MCE
MORGAN CREEK ENERGY
TRANSMISSION BY FAX (4 PAGES TOTAL)
August 12, 2008
Joanna Lam
United States Securities and Exchange Commission
Division of Corporation Finance
Fax: (202) 772-9368 or 9369
RE: Comments on Form 10-KSB
Morgan Creek Energy Corp.
Form 10-KSB for Fiscal Year Ended December 31, 2007
Filed March 28, 2008
File No. 000-52139
Dear Ms. Lam:
Pursuant to our telephone conversation of August 8, 2008, pertaining to the SEC
letter dated July 22, 2008, and the company's response letter dated August 6,
2008, I submit the following documentation for your review:
Item 1. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, PAGE 34
Please refer to the proposed, amended letter from De Joya Griffith &
Company, LLC to the company's Board of Directors and Stockholders dated
March 25, 2008.
Item 4. NOTE 4 STOCKHOLDER'S EQUITY/DEFICIT, PAGE 10
Please refer to the proposed, amended single page "Notes to Financial
Statements" document which includes the table pertaining to 314,702 share
purchase warrants, at an exercise price of $9.00 per share, which reflects
the effect of the company's stock split.
Please refer to the proposed, amended single page document pertaining to
"Material Commitments" which refers to the issuance of 2,525,356 shares of
the company's restricted common stock at $0.60 per share.
Please contact me at your convenience if you have further questions concerning
this documentation.
Yours truly,
/s/ BRUCE D. HORTON
_____________________________
Bruce D. Horton
Chief Financial Officer
Morgan Creek Energy Corp.
5050 Quorum Drive, Suite 700, Dallas, Texas 75254 USA
Telephone 214-722-6490 Fax 214-722-6499
Email: info@morgancreekenergy.com
DEJOYA GRIFFITH & COMPANY, LLC
__________________________________________
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders of
Morgan Creek Energy Corp.
Henderson, Nevada
We have audited the accompanying balance sheet of Morgan Creek Energy Corp. (An
Exploration Stage Company) as of December 31, 2007 and the related statements of
operations, stockholders' deficit, and cash flows for the period from inception
(October 19, 2004) to December 31, 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit. We did not audit the
financial statements of Morgan Creek Energy Corp. for the year ended December
31, 2006. Those statements were audited by other auditors whose report has been
furnished to us and our opinion, in so far as it relates to the amounts included
in the year ended December 31, 2006, is based solely on the report of other
auditors.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors the
financial statements referred to above present fairly, in all material respects,
the financial position of Morgan Creek Energy Corp. (An Exploration Stage
Company) as of December 31, 2007, and the results of their operations and cash
flows for the period from inception (October 19, 2004) to December 31, 2007 in
conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
De Joya Griffith & Company, LLC
Henderson, NV
March 25, 2008
________________________________________________________________________________
2580 Anthem Village Drive, Henderson, NV 89052
Telephone (702) 588-5960 * Facsimile (702) 588-5979
MORGAN CREEK ENERGY CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2008
(UNAUDITED)
________________________________________________________________________________
NOTE 4 - STOCKHOLDERS' EQUITY/DEFICIT (CONTINUED)
________________________________________________________________________________
(D) SHARE PURCHASE WARRANTS
Details of the Company's share purchase warrants issued and outstanding as of
March 31, 2008 are as follows:
Exercise price Weighted average price Number of warrants to purchase shares Expiry Date
____________________________________________________________________________________________________
$9.00 $9.00 314,702 October 16, 2008
The Company's share purchase warrants activity for the period ended March 31,
2008 is summarized as follows:
Weighted average exercise Weighted average remaining
Number of Warrants Price per share In contractual life (in years)
____________________________________________________________________________________________________________________
Balance, December 31, 2007 314,702 $ 9.00 0.80
Issued - - -
Expired - - -
Exercised - - -
____________________________________________________________________________________________________________________
Balance, March 31, 2008 314,702 $ 9.00 0.55
====================================================================================================================
All warrants are exercisable as at March 31, 2008.
NOTE 5 - STOCK OPTION PLAN
________________________________________________________________________________
On April 3, 2006 the Board of Directors of the Company ratified, approved and
adopted a Stock Option Plan for the Company in the amount of 1,666,667 shares
with an exercisable period up to 10 years. In the event an optionee ceases to be
employed by or to provide services to the Company for reasons other than cause,
any Stock Option that is vested and held by such optionee maybe exercisable
within up to ninety calendar days after the effective date that his position
ceases. No Stock Option granted under the Stock Option Plan is transferable. Any
Stock Option held by an optionee at the time of his death may be exercised by
his estate within one year of his death or such longer period as the Board of
Directors may determine.
As approved by the Board of directors, on December 12, 2006, the Company granted
616,667 stock options to certain officers, directors and management of the
Company at $3.30 per share. The term of these options are five years. The total
fair value of these options at the date of grant was estimated to be $1,527,170
and was recorded as a stock based compensation expense during 2006. The fair
value of these options was estimated using the Black-Scholes option pricing
model with the following assumptions: expected life of 3 years; risk free
interest rate of 4.49%; dividend yield of 0% and expected volatility of 187%.
The Company's stock option warrants activity for the period ended March 31, 2008
is summarized as follows:
Weighted average exercise Weighted average remaining
Number of Options Price per share In contractual life (in years)
____________________________________________________________________________________________________________________
Balance, December 31, 2007 616,667 $ 3.30 3.95
Granted - - -
Expired - - -
Exercised - - -
____________________________________________________________________________________________________________________
Balance, March 31, 2008 616,667 $ 3.30 3.70
====================================================================================================================
All options are exercisable as at March 31, 2008.
plan, management anticipates additional increases in operating expenses and
capital expenditures relating to: (i) oil and gas operating properties; (ii)
possible drilling initiatives on current properties and future properties; and
(iii) future property acquisitions. We intend to finance these expenses with
further issuances of securities, and debt issuances. Thereafter, we expect we
will need to raise additional capital and generate revenues to meet long-term
operating requirements. Additional issuances of equity or convertible debt
securities will result in dilution to our current shareholders. Further, such
securities might have rights, preferences or privileges senior to our common
stock. Additional financing may not be available upon acceptable terms, or at
all. If adequate funds are not available or are not available on acceptable
terms, we may not be able to take advantage of prospective new business
endeavors or opportunities, which could significantly and materially restrict
our business operations.
During the three-month period ended March 31, 2008, we closed a private
placement offering under Regulation S of the Securities Act pursuant to which we
received gross proceeds of $1,515,214, of which all consisted of settlement of
debt relating to amounts previously advanced to us by one of our shareholders
and related accrued interest. And effective March 24, 2008, we also settled an
aggregate $917,123 in debt by the issuance of 4,585,616 shares of our restricted
common stock at $0.21 per share (pre 3 to 1 reverse split April 22, 2008). See
"Part II. Item 2. Changes in Securities and Use of Proceeds."
MATERIAL COMMITMENTS
During fiscal year ended December 31, 2007, an aggregate of $1,365,500 was due
and owing to one of our shareholders relating to advances. Subsequently, during
January 2008, an additional advance was made by this same shareholder to us for
an aggregate amount of $1,512,214 due and owing. This amount was assigned by the
shareholder to various assignees and settled pursuant to the issuance of
2,525,356 shares of our restricted common stock at $0.60 per share. As a result,
as of March 31, 2008, an aggregate $260,000 was due and owing to this
shareholder, which bears interest at 8% per annum and has no specific repayment
terms. As at March 31, 2008, total accrued interest was $1,086. See "Part II.
Item 2. Changes in Securities and Use of Proceeds."
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve
months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Annual Report, we do not have any off-balance
sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our December 31, 2007 and December
31, 2006 financial statements contains an explanatory paragraph expressing
substantial doubt about our