30, 2012. The Company did not
realize any tax deductions related to the exercise of stock options for the
three months ended June 30, 2012 and 2011.
Note 11 - Income Taxes
The effective income tax rate for the three months ended June 30, 2012 and the
year ended March 31, 2012 differs from the U.S. Federal statutory income tax
rate due to the following:
For the Three For the Year
Months Ended Ended
June 30, March 31,
2012 2012
-------------------- ---------------------
Federal statutory income tax rate $ 11,883 309,000
State income taxes, net of Federal benefit 3,961 26,000
Permanent items - (132,000)
Other, change in rate - 240,000
Change in valuation allowance (15,844) (443,000)
-------------------- ---------------------
$ - $ -
-------------------- ---------------------
The components of the deferred tax assets and liabilities as of June 30, 2012
and March 31, 2012 are as follows:
21
Rancher Energy Corp.
(Debtor-in-Possession)
Notes to the Financial Statements
For the Three Months Ended June 30, 2012 and 2011
(Unaudited)
June 30, March 31,
2012 2012
------------------- --------------------
Long-term deferred tax assets:
Federal net operating loss carry forwards $ 30,278,800 $ 30,263,000
Stock-based compensation 824,000 824,000
Accrued expenses 143,000
143,000
Long-term deferred tax liabilities -
property, plant and equipment (66,000) (66,000)
Valuation allowance (30,278,800) (31,164,000)
------------------- --------------------
Net long-term deferred tax assets $ - $ -
------------------- --------------------
The Company has net operating loss carryovers of approximately $85,192,800 as of
June 30, 2012 and $85,177,000 as of March 31, 2012. The Company's net operating
losses begin to expire in 2024.
The Company has provided a full valuation allowance for the deferred
tax assets as of June 30, 2012 and March 31, 2012, based on the likelihood that
the deferred tax assets will not be utilized in the future.
Note 11 - Related Party Transactions
A director of the Company is a partner in the law firm that acts as counsel to
the Company. The Company incurred legal fees and expenses to the law firm in the
amount of $-0- and $ 27,000 during the three months ended June 30, 2012 and
2011, respectively. The amount owed to the law firm was approximately $9,234 as
of June 30, 2012 and March 31, 2012, respectively.
Note 12. Subsequent Events
Rancher Energy reached a Settlement and Release Agreement (Agreement) with
GasRock Capital (l/k/a Magma Assets, LLC) and Linc Energy Petroleum as of June
15, 2012 related to the outstanding litigation regarding legal fees and other
costs (See further explanation setting forth details of the litigations as noted
in Part I, Item 3 and in Note 7 to the financial statements). As a result of
this Agreement, and the subsequent approval of the Agreement by the bankruptcy
court in July, 2012, on July 18, 2012, Rancher received a $525,000 Success Bonus
payment from Linc Energy, and in turn made a $500,000 payment to GasRock out of
an existing escrow account in payment for settling litigation claims made by
GasRock. Based upon US GAAP guidelines covering the status of such transactions,
as of the June 30, 2012 financial statement date, Rancher has included the
aforementioned amounts in its balance sheet for this 10-Q report as a receivable
and payable, respectively, as of June 30, 2012.
22
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations
Forward-Looking Statements
--------------------------
The statements contained in this Quarterly Report on Form 10-Q that are
not historical are "forward-looking statements," as that term is defined in
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange
Act), that involve a number of risks and uncertainties. These forward-looking
statements include, among others, the following:
o Business strategy;
o Ability to develop a plan of reorganization acceptable to the
Bankruptcy Court and to emerge from bankruptcy;
o Ability to obtain any additional financial resources needed to
continue operations, to repay secured debt, and to purchase additional
oil and gas properties;
o Inventories, projects, and programs;
o Other anticipated capital expenditures and budgets;
o Future cash flows and borrowings;
o The availability and terms of financing;
o Oil reserves;
o Ability to obtain permits and governmental approvals;
o Technology;
o Financial strategy;
o Realized oil prices;
o Production;
o Lease operating expenses, general and administrative costs, and
finding and development costs;
o Availability and costs of drilling rigs and field services;
o Future operating results; and
o Plans, objectives, expectations, and intentions.
These statements may be found under "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and other sections
of this Quarterly Report on Form 10-Q. Forward-looking statements are typically
identified by use of terms such as "may," "could," "should," "expect," "plan,"
"project," "intend," "anticipate," "believe," "estimate," "predict,"
"potential," "pursue," "target" or "continue," the negative of such terms or
other comparable terminology, although some forward-looking statements may be
expressed differently.
The forward-looking statements contained in this Quarterly Report are
largely based on our expectations, which reflect estimates and assumptions made
by our management. These estimates and assumptions reflect our best judgment
based on currently known market conditions and other factors. Although we
believe such estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that are beyond our
control. In addition, management's assumptions about future events may prove to
be inaccurate. Management cautions all readers that the forward-looking
statements contained in this Quarterly Report on Form 10-Q are not guarantees of
future performance, and we cannot assure any reader that such statements will be
realized or the forward-looking events and circumstances will occur. Actual
results may differ materially from those anticipated or implied in the
forward-looking statements due to the factors listed in the "Risk Factors"
section and elsewhere in our Annual Report on Form 10-K for the year ended March
31, 2012. All forward-looking statements speak only as of the date of this
Quarterly Report on Form 10-Q. We do not intend to publicly update or revise any
forward-looking statements as a result of new information, future events or
otherwise. These cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
23
Organization
------------
We are an independent energy company that explores for and develops
produces, and markets oil and gas in North America. Through March 2011, we
operated four oil fields in the Powder River Basin, Wyoming. Since October 28,
2009, we have been operating as debtor-in-possession under Chapter 11 of the
United States Bankruptcy Code.
Effective March 1, 2011, we sold all of our oil and gas properties,
which has allowed us to eliminate the majority of our debt and also provide
financial resources during our continuing reorganization.
The following summarizes our goals and objectives for the next twelve
months:
o Minimize our operating and administrative expenses while we are
reorganizing;
o Successfully emerge from bankruptcy under the provisions of an
approved plan of reorganization; and
o Pursue and analyze oil and gas related opportunities for us, should we
successfully emerge from bankruptcy.
Proceedings under Chapter 11
----------------------------
On October 28, 2009, we filed a voluntary petition (the "petition") for
relief in the United States Bankruptcy Court (the "Court"), District of Colorado
under Chapter 11 of Title 11 of the U.S. Bankruptcy Code (the "Bankruptcy
Code"). As a result of the Chapter 11 filing we continue to operate our business
as "debtor-in-possession" under the jurisdiction of the Court and in accordance
with the applicable provisions of the Bankruptcy Code and the order of the
Court, as we devoted renewed efforts to resolve our liquidity problems and
develop a reorganization plan. In November 2009, the Court approved an interim
order for our use of cash collateral. The interim order for continued Use of
Cash Collateral has since been extended by the Court on several occasions. As of
the date of filing this annual report, no creditor has a lien on our cash
collateral, and therefore no further authority of the Court is necessary to our
use of cash collateral.
From January 2007 through March 2011, we operated four fields in the
Powder River Basin, Wyoming, which is located in the Rocky Mountain region of
the United States. The fields, acquired in December 2006 and January 2007, are
the South Glenrock B Field, the Big Muddy Field, the Cole Creek South Field and
the South Glenrock A Field. Effective March 1, 2011, we sold all of our interest
in the four fields to Linc Energy Petroleum (Wyoming), Inc. as part of the
Chapter 11 Bankruptcy proceeding. The sale of such properties has allowed us to
eliminate the majority of our debt and also provides financial resources during
our continuing reorganization.
On April 30, 2012, the Company filed its 2nd Amended Plan of
Reorganization ("the Plan") and Disclosure Statement for 2nd Amended Plan of
Reorganization with the Court. The Plan provides for the Company to pay the
claims of its creditors as the assets of the Company allow, and permits but does
not obligate the Company to continue in the oil and gas industry with a focus on
the purchase on non-operating interests in oil and gas producing properties, as
discussed below. The Plan has not yet been sent for voting and has not been
confirmed by the Bankruptcy Court. A hearing has been set in the bankruptcy
court to review the 2nd Amended Plan on September 4, 2012.
There is no certainty that we will be successful in completing a plan
of reorganization or that it will be confirmed by the Court. If the plan of
reorganization is not confirmed by the Court, any party in interest may file a
plan of reorganization for us or move to have the case converted to a case under
Chapter 7, which would result in the liquidation of the Company.
The following summarizes our goals and objectives for the next twelve
months:
o Minimize our operating and administrative expenses while we are
reorganizing;
o Successfully emerge from bankruptcy under the provisions of an
approved plan of reorganization; and
o Pursue and analyze oil and gas related opportunities for us, should we
successfully emerge from bankruptcy.
24
Results of Operations
With the sale of substantially all of the Company's assets in March
2011, the Company's results of operations are presented as follows:
Continuing operations
o Results of the Company's continuing operations for the three months
ended June 30, 2012 as compared to the three months ended June 30,
2011; and
Discontinued operations
o Results of the Company's discontinued operations for the three months
ended June 30, 2012 as compared to the three months ended June 30,
2011; and
Continuing Operations
Three months ended June 30, 2012 compared to three months June 30, 2011
- continuing operations.
The following is a comparative summary of our results from continuing
operations:
Three Months Ended
June 30,
---------------------------------------
2012 2011
------------------ -------------------
Revenues $ - $ -
================== ===================
Operating expenses:
General and administrative 104,887 222,814
Depreciation and amortization 26,286 11,488
------------------ -------------------
Total operating expenses 131,173 243,302
------------------ -------------------
Other income (expense):
Interest expense and financing costs (6,064) (5,934)
Interest and other income 88,396 100,485
------------------ -------------------
Total other income 82,332 94,551
------------------ -------------------
Loss before reorganization items (48,841) (139,751)
Reorganization items (30,376) (97,596)
------------------ -------------------
Net loss from continuing operations $ (79,217) $ (237,347)
================== ===================
Overview. For the three months ended June 30, 2012, we reported a net
loss from continuing operations of $79,217, or $0.00 per basic and fully-diluted
share, compared to a net loss of $237,437 or $0.00 per basic and fully-diluted
share, for the corresponding three months of 2011. Discussions of individually
significant period to period variances follow.
25
General and administrative expense. For the three months ended June 30,
2012, we incurred general and administrative expenses of $104,887 as compared to
$222,814 for the corresponding three months ended June 30, 2011. The decrease in
our general and administrative resulted primarily from decreases in compensation
and office expenses. Office expenses decreased primarily as a result of lower
rent expense associated with the April 2011 relocation of the Company's
headquarters.
Reorganization items. Reorganization items, totaling $30,376 for the
three months ended June 30, 2012, include those items of expense specifically
related to our reorganization following the filing of a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court on
October 28, 2009. These costs consist entirely of professional fees to legal
counsel for assistance with our reorganization plan and other bankruptcy related
matters. While these costs have decreased as compared to the corresponding three
months in 2011 (total expense of $97,596), we expect these expenses will
continue to be a significant component of expenses as we progress through the
bankruptcy process.
Interest and other income. The Company entered into an agreement to
assign interests in a CO2 supply agreement to Merit Energy Company ("Merit"),
beginning in December 2010. In return for this assignment, the Company receives
a fee of $.03 per Mcf purchased by Merit under this supply agreement, which
expires at the end of 2012. During the three months ended June 30, 2012, the
Company recognized income of approximately $86,818 for purchases made under this
supply agreement.
Discontinued Operations
Three months ended June 30, 2012 compared to three months June 30, 2011
- discontinued operations.
For the three months ended June 30, 2012, we did not report a net
income or loss from our discontinued operations, compared to a net loss of
$6.323, for the corresponding three months of 2011. With the sale of all of the
Company's oil and gas properties in March 2011, the Company had no revenue or
notable expenses relating to discontinued operations during the three months
ended June 30, 2012.
Liquidity and Capital Resources
-------------------------------
The report of our independent registered public accounting firm on the
financial statements for the years ended March 31, 2012 and 2011 includes an
explanatory paragraph relating to the uncertainty of our ability to continue as
a going concern. We are in bankruptcy and have incurred a cumulative net loss of
approximately $93 million for the period from inception (February 4, 2004) to
June 30, 2012.
In March 2011, we sold all of our oil and gas income producing assets
which enabled us to pay off all secured debt and left us with net cash proceeds
of approximately $3,500,000 and a receivable from the transaction of $250,000.
We do not have any sources of revenue and our projected interest and other
income is not sufficient to sustain our ongoing general and administrative,
legal and reorganization costs. We received proceeds from the return of funds we
have on deposit for oil and gas environmental and performance bonds with the
State of Wyoming. These amounts total approximately $279,000 and were returned
to the Company in October 2011. We expect that our monthly operating expenses
(excluding reorganization items) will exceed monthly operating income by
approximately $70,000 until we are able to pursue other business activities.
We continue to operate our business as "debtor-in-possession" under the
jurisdiction of the Court and in accordance with the applicable provisions of
the Bankruptcy Code and orders the Court. As debtors-in-possession, the Company
is authorized to continue to operate as an ongoing business, and may pay all
debts and honor all obligations arising in the ordinary course of our business
after the Petition Date. However, we may not pay creditors on account of
obligations arising before the Petition Date or engage in transactions outside
the ordinary course of business without approval of the Court, after notice and
an opportunity for a hearing.
26
We have prepared and filed all required financial and operating reports
and other documents with the Court. There is no assurance the Company will be
able to emerge from bankruptcy as an operating business, and if so, that we will
be able to raise the capital or funds necessary to analyze and pursue other oil
and gas related opportunities.
Cash flows used for continuing operations decreased in the three months
ended June 30, 2012 as compared to the three months ended June 30, 2011,
primarily due to a decrease in the Company's operational activities and a
decrease in the fees associated with its administrative activities.
Off-Balance Sheet Arrangements
------------------------------
We have no material off-balance sheet arrangements nor do we have any
unconsolidated subsidiaries.
Critical Accounting Policies and Estimates
------------------------------------------
Critical accounting policies and estimates are provided in Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, and Item 8. Financial Statements and Supplementary Data, both of
which are included in Part II of our Annual Report on Form 10-K for the fiscal
year ended March 31, 2012. Additional footnote disclosures are provided in Notes
to Financial Statements (unaudited), which are include in Item 1. Financial
Statements to this Quarterly Report on Form 10-Q for the quarter ended March 31,
2012.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Commodity Price Risk
--------------------
Because we are not currently operating on any oil and gas properties,
we are not exposed to market risk relating to the pricing applicable to the oil
and gas commodity markets. However, our ability to raise additional capital at
attractive rates, any future revenues from oil and gas operations, and our
profitability will depend substantially upon the market prices of oil and
natural gas, which fluctuate widely. To the extent we are able to acquire
additional oil and gas producing properties, exposure to this risk will become
significant. We expect commodity price volatility to continue.
Financial Market Risk
---------------------
The debt and equity markets have exhibited adverse conditions in recent
years. The unprecedented volatility and upheaval in the capital markets impacted
our ability to refinance or extend our existing short term debt when it matured
on October 15, 2009. Going forward, market conditions may affect the
availability of capital for prospective lenders or purchasers of or equity.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
----------------------------------
We conducted an evaluation under the supervision and with the
participation of our management, including our Chief Executive Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. The term "disclosure controls and procedures," as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(Exchange Act), means controls and other procedures of a company that are
designed to ensure that information required to be disclosed by the company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures also
include, without limitation, controls and procedures designed to ensure that
27
information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
company's management, including its principal executive officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure. The conclusion by our Chief Executive Office is the
identification of the following material weakness in our internal control over
financial reporting and, as a result of this material weakness, we concluded as
of March 31, 2012 and as of the end of the period covered by this Quarterly
Report that our disclosure controls and procedures were not effective.
We did not adequately segregate the duties of different personnel
within our Accounting Department due to an insufficient complement of staff and
inadequate management oversight.
We have limited accounting personnel with sufficient expertise in
generally accepted accounting principles to enable effective segregation of
duties with respect to recording journal entries and to allow for appropriate
monitoring of financial reporting matters and internal control over financial
reporting. Specifically, the Acting Chief Accounting Officer has involvement in
the creation and review of journal entries and note disclosures without adequate
independent review and authorization. This control deficiency is pervasive in
nature and impacts all significant accounts. This control deficiency also
affects the financial reporting process including financial statement
preparation and the related note disclosures.
Changes in Internal Control over Financial Reporting
----------------------------------------------------
There have been no changes in our internal control over financial
reporting during the most recently completed fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
On October 28, 2009, the Company filed a voluntary petition (the
"petition") for relief in the United States Bankruptcy Court (the "Court"),
District of Colorado under Chapter 11 of Title 11 of the U.S. Bankruptcy Code.
(the "Bankruptcy Code"). The Bankruptcy proceedings are discussed in further
detail in Item 1 of this filing.
On February 12, 2010, the Company filed an adversary proceeding in the
Bankruptcy Court against GasRock Capital LLC, Case No. 10-01173-MER. The
complaint seeks to recover the 10% NPI conveyed to GasRock ("the Lender") in
connection with the Eighth Amendment to the Term Credit Agreement and the
additional 1% ORRI conveyed to the Lender in October 2008 in connection with an
extension of the short term note. The primary basis of the complaint is that the
Lender gave less than fair equivalent value for the conveyances at a time when
the Company was insolvent, or when the conveyances left the Company with
insufficient capital. In other words, the Company has claimed that the value of
the conveyances was in excess of a reasonable fee for the extensions, and, as a
result, the conveyances were "constructively fraudulent" under both applicable
Bankruptcy law and the Uniform Fraudulent Transfers Act.
In addition, the Company has challenged the conveyance of the NPI and
the 1% ORRI, together with the original 2% ORRI conveyed to Lender when its loan
was first made, on the grounds that they should be characterized as security
interests and not outright transfers of title. The Bankruptcy Court has granted
GasRock's motion to dismiss these claims. The Company has also claimed that the
conveyances rendered the Loan usurious under Texas law. Further, the Company has
sought to have the NPI and 1% ORRI avoided as preferences under ss. 547 of the
Bankruptcy Code and to equitably subordinate the Lender's claim. Although the
Company believes its claims are well-taken, the Lender is vigorously defending
against the complaint, and no assurance can be given that the Company will be
successful in whole or in has part.
On June 15, 2012, the Company entered into a settlement agreement with
GasRock and Linc Energy to resolve the adversary proceeding against GasRock. In
July, the bankruptcy court approved the settlement agreement and on July 18,
2012 the Company:
28
a. received the disputed NPI, which the Company conveyed to Linc Energy;
b. released all claims to the funds held in escrow pursuant to the terms
of the sale of substantially all of its assets to Linc Energy;
c. received from Linc Energy $525,000 plus an amount of $35,523 for final
settlement of Rancher's litigation costs due under the Litigation
Agreement with Linc Energy;
d. Dismissed the adversary proceeding against GasRock with prejudice; and
e. Paid to GasRock $500,000 from an existing escrow account, and was
released from GasRock's claim for attorneys' fees and costs that
GasRock asserted it was owed for defending itself in the adversary
proceeding.
In a letter dated February 18, 2009, sent to each of our then
Directors, attorneys representing a group of persons who purchased approximately
$1,800,000 of securities (in the aggregate) in our private placement offering
commenced in late 2006 alleged that securities laws were violated in that
offering. In April 2009, we entered into tolling agreements with the purchasers
to toll the statutes of limitations applicable to any claims related to the
private placement. In February 2009, our Board of Directors established a
Special Committee of the Board (the "Special Committee") to investigate the
allegations. Following the completion of the investigation, the Special
Committee recommended no action be taken. We deny the allegations and believe
they are without merit. The claimants have filed Proof of Claims with the
Bankruptcy Court in the amount of $1,776,050 plus ancillary amounts purported to
be damages attributable to the alleged securities violations. The Company
objected to the claims and asked the Bankruptcy Court to subordinate the claims
to the level of equity. In June 2011, the Bankruptcy Court rendered a decision
that these claims are subordinated to unsecured claims.
If management believes that a loss arising from this matter is probable
and can reasonably be estimated, the Company would record the amount of the
loss, or the minimum estimated liability when the loss is estimated using a
range, and no point within the range is more probable than another. As
additional information, becomes available, any potential liability related to
this matter will be assessed and the treatment revised, if necessary. Based on
currently available information, management is unable to make a determination as
to the probability of a gain or loss regarding this suit at this time.
ITEM 1A. Risk Factors
Not applicable to smaller reporting companies.
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. MINE AND SAFETY DISCLOSURE
NOT APPLICABLE.
ITEM 5. OTHER INFORMATION
NONE.
29
ITEM 6. 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 and Acting Chief
Financial Officer pursuant to Section 302 of the Sarbanes-
Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer and Acting
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
101.INS XBRL Instance Document (1)
101.SCH XBRL Taxonomy Extension Schema Document (1)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (1)
(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is
not subject to liability under these sections.
*Filed herewith.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RANCHER ENERGY CORP.
Dated: October 17, 2012 By: /s/ Jon C. Nicolaysen
------------------------------
Jon C. Nicolaysen, President,
Chief Executive Officer, and
Acting Chief Accounting
Officer
31