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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
|X| Quarterly Report Pursuant To Section 13 or 15(d) Of The Securities
Exchange Act Of 1934
For the quarterly period ended May 31, 2007
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 (I.R.S. Employer Identification No.)
of incorporation or organization)
401 - 1529 West 6th Avenue
Vancouver, British Columbia, Canada V6J1R1
--------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
604-737-8180
-------------------------
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 10, 2007, 47,000,000
shares of common stock of the issuer were issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEE ACCOMPANYING NOTES
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
INTERIM BALANCE SHEET
May 31, 2007
(Stated in US Dollars)
May 31 February 28
2007 2007
ASSETS (Unaudited)
------
-------------------- --------------------
Current assets
Cash and cash equivalents $ 347,913 $ 58,316
Accounts receivable
Trade 32,716 15,722
Sale of assets - 308,200
Prepaid expense - 2,500
-------------------- --------------------
Total Current Assets 380,629 384,738
Oil and gas properties
Proved properties, net of accumulated depletion 845,200 845,500
Well equipment, net of accumulated depreciation 95,998 102,398
-------------------- --------------------
Total oil and gas properties 941,198 947,898
Other assets
Other equipment, net of accumulated depreciation 2,396 2,686
Website development, net of accumulated amortization 7,345 8,394
-------------------- --------------------
Total other assets 9,741 11,080
-------------------- --------------------
TOTAL ASSETS $ 1,331,568 $ 1,343,716
==================== ====================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
Current Liabilities
Accounts payable and accrued liabilities $ 189,590 $ 179,165
Accounts payable to related parties 73,033 69,533
Promissory notes payable 2,144,760 2,144,760
-------------------- --------------------
Total Current Liabilities 2,407,383 2,393,458
Common Stock Issuance Liability 381,250 381,250
-------------------- --------------------
Total Liabilities 2,774,708
2,788,633
Stockholders' (deficit)
Common stock, par value $0.001 per share:
75,000,000 shares authorized: 47,000,000
Shares issued and outstanding, respectively 47,000 47,000
Additional paid-in capital 1,685,913 1,685,913
Retained (deficit) (3,189,978) (3,163,905)
-------------------- --------------------
Total stockholders' (deficit) (1,457,065) (1,430,992)
-------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 1,331,568 $ 1,343,716
==================== ====================
SEE ACCOMPANYING NOTES
F1
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
INTERIM STATEMENTS OF OPERATIONS
for the three months ended May 31, 2007 and 2006
(Stated in US Dollars)
(Unaudited)
Three months ended May 31
2007 2006
---------------- ---------------------
Oil and gas revenue $ 64,355 $ -
Lease operating expenses 24,940 -
Production taxes 8,987 -
---------------- ---------------------
Net oil and gas revenue 35,428 -
Operating Expenses
Amortization depletion and depreciation 8,039 622
Management fees 10,500 -
Marketing 9,450 -
Office and administration 3,171 442
Professional fees 4,170 5,528
---------------- ---------------------
Total Operating Expenses 35,330 6,592
---------------- ---------------------
Net income (loss) before other income (expenses) 98 (6,592)
Other Items
Interest expense (27,448) -
Currency translation 1,277 -
---------------- ---------------------
Total Other Income (Expenses) (26,171) -
---------------- ---------------------
Net loss $ (26,073) $ (6,592)
================ =====================
Basic and diluted loss per share $ (0.00) $ (0.00)
================ =====================
Weighted average number of shares outstanding 47,000,000 45,500,000
================ =====================
SEE ACCOMPANYING NOTES
F2
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
INTERIM STATEMENTS OF CASH FLOWS
for the three months ended May 31, 2007 and 2006
(Stated in US Dollars)
(Unaudited)
Three months ended May 31
2007 2006
-------------------------------------
Operating Activities
Net loss $ (26,073) $ (6,592)
Adjustment to reconcile net loss to net cash used by operating activities
Amortization, depreciation and depletion 8,039 622
Changes in operating assets and liabilities
Accounts receivable trade (16,994) -
Accounts receivable sale of assets 308,200 -
Prepaid expenses 2,500 -
Accounts payable and accrued liabilities 13,925 4,245
Accounts payable to related parties 3,500 -
-------------------------------------
Cash from (used in) operating activities 289,597 (1,725)
-------------------------------------
Financing Activities
Due to related party - 5,534
-------------------------------------
Cash used in financing activities - 5,534
-------------------------------------
Increase in cash during the period 289,597 3,809
Cash, beginning of the period 58,316 1,016
-------------------------------------
Cash, end of the period $ 347,913 $ 4,825
=====================================
Supplemental disclosure of cash flow information:
Cash paid for the year for income tax purposes $ - $ -
=====================================
Cash paid for the year for interest $ - $ -
=====================================
SEE ACCOMPANYING NOTES
F3
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
for the three months ended May 31, 2007
(Stated in US Dollars)
(Unaudited)
Common Shares Paid-in Accumulated
Number Par Value Capital Deficit Total
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance February 2006 45,500,000 $ 45,500 $ 40,500 $ (89,508) $ (3,508)
Acquisition of oil and gas properties 1,500,000 1,500 1,645,413 - 1,646,913
Net loss - - (3,074,397) (3,074,397)
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Balance February 28, 2007 47,000,000 47,000 1,685,913 (3,163,905) (1,430,992)
Net loss for the period - - - (26,073) (26,073)
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Balance May 31, 2007 47,000,000 $ 47,000 $ 1,685,913 $ (3,189,978) $(1,457,065)
==========================================================================
SEE ACCOMPANYING NOTES
F4
SEE ACCOMPANYING NOTES
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(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 Quantum Energy, Inc.'s ("the
Company's") audited February 28, 2007 annual financial statements.
The results of operations for the three-month period ended May 31,
2007, are not necessarily indicative of the results to be expected
for the year ending February 28, 2008.
These unaudited interim financial statements should be read in
conjunction with the February 28, 2007 audited financial
statements of the Company.
Note 2 Nature and Continuance of Operations
------------------------------------
a) Organization
Boomers Cultural Development Inc. ("the Company") was incorporated
in the State of Nevada, United States of America, on February 5,
2004. On May 18, 2006, the name of the Company was changed from
Boomers Cultural Development Inc. to Quantum Energy Inc.
b) Going Concern
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern, which assumes that the Company will be able to meet its
obligations and continue its operations for its next fiscal year.
Realization values may be substantially different from carrying
values as shown and these financial statements do not give effect
to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be
unable to continue as a going concern. At May 31, 2007, the
Company had not yet achieved profitable operations, has
accumulated losses of $3,203,031 since its inception, has a
working capital deficiency of $2,039,807 and expects to incur
further losses in the development of its business, all of which
casts substantial doubt about the Company's ability to continue as
a going concern. The Company's ability to continue as a going
concern is dependent upon its ability to generate future
profitable operations and/or to obtain the necessary financing to
meet its obligations and repay its liabilities arising from normal
business operations when they come due. Management has no formal
plan in place to address this concern but considers that the
Company will be able to obtain additional funds by equity
financing and/or related party advances, however there is no
assurance of additional funding being available.
F5
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 2 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, 2007, the Company had no cash equivalents.
b) Foreign Currency Translation
The Company's uses the U.S. dollar as its reporting currency for
consistency with registrants of the Securities and Exchange
Commission ("SEC") and in accordance with the SFAS No. 52.
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) 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. Amortization of other equipment is at a
rate of 20% per annum, on a straight-line basis.
d) 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.
e) Impairment of Long-Lived Assets
The Company has adopted SFAS 144, "Accounting for the Impairment
and Disposal of Long-lived Assets", which requires that long-lived
assets to be held and used be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment charge is
recognized for the amount, if any, which the carrying value of the
asset exceeds the fair value. The Company has not recorded an
impairment of long-lived assets for the three month period ending
May 31, 2007.
F6
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 2 Significant Accounting Policies (continued)
-------------------------------------------
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, 2007, 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.
Note 3 Other Assets
------------
Cost Accumulated Net Book Value Net Book Value
Amortization May 31, 2007 February 2007
--------------------------------------------------------------------------
Office equipment $ 3,629 $ 1,572 $ 2,057 $ 2,239
Computer equipment 1,433 1,094 339 447
--------------------------------------------------------------------------
$ 5,062 $ 2,666 $ 2,396 $ 2,686
==========================================================================
Note 4 Website Development
Cost Accumulated Net Book Value Net Book Value
Amortization May 31, 2007 February 2007
--------------------------------------------------------------------------
Website development $ 12,591 $ 5,246 $ 7,345 $ 8,394
--------------------------------------------------------------------------
$ 12,591 $ 5,246 $ 7,345 $ 8,394
==========================================================================
F7
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5 Oil and Gas Properties
----------------------
The Company uses the successful efforts method of accounting for
oil and gas producing activities. Costs to acquire mineral
interests in oil and gas properties, to drill and equip
exploratory wells that find proved reserves, to drill and equip
development wells and related asset retirement costs are
capitalized. Costs to drill exploratory wells that do not find
proved reserves, geological and geophysical costs, and costs of
carrying and retaining unproved properties are expensed.
Unproved oil and gas properties that are individually significant
are periodically assessed for impairment of value, and a loss is
recognized at the time of impairment by providing an impairment
allowance. Other unproved properties are amortized based on the
Company's experience of successful drilling and average holding
period. Capitalized costs of producing oil and gas properties,
after considering estimated residual salvage values, are
depreciated and depleted by the unit-of-production method. Support
equipment and other property and equipment are depreciated over
their estimated useful lives.
On the sale or retirement of a complete unit of a proved property,
the cost and related accumulated depreciation, depletion, and
amortization are eliminated from the property accounts, and the
resultant gain or loss is recognized. On the retirement or sale of
a partial unit of proved property, the cost is charged to
accumulated depreciation, depletion, and amortization with a
resulting gain or loss recognized in income.
On the sale of an entire interest in an unproved property for cash
or cash equivalent, gain or loss on the sale is recognized, taking
into consideration the amount of any recorded impairment if the
property had been assessed individually. If a partial interest in
an unproved property is sold, the amount received is treated as a
reduction of the costs of the interest retained.
Depletion for the three months ended May 31, 2007 was $300.
Corsicana Field - JMT pilot project
On October 11, 2005, KOKO ("KOKO") Petroleum Inc. signed a letter
of intent with JMT Resources Ltd., a majority owner and operator
of certain oil and gas leases, comprising 4,000 acres of mineral
leasehold, located in Corsicana, Navarro County, Texas. KOKO
provided an initial equity contribution of $602,300 during the
year ended 2005. KOKO contributed a further $150,000 on May 23,
2006 which brought its joint venture partnership interest to 25%.
On May 31, 2006, the Company entered into an asset purchase
agreement with KOKO, whereby the Company would purchase KOKO's
interest in the oil and gas leases located in Corsicana, Texas.
The effective date of the KOKO Purchase agreement was July 1, 2006
with the following terms:
a) The Company would acquire all of the oil and gas operations,
leases and wells in the Corsicana, Texas and Barnett Shale,
Texas properties.
b) The Company would assume all of the promissory notes payable.
See Note 6.
c) The Company agreed to contribute up to $100,000 to assist
KOKO in its common stock SEC registration. To date, the
Company has contributed $27,000.
F8
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5 Oil and Gas Properties (continued)
----------------------------------
Corsicana Field - JMT pilot project - (continued)
d) The Company will cause to be issued 1,500,000 common stock
shares of the Company to KOKO.
Any reference to the KOKO acquisition of oil and gas assets means
an acquisition by the Company pursuant to this agreement purchase
agreement.
On January 31, 2007, the Company reached a settlement with JMT
Resources whereby the Company sold its interest in the Corsicana
field for gross settlement proceeds of $308,000. The proceeds were
received on May 27, 2007.
Boyd #1, Barnett Shale Project, Texas
On May 1, 2006, by letter of agreement with KOKO, the company
acquired a 10% undivided working interest in and to a lease known
as Boyd #1, Barnett Shale Project in Cooke County, Texas,
containing approximately 40 acres and burdened by a total of 25%
royalty and overriding royalty interest for $140,000. The
undivided 10% working interest is subject to a pro-rata share of
the royalty and overriding royalty interest equal to a 7.5% net
revenue. The operator of record is Rife Energy Operating Inc. A
standard operating lease governs the day to day operations.
Inglish #2, Barnett Shale Project, Texas
On May 1, 2006, by letter of agreement with KOKO, the company
acquired a 10% undivided working interest in and to a lease known
as Inglish #2, Barnett Shale Project in Cooke County, Texas,
containing approximately 40 acres and burdened by a total of 25%
royalty and overriding royalty interest for $140,000. The
undivided 10% working interest is subject to a pro-rata share of
the royalty and overriding royalty interest equal to a 7.5% net
revenue. The operator of record is RIFE Energy Operating Inc. A
standard operating lease governs the day to day operations.
Corsicana Seismic Project
The Company has also acquired a 23.5% working interest the lands
under lease by JMT Resources and Rife Energy Operating Inc. and
referred to as the Corsicana Field - JMT Project. The Company's
geologist believes there are substantial potentials for deeper
zone discoveries in this project. At present, only the Nacatoch
zone is being produced at 900 feet. This area is known to possess
significant oil bearing structures or traps in the Pecan Gap,
Woodbine, Wolf City, Cotton Valley and Smackover down to 11,000
feet.
The intention of the Corsicana partners and the purpose of the 3
dimensional seismic is to "shoot" seismic lines over the 8 square
miles and 4,000 acres of land, which upon interpretation will
identify the existence of potential traps for exploratory or
development drilling in one or more of the above mentioned
reservoirs. Total cost to shoot is approximately $500,000. The
Company has paid $100,000 towards 50% of the cost and will pay the
next $150,000 upon seismic completion.
F9 Continued
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5 Oil and Gas Properties (continued)
----------------------------------
Inglish #1H - Barnett Shale Project
The Company acquired a 5% working interest for gross proceeds of
$135,000. This is the first horizontal well drilled by REO Energy
Ltd. (the operator) in the Barnett Shale. All previous wells were
vertical wells. Total cost of this well is approximately
$2,700,000. The well has been drilled, completed and is now in
production.
Inglish #4, #5, #D1, #D2, Craig Muncaster #6 and #7
On September 1, 2006, the Company acquired a 50% working interest
in oil and gas projects located in the State of Texas. Terms of
the asset purchase agreement were for gross proceeds of $400,000
payable by way of a non-interest bearing promissory note, due
November 1, 2006.
On February 28, 2007 an extension was granted by way of a
promissory note, with an extended due date to October 31, 2007,
which bares interest at 10% per annum and is secured by a general
security agreement. As part of the extension, the Company agreed
to issue 250,000 common shares to the seller, free and clear of
all liens and encumbrances. If the Company duly observes and
performs all of the Company's covenants, one-half of the common
stock issued (125,000 shares) shall be returned to the Company by
the seller.
The Company recognized and has recorded a charge to interest
expense of $381,250 which represented the fair value ($3.05 per
share) of the 125,000 shares of common stock which will not be
returned to the Company. The Company and the seller have a
director in common.
Other properties
On November 17, 2006 the Company acquired a oil lease, located in
Oklahoma ("Cannon Lease") for gross proceeds of $14,000 and future
stock, (amount to be determined) in the Company.
On September 11, 2006 the Company completed the waste water
disposal project for gross proceeds of $20,000.
Note 6 Promissory Notes Payable
------------------------
In accordance with the KOKO Purchase Agreement, the Company has
accepted financing for $1,594,760 due on demand, interest
compounded annually at 4% and $550,000 at 10%. At any time the
Company may pay off all or any part of the principal that remains
unpaid together with applicable interest. Gross promissory notes
of $1,774,760 are not secured, and have no defined terms of
repayment. Promissory notes of $400,000 are secured, by way of
250,000 shares in the capital stock of the Company and a
collateral interest in the oil and gas properties. Interest of
$27,448 has been accrued in the May 31financial statements.
F10 Continued
QUANTUM ENERGY INC.
(formerly Boomers' Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 7 Common Stock
------------
The authorized number of common shares remains at 75,000,000
common shares with a par value of $0.001. The Company also issued
250,000 shares in the capital stock of the Company as a collateral
interest against a promissory note issued by the Company.
Note 8 Well Equipment
--------------
Accumulated Net Book Value Net Book Value
Cost Amortization May 31, 2007 February 28, 2007
-------------- ---------------------- ----------------------- -------------------------
Well equipment $ 127,998 $ 32,000 $ 95,998 $ 102,398
-------------- ---------------------- ----------------------- -------------------------
F11
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 401 - 1529 West 6th Avenue, Vancouver, British
Columbia, Canada, V6J1R1. The Company's telephone number is (604)737-8180.
Starting in May of 2006 the Company embarked 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.
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.
Financial Condition and Results of Operations
For the three-month period ended May 31, 2007, the Company received revenue of
$64,355 from production of oil and gas from the Barnett Shale properties, as
compared to no revenue for the fiscal period ended May 31, 2006.
For the three-month period ended May 31, 2007, the Company had a net loss of
approximately $26,073, as compared to a net loss of $6,592 for the three-month
period ended May 31, 2006, an increase of approximately 83%.
This increase in the net loss was the result of increase in general and
administrative expenses, which totaled $35,330 for the three months ended May
31, 2007, compared to $6,592 for the three months ended May 31, 2006, which in
turn, was the result of an increase in legal and accounting fees incurred by the
Company during this quarter.
Liquidity and Capital Resources
The Company had cash of $347,913 as of May 31, 2007, compared to cash of $58,316
as of February 28, 2007. The increase is due to sale of assets in Corsicana. The
Company had a working capital deficit of $2,026,754 as of May 31, 2007, compared
to working capital deficit of $2,008,720 as of February 28, 2007. The decrease
in working capital was substantially due to increased general and administrative
expenses incurred by the Company during this quarter.
2
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 substantial additional funding will be required to maintain
the Company for the next twelve months.
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 may 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.
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
3
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, 2007, 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, 2007, the Company's disclosure controls
and procedures were effective.
Changes in internal controls
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.
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.
3.3 Articles of Amendment Incorporated by reference from
10-KSB annual report filed on June
14, 2006, SEC File No. 333-118138.
Item 10 Material Contracts
10.5 Extension Agreement between Nitro Petroleum and Quantum Incorporated by reference from the
Energy Inc. dated November 1, 2006 Form 10 - QSB filed January 12,
2007, SEC File No. 333-118138
10.6 Promissory Note 2 dated November 1, 2006 Incorporated by reference from the
Form 10 - QSB filed January 12,
2007, SEC File No. 333-118138
10.7 General Security Agreement between Nitro Petroleum and Incorporated by reference from
Quantum Energy Inc. dated November 7, 2006 the Form 10 - QSB filed January
12, 2007, SEC File No. 333-118138
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10.8 Settlement Agreement and Mutual Release dated January 31, Incorporated by reference from
2007 8K form filed February 28,
2007-05-31 SEC file No. 333-118138
10.9 Extension Agreement 2 dated February 28, 2007 between Nitro Incorporated by reference from
Petroleum Incorporated and Quantum Energy Inc. including 10-KSB annual report filed on June
promissory note 12, 2007, SEC File No. 333-118138.
10.10 Promissory Note dated January 12, 2007 in the amount of Incorporated by reference from
$25,000.00 (USD) payable to Coach Capital LLC 10-KSB annual report filed on June
14, 2006, SEC File No. 333-118138.
10.11 Consulting agreement dated February 28, 2007 between Quantum Incorporated by reference from
Energy Inc. and T. Kozub Enterprises Ltd. 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 Financial
This filing 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 Financial
This filing 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 25th day of July,
2007.
QUANTUM ENERGY INC.
By: /s/ Shane Lowry
-----------------------------------------------------
Shane Lowry
President
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