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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| Quarterly Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
Act Of 1934
For the quarterly period ended May 31, 2006
Commission File Number 333-118138
QUANTUM ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0428608
- --------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
29 - 3800 Pinnacle Way
Gallaghers Canyon, Kelowna, British Columbia, Canada V1W 3Z8
- ----------------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
250 - 809 -9185
-------------------------
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ]No
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12B-2 of the Exchange Act) [ ] Yes [X] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of July 14, 2006, 45,500,000
shares of common stock of the issuer were issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<page>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development, Inc.)
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
May 31, 2006
(Stated in US Dollars)
(Unaudited)
<page>
QUANTUM ENERGY INC.
(A Development Stage Company)
INTERIM BALANCE SHEETS
May 31, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
May 31, Feb 28,
2006 2006
ASSETS Unaudited Audited
<s> <c> <c>
Current
Cash and cash equivalent $ 4,825 $ 1,016
Capital Assets - Note 4 3,557 3,846
Website Development Costs -Note 5 1,000 1,333
------------------ ------------------
$ 9,382 $ 6,195
================== ==================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 8,948 $ 4,703
Due to related party - Note 6 10,534 5,000
------------------ ------------------
19,482 9,703
------------------ ------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Capital stock - Note 7 Authorized:
75,000,000 common stock, $0.001 par value
Issued and outstanding:
45,500,000 common shares 45,500 45,500
45,500,000
Contributed surplus 40,500 40,500
Deficit accumulated during the development stage (96,100) (89,508)
------------------- -------------------
(10,100) (3,508)
------------------- -------------------
$ 9,382 $ 6,195
================== ==================
</table>
SEE ACCOMPANYING NOTES
<page>
QUANTUM ENERGY INC.
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three month period ended May 31, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
February 4, 2004
(Date of
Three months ended Inception) to
May 31, May 31,
-----------------------------------------
2006 2005 2006
---- ---- ----
<s> <c> <c> <c>
Expenses
Organizational costs $ - $ - $ 1,034
Professional fees 5,528 3,004 52,100
Office and administration 442 3,690 11,434
Marketing 27,027
- 4,988
Amortization 573 4,505
-------------------- ------------------ ------------------
622
Net loss for the period $ (6,592) $ (12,255) $ (96,100)
================== ================== ===================
Basic and diluted loss per share $ (0.00) $ (0.00)
================== ==================
Weighted average number of shares outstanding 45,500,000 45,500,000
================== ==================
</table>
SEE ACCOMPANYING NOTES
<page>
QUANTUM ENERGY INC.
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three months ended May 31, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
February 5, 2004
(Date of
Three months ended Inception) to
May 31, May 31,
2006 2005 2006
---- ---- ----
<s> <c> <c> <c>
Operating Activities
Net loss for the period $ (6,592) $ (12,255) $ (96,100)
Change in non-cash working capital balance
related to operations
Amortization 622 573 4,505
Accounts payable and accrued liabilities 4,245 767 8,948
------------------ -------------------- -------------------
Cash used in operating activities (1,725) (10,915) (82,647)
------------------ ------------------ -------------------
Investing Activities
Additions to property, plant and equipment - (2,400) (5,062)
Additions to intangibles - - (4,000)
------------------ ------------------ -------------------
Cash used in investing activities - (2,400) (9,062)
------------------ ------------------ -------------------
Financing Activities
Note payable to related party 5,534 10,534
Issuance of common stock - - 86,000
------------------ ------------------ -------------------
Cash used in financing activities 5,534 (2,400) 96,534
------------------ ------------------ -------------------
Increase (decrease) in cash during the period 3,809 (13,315) 4,825
Cash, beginning of the period 1,016 61,722 -
------------------ ------------------ -------------------
Cash, end of the period $ 4,825 $ 48,407 $ 4,825
================== ================== ===================
Supplemental disclosure of cash flow information Cash paid during the period
for:
Interest $ - $ - $ -
================== ================== ===================
Income taxes $ - $ - $ -
================== ================== ===================
</table>
SEE ACCOMPANYING NOTES
<page>
QUANTUM ENERGY INC.
(A Development Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIENCY) for the period February 4, 2004 (Date of
Inception) to May 31, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
Deficit
Accumulated
During the
Additional Pre-
Common Shares Paid-in exploration
------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
<s> <c> <c> <c> <c> <c>
Capital stock issued for cash:
February 12, 2004 - at $0.001 20,000,000 $ 20,000 $ (18,000)$ - $ 2,000
February 27, 2004 - at $0.01 19,000,000 19,000 - - 19,000
Net loss for the period - - - (2,236) (2,236)
------------- -------------- -------------- --------------- ---------------
Balance, as at February 2004 39,000,000 $ 39,000 $ (18,000)$ (2,236) $ 18,764
Capital stock issued for cash:
December, 2004 - at $0.10 6,500,000 6,500 58,500 65,000
Net loss for the year - - - (21,197) (21,197)
------------- -------------- -------------- --------------- ---------------
Balance, as at February 2005 45,500,000 $ 45,500 $ 40,500 $ (23,433) $ 62,567
Net loss for the year - - - (66,075) (66,075)
------------- -------------- -------------- --------------- ---------------
Balance, as at February 2006 45,500,000 $ 45,500 $ 40,500 $ (89,508) $ (3,508)
Net loss for the period - - - (6,592) (6,592)
------------- -------------- -------------- --------------- ---------------
Balance, as at May 31, 2006 45,500,000 $ 45,500 $ 40,500 $ (96,100) $ (10,100)
============= ============== ============== ============== ===============
</table>
SEE ACCOMPANYING NOTES
<page>
QUANTUM ENERGY INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2006
(Stated in US Dollars)
(Unaudited)
Note 1 Basis of Presentation of Interim Financial Statements
-----------------------------------------------------
While the information presented in the accompanying interim
three-month financial statements is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and
cash flows for the interim period presented. All adjustments are
of a normal recurring nature. Except as disclosed below, these
interim financial statements follow the same accounting policies
and methods of their application as the Company's audited February
28, 2006 annual financial statements.
The results of operations for the three-month period ended May 31,
2005, are not necessarily indicative of the results to be expected
for the year ending February 28, 2007.
These unaudited interim financial statements should be read in
conjunction with the February 28, 2006 audited financial
statements of the Company.
Note 2 Nature and Continuance of Operations
------------------------------------
a) Organization
The Company was incorporated in the State of Nevada, United States
of America, on February 5, 2004. The name of the Company was
changed from Boomers Cultural Development Inc to Quantum Energy
Inc on May 18, 2006
b) Development Stage Activities
The Company is in the development stage and has not yet realized
any revenues from its planned operations. On May 9, 2006 and May
19, 2006 respectively, the Company signed a Memorandum of
Understanding to Acquire Assets and an Asset Purchase Agreement
(the "Agreements") with a public company in the United States. The
Agreements provide for the purchase of certain assets including
interests in oil and gas projects in the State of Texas and
related agreements with third parties. In consideration for the
purchase of the assets the Company agreed to pay $20,000 on
closing, up to $80,000 thereafter for professional and public
company filing fees, assume debt of $150,000 related to the oil
and gas projects, assume other debts of up to $1,600,000 and issue
1,500,000 common shares of the Company, This agreement is
currently expected to be closed in July 2006. The company was
intending to establish itself as a provider of personally guided
tours for visitors to British Columbia, Canada. The Company no
longer intends to continue with this venture.
c) Going Concern
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As of May 31, 2006
the Company has not yet attained profitable operations and has
<page>
Quantum Energy Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
May 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 2
---------
accumulated losses of $96,100 since inception. The future of the
Company is dependent upon its ability to obtain financing and upon
future profitable operations from the development of their
interest in the oil and gas projects and to repay its liabilities
arising from normal business operations when they come due. These
financial statements do not include any adjustments to the amount
and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern.
Note 3 Significant Accounting Policies
-------------------------------
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates, which have been made using careful
judgment. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
a) Cash and Cash Equivalents
For purposes of the balance sheet and the statement of cash flows,
the Company considers all highly liquid debt instruments purchased
with maturity of three months or less to be cash equivalents. As
at May 31, 2006, the Company had no cash equivalents.
b) Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Transactions
in Canadian dollars are translated into U.S. dollars as follows:
i) monetary items at the rate prevailing at the balance sheet
date;
ii) non monetary items at the historical exchange rate
iii) revenue and expenses at the average rate in effect during the
period
Gains and losses are recorded in the statement of operations.
c) Development Stage Company
The Company is a development stage company as defined in the
Statements of Financial Accounting Standards No7. The Company is
devoting substantially all of its present efforts to establish new
operations and none of these planned operations have commenced.
All losses accumulated since inception has been considered as part
of the Company's development stage activities.
<page>
Quantum Energy Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
May 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 3
---------
d)Capital Assets
Capital assets are recorded at cost. Amortization of computer
equipment is at a rate of 30% per annum, on a straight-line basis.
Amortization of office equipment is at a rate of 20% per annum, on
a straight-line basis.
e) Website Development Costs
Website development costs represent capitalized costs of design,
configuration, coding, installation and testing of the Company's
web-site up to its initial implementation. The asset is being
amortized over its estimated useful life of three years using the
straight-line method. Ongoing website maintenance costs will be
expensed as incurred. Since the Company has now changed the
primary operation, it will have to be determined if this website
continues to have any value to the company.
f) Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings per Share", the basic
loss per common share is computed by dividing net loss available
to common stockholders by the weighted average number of common
shares outstanding. Diluted loss per common share is computed
similar to basic loss per common share except that the denominator
is increased to include the number of additional common shares
that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive.
At May 31, 2006, the Company had no stock equivalents that were
anti-dilutive and excluded in the earnings per share computation.
g) Financial Instruments
The carrying value of the Company's financial instruments
consisting of cash and accounts payable and accrued liabilities
approximate their fair value due to the short term maturity of
such instruments. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial statements.
h) New Accounting Standards
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, could have
a material effect on the accompanying financial statements.
<page>
Quantum Energy Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
May 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 4
---------
Note 4 Capital Assets
--------------
<table>
<caption>
Cost Accumulated Net Book Net Book February
Amortization May 2006 2006
<s> <c> <c> <c> <c>
Office equipment $ 3,629 $ 845 $ 2,783 $ 2,965
Computer equipment 1,433 659 774 881
------------------------------------------------------------------
$ 5,062 $ 1,504 $ 3,557 $ 3,846
------------------------------------------------------------------
</table>
Note 5 Website Development
-------------------
<table>
<caption>
Cost Accumulated Net Book Net Book February
Amortization May 2006 2006
<s> <c> <c> <c> <c>
Website development $ 4,000 $ 3,000 $ 1,000 $ 1,333
------------------------------------------------------------------
$ 4,000 $ 3,000 $ 1,000 $ 1,333
------------------------------------------------------------------
</table>
Note 6 Note Payable to Related Party
-----------------------------
The President and Chief Executive Officer advanced the company
$6,000 US and $5,000 Cdn for continued operations. These advances
are secured by a promissory note, do not bear interest and are due
on demand.
Note 7 Common Stock
------------
In the period ended February 29, 2004, the Company issued
20,000,000 common shares at a price of $.001 per share for total
gross proceeds of $2,000 and 19,000,000 common shares at a price
of $0.01 per share for total gross proceeds of $19,000.
In the year ended February 28, 2005, the Company issued 6,500,000
common shares at a price of $0.10 per share for total gross
proceeds of $65,000.
<page>
Quantum Energy Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
May 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 5
---------
Effective August 26, 2005, the Board of Directors authorized a 1
for 10 stock split of the Company's issued common stock. One (1)
old issued common share was split into 10 new issued common
shares. All references in the accompanying financial statements to
the number of common shares have been restated to reflect the
stock split. The authorized number of common shares remains at
75,000,000 common shares with a par value of $0.001.
<page>
ITEM 2. MANAGEMENT DISCUSSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Quantum Energy Inc. (referred to as "Quantum" or the "Company") was incorporated
on February 5, 2004, in the State of Nevada. The Company's principal executive
offices now are located at 29 - 3800 Gallagers Canyon, Kelowna, BC V1W 3Z8. The
Company's telephone number is (250) 809-9185.
Starting in May of 2006 the Company decided to embark on a new business path in
oil and gas exploration and acquisitions. The Company intends to acquire
interests in the properties and working interests in the production owned by
established oil and gas production companies, whether public or private, in
United States oil producing areas. The Company believes this opportunity may
have considerable future potential.
On May 19, 2006, the Company entered into an Asset Purchase Agreement with KOKO
Petroleum, Inc., purchasing oil and gas assets in Texas, USA, which include
three producing wells and 10% working interests in two additional wells. The
transaction was to be closed on May 31, 2006, however, by oral mutual agreement
the delivery date was extended indefinitely. The Company anticipates that the
transaction will be closed before July 31, 2006, although it cannot provide any
assurances that it will be able to do so.
The degree of expansion of the Company's oil and gas business will depend on
availability of funds. When and if funding becomes available, the Company plans
to acquire high-quality oil and gas properties, primarily proven producing and
proven undeveloped reserves. The Company will also explore low-risk development
drilling and work-over opportunities with experienced, well-established
operators.
Plan of Operation
The Company will acquire a 50% working interest in Corsicana Pilot Project,
which is currently being developed and upon completion will earn a 23.5% net
revenue interest in seven producing wells of the Corsicana leases. Surtek
Engineers are designing the polymer flood program for the pilot project, which
is expected to commence by mid September 2006. Six injecting wells are going to
be used in this project. A seismic project is scheduled to start in late July of
2006 to shoot the three-dimensional seismic over a 4,000 acre series of leases.
Upon closing of the transaction the Company shall receive revenue from a 10%
working interest in two Barnett Shale wells and a 35% working interest in three
producing wells in a 1,000 acres McKinney Lease. The wells are marginal;
however, McKinney #2 is producing 10 barrels a day after a lateral well bore and
fracturing was carried out. Normal production is two or three barrels per day.
2
<page>
General and Administrative Expenses
General and administrative expenses consist of expenses related to general
corporate functions including marketing expenses, professional and consultant
service expenses, development costs and travel.
General and administrative expenses totaled $5,970 for the three months ending
May 31, 2006, compared to $11,682 for the three months ending May 31, 2005. This
decrease was due to decreases in office administration and marketing costs
associated with the movement into the oil and gas business.
Liquidity and Capital Resources
The Company had cash of $4,825 as of May 31, 2006, compared to cash of $48,407
as of May 31, 2005. The Company had a working capital deficit of $14,657 as of
May 31, 2006, compared to working capital of $44,362 as of May 31, 2005.
The decrease in working capital and in cash was substantially due to general and
administrative expenses incurred by the Company. The Company will continue to
utilize the free labor of its directors and stockholders until such time as
funding is sourced from the capital markets. It is anticipated that funding for
the next twelve months will be required to maintain the Company.
The Company's continued operations will depend upon its ability to raise
additional funds through bank borrowings, equity or debt financing. While the
Company has been successful in raising funds to date, there is no assurance that
the Company will be able to obtain additional funding when needed, or that such
funding, if available, can be obtained on terms acceptable to the Company. If
the Company cannot obtain needed funds, it may be forced to curtail or cease its
activities.
If additional shares are issued to obtain financing, current shareholders may
suffer a dilutive effect on their percentage of stock ownership in the Company.
A large portion of the Company's financing to date has been through the issuance
of shares or through equity financing with share based collateral. There can be
no assurances that the Company will become self-sufficient. Therefore, the
Company may continue to issue shares to further the business, and existing
shareholders may suffer a dilutive effect on the price of their shares as well
as a loss of voting power in the Company.
Going Concern
The Company has not attained profitable operations and is dependent upon
obtaining financing to pursue its business objectives. For these reasons, the
Company's auditors stated in their report on the Company's audited financial
statements that they have substantial doubt the Company will be able to continue
as a going concern without further financing.
The Company will continue to rely on equity sales of the common shares in order
to continue to fund the Company's business operations. Issuances of additional
shares will result in dilution to existing stockholders. There is no assurance
that the Company will achieve any additional sales of the equity securities or
arrange for debt or other financing to fund planned business activities.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.
3
<page>
ITEM 3. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed by it in the reports that it
files or submits to the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified by the Securities and Exchange
Commission's rules and forms, and that information is accumulated and
communicated to management, including the Company's principal executive and
principal financial officers (whom the Company refers to in this periodic report
as its Certifying Officers), as appropriate to allow timely decisions regarding
required disclosure. The Company's management evaluated, with the participation
of its Certifying Officers, the effectiveness of the Company's disclosure
controls and procedures as of May 31, 2006, pursuant to Rule 13a-15(b) under the
Securities Exchange Act. Based upon that evaluation, the Company's Certifying
Officers concluded that, as of May 31, 2006, the Company's disclosure controls
and procedures were effective.
There were no changes in the Company's internal control over financial reporting
that occurred during its most recently completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit
Number* Description of Exhibit Location
Item 3 Articles of Incorporation and Bylaws
3.1 Articles of Incorporation Incorporated by reference from the
Registration Statement Amendment 2
on Form SB-2 filed October 26,
2004, SEC File No. 333-118138.
3.2 Bylaws, as amended Incorporated by reference from the
Registration Statement Amendment 2
on Form SB-2 filed October 26,
2004, SEC File No. 333-118138.
4
<page>
3.3 Articles of Amendment Incorporated by reference from
10-KSB annual report filed on
June 14, 2006, SEC File No.
333-118138.
Item 31 Rule 13a-14(a)/15d-14(a) Certifications
31.1 Certification of Chief Executive Officer and Chief This filing
Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Item 32 Section 1350 Certifications
32.1 Certification of Chief Executive Officer and Chief This filing
Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
* The number preceding the decimal indicates the applicable SEC reference
number in Item 601, and the number following the decimal indicating the
sequence of the particular document.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 19th day of June,
2006.
QUANTUM ENERGY INC.
By: /s/ Ted Kozub
--------------------
Ted Kozub
President, CEO, CFO
Date: July 19, 2006
5