-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TOjM7zzmwf0KTbHmzpQrmei7G39qe7BovD9XpJad47Ed7YzDuNXZ35sMvLkhtjgL k0lChQmlo33SxPj0l9LOKg== 0001092306-06-000682.txt : 20061114 0001092306-06-000682.hdr.sgml : 20061114 20061114142606 ACCESSION NUMBER: 0001092306-06-000682 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061114 DATE AS OF CHANGE: 20061114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIAL ENERGY, INC. CENTRAL INDEX KEY: 0001282496 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-113726 FILM NUMBER: 061213883 BUSINESS ADDRESS: STREET 1: 1313 EAST MAPLE STREET CITY: BELLINGHAM STATE: WA ZIP: 98225 BUSINESS PHONE: 360-685-4200 MAIL ADDRESS: STREET 1: 1313 EAST MAPLE STREET CITY: BELLINGHAM STATE: WA ZIP: 98225 FORMER COMPANY: FORMER CONFORMED NAME: BV PHARMACEUTICAL INC DATE OF NAME CHANGE: 20040303 10QSB 1 radial10qsb.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006 COMMISSION FILE NUMBER 333-113726 RADIAL ENERGY INC. _________________________________________________________________ (Exact name of small business issuer as specified in its charter) NEVADA 72-1580091 _______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1200 SMITH STREET, SUITE 1600, HOUSTON, TEXAS 77002 ___________________________________________________ (Address of principal executive offices) Issuer's telephone number: (713) 353-4963 1313 EAST MAPLE ST., SUITE 223, BELLINGHAM, WASHINGTON 98225 ____________________________________________________________ (Former address, if changed since last report) Check whether the issuer (1) has 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 filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of November 6, 2006, 44,585,824 shares of common stock were issued and outstanding. Transitional Small Business Disclosure Format (Check one): Yes |_| No |X| ================================================================================ RADIAL ENERGY INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements Interim Balance Sheets as of September 30, 2006 and December 31, 2005 (Unaudited)............................................ 4 Interim Statements of Operations for the three and nine-month periods ended September 30, 2006 and 2005 and for the period from June 30, 2000 (Date of Inception) to September 30, 2006 (Unaudited)................................................. 5 Interim Statements of Cash Flows for the nine-month period ended September 30, 2006 and 2005 and for the period from June 30, 2000 (Date of Inception) to September 30, 2006 (Unaudited)................................................. 6 Interim Statement of Stockholders' Equity (Deficiency) for the period June 30, 2000 (Date of Inception) to September 30, 2006 (Unaudited)........................................ 7 Notes to the Interim Financial Statements (Unaudited).......... 9 Item 2. Management's Plan of Operation.................................. 20 Item 3. Controls and Procedures......................................... 25 PART II. OTHER INFORMATION Item 6. Exhibits....................................................... 27 SIGNATURES.................................................................. 28 EXHIBIT INDEX .............................................................. 29 2 ================================================================================ PART I.--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM FINANCIAL STATEMENTS September 30, 2006 (Stated in US Dollars) (UNAUDITED) 3 ================================================================================
RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM BALANCE SHEETS September 30, 2006 and December 31, 2005 (Stated in US Dollars) (UNAUDITED) September 30 December 31 2006 2005 ____________ ___________ ASSETS Current Cash $ - $ 1,211 Prepaid expenses and deposit 7,857 - Current assets of discontinued operations - Note 12 - 1,000 ____________ ___________ 7,857 2,211 Equipment - Note 4 1,980 - Oil and gas properties - Note 5 2,418,426 - ____________ ___________ $ 2,428,263 $ 2,211 ============ =========== LIABILITIES Current Bank indebtedness $ 2,529 $ - Accounts payable and accrued liabilities - Note 5 774,012 8,435 Due to related parties - Note 8 36,847 - Notes payable - Note 6 385,000 - Current liabilities of discontinued operations - Note 12 - 7,500 ____________ ___________ 1,198,388 15,935 ____________ ___________ STOCKHOLDERS' EQUITY (DEFICIENCY) Capital stock - Note 7 Authorized: 75,000,000 common stock, $0.001 par value Issued: 44,585,824 common stock (December 31, 2005: 151,065,824) 44,586 151,066 Additional paid-in capital - shares 2,250,810 6,180 - warrants 904,950 - Deficit accumulated during the development stage (1,970,471) (170,970) ____________ ___________ 1,229,875 (13,724) ____________ ___________ $ 2,428,263 $ 2,211 ============ =========== SEE ACCOMPANYING NOTES
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RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM STATEMENTS OF OPERATIONS for the three and nine-month periods ended September 30, 2006 and 2005 and for the period from June 30, 2000 (Date of Inception) to September 30, 2006 (Stated in US Dollars) (UNAUDITED) June 30, 2000 (Date of Three months ended Nine months ended Inception) to September 30 September 30 September 30, 2006 2005 2006 2005 2006 ___________ ____________ ___________ ____________ ___________ Administrative expenses Administration fees $ 5,831 $ - $ 14,331 $ - $ 14,331 Advertising and promotion - - - - 1,001 Amortization 104 - 104 - 104 Consulting fees - Note 8 39,063 425 68,580 425 117,077 Executive compensation and benefits - Note 8 82,800 - 1,342,000 - 1,342,000 Filing fees 3,613 - 7,584 6,613 20,039 Financing fees - Note 9 11,250 - 11,250 - 11,250 Interest and bank charges 29,179 24 30,567 2,588 38,181 Investor relations 34,505 - 76,162 - 86,158 Marketing management services 17,460 - 46,610 - 46,610 Office and miscellaneous 1,733 473 4,384 3,898 15,386 Professional fees 63,281 3,399 88,693 11,009 129,331 Rent 5,097 - 7,419 - 7,924 Telephone 14,419 - 15,987 - 17,858 Transfer agent fees 1,745 - 4,802 1,581 4,802 Travel and related costs 67,493 - 84,944 - 84,994 Website maintenance 1,897 - 13,991 273 16,120 ___________ ____________ ___________ ____________ ___________ Loss before other items (379,470) (4,321) (1,817,408) (26,387) (1,953,116) Other items: Other income - - - - 58 Gain on note payable forgiven - Note 7 - - 9,407 - 9,407 ___________ ____________ ___________ ____________ ___________ Net loss from continuing operations (379,470) (4,321) (1,808,001) (26,387) (1,943,651) Income (loss) from discontinued operations - Note 12 - - 8,500 480 (26,820) ___________ ____________ ___________ ____________ ___________ Net loss for the period $ (379,470) $ (4,321) $(1,799,501) $ (25,907) $(1,970,471) =========== ============ =========== ============ =========== Basic loss per share from continuing operations $ (0.01) $ (0.00) $ (0.03) $ (0.00) =========== ============ =========== ============ Basic income per share from discontinued operations $ - $ - $ 0.00 $ 0.00 =========== ============ =========== ============ Weighted average number of shares outstanding 42,742,346 150,493,112 54,649,121 150,113,400 =========== ============ =========== ============ SEE ACCOMPANYING NOTES
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RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM STATEMENTS OF CASH FLOWS for the nine-month period ended September 30, 2006 and 2005 and for the period from June 30, 2000 (Date of Inception) to September 30, 2006 (Stated in US Dollars) (UNAUDITED) June 30, 2000 (Date of Nine months ended Inception) to September 30, September 30, 2006 2005 2006 ___________ ____________ ___________ Cash Flows from (used in) Operating Activities Net loss from continuing operations $(1,808,001) $ (26,387) $(1,943,651) Deduct items not affecting cash: Amortization 104 - 104 Gain on note payable forgiven (9,407) - (9,407) Stock issued for executive compensation 1,200,000 - 1,200,000 Stock issued for financing fee 19,600 - 19,600 Changes in non-cash working capital balances related to operations: Prepaid expenses (7,857) - (7,857) Accounts payable and accrued liabilities 765,984 (6,566) 774,419 ___________ ____________ ___________ 160,423 (32,953) 33,208 ___________ ____________ ___________ Cash Flows used in Investing Activities Acquisition of equipment (2,084) - (2,084) Oil and gas properties (2,418,426) - (2,418,426) ___________ ____________ ___________ (2,420,510) - (2,420,510) ___________ ____________ ___________ Cash Flows from Financing Activities Bank indebtedness 2,529 - 2,529 Increase in due to related parties 36,847 - 36,847 Capital stock issued 1,852,500 - 1,952,475 Increase in note payable 365,000 - 365,000 Convertible debentures - 2,479 57,271 ___________ ____________ ___________ 2,256,876 2,479 2,414,122 ___________ ____________ ___________ Increase (decrease) in cash from continuing operations (3,211) (30,474) 26,820 Increase (decrease) in cash from discontinued operations - Note 12 2,000 7,980 (26,820) ___________ ____________ ___________ Decrease in cash during the period (1,211) (22,494) - Cash, beginning of the period 1,211 24,964 - ___________ ____________ ___________ Cash, end of the period $ - $ 2,470 $ - =========== ============ =========== Non-cash Transactions - Note 11 SEE ACCOMPANYING NOTES
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RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) for the period June 30, 2000 (Date of Inception) to September 30, 2006 (Stated in US Dollars) (UNAUDITED) Deficit Accumulated Additional Paid-in During the Common Stock Capital Development *Shares **ParValue Shares Warrants Stage Total ___________ __________ __________ ________ ___________ _________ Capital stock subscribed pursuant to an offering memorandum for cash - at $0.0000002 122,172,000 $ 122,172 $(121,968) $ - $ - $ 204 ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2000 122,172,000 122,172 (121,968) - - 204 Capital stock issued pursuant to a private placement - at $0.0025 27,108,400 27,108 40,663 - - 67,771 - at $0.05 160,000 160 7,840 - - 8,000 Net loss for the year - - - - (69,885) (69,885) ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2001 149,440,400 149,440 (73,465) - (69,885) 6,090 Capital stock issued pursuant to a private placement - at $0.05 480,000 480 23,520 - - 24,000 Net loss for the year - - - - (30,090) (30,090) ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2002 149,920,400 149,920 (49,945) - (99,975) - Net income for the year - - - - 108 108 ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2003 149,920,400 149,920 (49,945) - (99,867) 108 Net loss for the year - - - (36,453) (36,453) ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2004 149,920,400 149,920 (49,945) - (136,320) (36,345) .../cont'd SEE ACCOMPANYING NOTES 7 RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) INTERIM STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) for the period June 30, 2000 (Date of Inception) to September 30, 2006 (Stated in US Dollars) (UNAUDITED) Deficit Accumulated Additional Paid-in During the Common Stock Capital Development *Shares **ParValue Shares Warrants Stage Total ___________ __________ __________ ________ ___________ _________ Capital stock issued pursuant to conversion of convertible debentures - at $0.05 1,145,424 1,146 56,125 - - 57,271 Net loss for the year - - - - (34,650) (34,650) ___________ __________ _________ ________ ___________ _________ Balance, December 31, 2005 151,065,824 151,066 6,180 - (170,970) (13,724) Capital stock retired to the treasury (116,000,000) (116,000) 87,000 - - (29,000) Capital stock issued for executive compensation - at $0.80 1,500,000 1,500 1,198,500 - - 1,200,000 Capital stock issued for loan fee - at $0.98 20,000 20 19,580 - - 19,600 Capital stock issued pursuant to a private placement - at $0.25 8,000,000 8,000 1,087,050 904,950 - 2,000,000 Finders' fees on private placement - - (147,500) - - (147,500) Net loss for the period - - - - (1,799,501) (1,799,501) ___________ __________ _________ ________ ___________ _________ Balance, September 30, 2006 44,585,824 $ 44,586 $2,250,810 $904,950 $(1,970,471) $1,229,875 =========== ========= ========= ======== =========== ========= * The common stock issued has been retroactively restated to reflect a forward stock split of 1,500 new shares for one old share, effective January 5, 2001 and a forward split of four new shares for one old share, effective February 20, 2006 (Note 7). ** The par value of common stock has been retroactively restated to reflect a change from no par value to a par value of $0.001 per share. SEE ACCOMPANYING NOTES
8 RADIAL ENERGY INC. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS September 30, 2006 (Stated in US Dollars) (UNAUDITED) Note 1 INTERIM REPORTING The accompanying unaudited interim financial statements have been prepared by Radial Energy Inc. (the "Company") pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2005. The results of operations for the nine months ended September 30, 2006 are not indicative of the results that may be expected for the full year. Note 2 CONTINUANCE OF OPERATIONS These interim 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 twelve months. 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 September 30, 2006, the Company had not yet achieved profitable operations, has accumulated losses of $1,970,471 since its inception, has a working capital deficiency of $1,190,531 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. The Company has arranged a financing of up to $5,000,000 pursuant to a securities purchase agreement to issue and sell to the purchaser secured convertible debentures which shall be convertible into shares of the Company's common stock and will issue to the purchaser warrants to purchase the Company's common stocks (Note 10). 9 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 2 Note 3 ADDITIONAL ACCOUNTING POLICIES OIL AND GAS PROPERTIES The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities. Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. Future net cash flows from proved reserves using period-end, non-escalated prices and costs, are discounted to present value and compared to the carrying value of oil and gas properties. Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the rate of depletion by more than 20%. Royalties paid net of any tax credits received are netted with oil and gas sales. EQUIPMENT AND DEPRECIATION Equipment is recorded at cost and depreciated over their estimated useful lives using the declining balance method. Additions are depreciated at half the annual rate in the year of acquisition. Note 4 EQUIPMENT
September 30, 2006 December 31, 2005 ____________________________________ _________________ Accumulated Cost Depreciation Net Net _______ ____________ _______ ___ Computer equipment $ 2,084 $ 104 $ 1,980 $ - ======= ===== ======= ===
10 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 3 Note 5 OIL AND GAS PROPERTIES
September 30, December 31, 2006 2005 ______________ ____________ Anticline Project Equipment and advance on exploration $1,650,000 $ - Geological consulting 68,426 - ______________ ___ 1,718,826 - Cherokee County Project Advance 700,000 - ______________ ___ $2,418,426 $ - ============== ===
i) Anticline Project On May 11, 2006, the Company entered into a Joint Operating Agreement ("JOA") with Peruvian and American companies whereby the Company acquired a 20% working interest and 18% revenue interest in an oil project located in Peru by funding the acquisition of certain equipment, for the shipment of this equipment to the project site in Peru and for the drilling, testing and evaluation of the first exploratory well on the property in the total amount of $1,650,000. After the drilling of the first well is complete, the Company will have the option whether to proceed with the project by funding the drilling, testing and evaluation of another two wells on the property for an additional $1,650,000. This additional investment will also cover the costs to install production facilities, including pipeline and loading dock, tank batteries and pumping units as required to deliver the produced oil to market. Thereafter, the Company will have the option to pay for its 20% working interest share of the development and operation of the project. In the event the Company and the transacting parties decide that the project is not feasible, the equipment acquired will be sold and the Company will be entitled to 67% of the proceeds. At September 30, 2006, the Company had advanced $1,650,000 towards the acquisition of the equipment. 11 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 4 Note 5 OIL AND GAS PROPERTIES - (cont'd) ii) Cherokee County Project By an assignment agreement dated June 27, 2006 and amended September 29, 2006, the Company has agreed to acquire a working interest from a Canadian company in three separate exploratory oil and gas prospects located in Cherokee County, Texas, under three leasehold assignment agreements with a company in Texas. In consideration for the assignment, the Company has agreed to pay $700,000 on or before November 17, 2006, with the vendor retaining a 4% overriding royalty. The payment covers the Company's share of the estimated capital expenditures to drill and complete the first test wells on each of the three prospects. The leasehold agreement for all three prospects includes a 30% working interest before payout of initial investment of the Canadian company and a 22.5% working interest after payout, with payout determined on a per project basis. In the event that the Company fails to make the payment, the Canadian company has the option to have the rights of the agreement revert back or to receive from the Company a penalty payment in the amount of 120% of the $700,000 consideration and at its option, the amount shall be convertible into the securities of the Company at a price equal to the lowest offering price of the Company's securities to the general public during the year ended December 31, 2006. Note 6 NOTES PAYABLE - Note 7 On July 12, 2006, the Company received $250,000 pursuant to a promissory note. The note is unsecured, bears interest at 12% per annum and is due July 12, 2007. On July 31, 2006, the Company received $100,000 pursuant to a promissory note. The note is unsecured, bears interest at 12% per annum and is due July 31, 2007. The Company paid a loan fee by the issuance of 20,000 shares of common stock valued at $19,600. On September 19, 2006, the Company received $35,000, pursuant to a promissory note. The note is unsecured, non-interest bearing and is due September 19, 2006. The note was paid in full subsequent to September 30, 2006. Note 7 CAPITAL STOCK - Notes 6 and 9 Effective on January 5, 2001, the Company forward split its issued common stock on the basis of 1,500 new for one old. On May 25, 2004, the Company amended its authorized capital stock to 75,000,000 common shares with a par value of $0.001 per share. The number of authorized shares and the par value per share as referred to in these financial statements has been restated wherever applicable to give retroactive effect to this amendment. 12 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 5 Note 7 CAPITAL STOCK - Notes 6 and 9 - (cont'd) On February 10, 2006, the Company repurchased a total of 29,000,000 pre-forward split (116,000,000 post-forward split) common shares at $0.001 per share from the previous President of the Company by the issuance of a promissory note for $29,000 bearing interest at 8% per annum and due August 10, 2006. The Company repaid $20,000 of the promissory note on March 27, 2006, which was accepted as payment in full. Consequently the balance of the note and related interest was written off during the three months ended March 31, 2006. Effective on February 20, 2006, the Company forward split its issued common stock on the basis of four new for one old. The number of shares referred to in these financial statements has been restated wherever applicable to give retroactive effect on the forward stock splits. There was no effect on the Company's authorized share capital. The retroactive restatement of the issued common shares is required by the Securities and Exchange Commission's Staff Accounting Bulletin, Topic 4c. In actuality, the forward stock split, of four for one is effective after the Company's repurchase of 29,000,000 pre-forward split (116,000,000 post-forward split common shares). Consequently, the number of shares actually issued immediately prior to the split was 8,766,456 pre-forward split common shares (35,065,824 post-forward split common shares). The actual number of common shares, both pre-forward split and post-forward split, are less than the number of common shares authorized of 75,000,000. On March 29, 2006, the officers of the Company approved a plan of merger between the Company and Radial Energy Inc. a wholly-owned inactive subsidiary of the Company incorporated in the State of Colorado on April 10, 2006 by the Company. Under the plan of merger, the shares of Radial Energy Inc. were cancelled and the shareholders of the Company received one share of the newly-merged company for every share of BV Pharmaceutical, Inc. held. The purpose of the merger was to facilitate a name change to Radial Energy Inc. On July 7, 2006, the Company issued 1,500,000 common shares at $0.80 per share to an officer of the Company pursuant to an employment agreement (Note 9). On July 21, 2006, the Company issued 8,000,000 units at $0.25 per unit for proceeds of $2,000,000 through the private placement offering approved by the Company on February 10, 2006. Each unit consists of one common share and one stock purchase warrant exercisable until August 4, 2008, into one common share at $0.30 per share. The Company recorded finders' fees totalling $147,500, $117,500 was paid at September 30, 2006 and the remaining $30,000 was paid subsequent to September 30, 2006. On July 31, 2006, the Company issued 20,000 common shares for a loan fee valued at $19,600 pursuant to a promissory note for $100,000. 13 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 6 Note 7 CAPITAL STOCK - Notes 6 and 9 - (cont'd) STOCK PURCHASE WARRANTS As of September 30, 2006, the Company had 8,000,000 warrants outstanding entitling the holder thereof the right to purchase one common share for each warrant held. The fair value of these warrants of $904,950 was determined using the Black-Scholes stock price valuation model with the following assumptions: Expected share price volatility 96% Risk free interest rate 4.91% Expected dividend yield 0.0% Expected term in years 2 Note 8 RELATED PARTY TRANSACTIONS - Notes 7 and 9 The Company incurred the following amounts charged by a former director of the Company and directors and officers of the Company pursuant to employment agreements (Note 9):
June 30, 2000 (Date of Three months ended Nine months ended Inception) to September 30, September 30, September 30, 2006 2005 2006 2005 2006 _______ ____ __________ ____ _____________ Consulting fees $ - $ - $ 9,000 $ - $ 9,000 Executive compensation and benefits 82,800 - 1,342,000 - 1,342,000 _______ ____ __________ ____ __________ $82,800 $ - $1,351,000 $ - $1,351,000 ======= ==== ========== ==== ==========
As at September 30, 2006, the due to related parties of $36,847 (December 31, 2005: $Nil) consists of expenses owing to the directors and officers of the Company. These amounts are unsecured, non-interest bearing and have no specific terms of repayment. Note 9 COMMITMENTS - Notes 7 and 10 i) By an employment agreement dated March 10, 2006 with the President of the Company, and effective April 1, 2006, the Company will pay $180,000 per year plus annual bonuses as determined by the Board of Directors of the Company. In addition, the President will receive a $400 per month auto allowance, $800 per month insurance reimbursement and a minimum $1,000 per month for rental and administrative expenses to maintain an office. The Company may also issue stock options to the President as deemed appropriate by the Board of Directors. The term of the agreement is 3 years. 14 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 7 Note 9 COMMITMENTS - Notes 7 and 10 - (cont'd) ii) By an employment agreement dated June 1, 2006, with the Chief Operating Officer of the Company, and effective June 1, 2006, the Company will pay $132,000 per year plus annual bonuses as determined by the Board of Directors of the Company. In addition, the Chief Operating Officer will receive a $400 per month auto allowance, $800 per month reimbursement of the costs of the medical insurance coverage and a minimum $1,000 per month for rental and administrative expenses to maintain an office. The Company may also issue stock options to the Chief Operating Officer as deemed appropriate by the Board of Directors. The term of the agreement is 3 years. In addition, during the nine months ended September 30, 2006, the Company issued 1,500,000 common shares restricted under the Securities and Exchange Commission Rule 144 for additional consideration for this agreement valued at $1,200,000. iii) By a business consulting agreement dated April 1, 2006, the Company will pay $10,000 per month for investor relations services for a term of two years. iv) On August 23, 2006, the Company entered into a Letter of Intent with a Columbian company, to enter into a joint operating agreement to acquire a twenty percent (20%) working interest in the right to explore and develop oil reserves and production located in Middle Magdalena Valley of Columbia. The Company's working interest will be subject to a joint operating agreement which is to be negotiated. The Company will be required to contribute $2,200,000 in cash upon execution of the joint operating agreement, $350,000 will be due upon signing the joint operating agreement and another $350,000 will be due sixty days following the signing of the joint operating agreement. The remaining $1,500,000 will be due fifteen days following any capital call made by the Columbian company at any time following the execution of the joint operating agreement. The Company will receive a 33.33% participation in distributions until payout of $1,500,000 of its investment, then after payout, the interest will remain at 20%. The Company has until November 22, 2006 to enter into the joint operating agreement. If the company fails to enter into the agreement by the deadline, then the Columbian company will have no obligation to enter into the joint operating agreement. Further, if the Company fails to properly execute the joint operating agreement, it shall be liable for a termination fee of up to $200,000 as follows: (a) $50,000, if the Company terminates at any time on or before the date the Colombian government issues the appropriate authority to the Columbian Company to begin operations at the site; (b) total of $100,000, if the Company terminates following the date the Colombian government issues such authority; and 15 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 8 Note 9 COMMITMENTS - Notes 7 and 10 - (cont'd) iv) - (cont'd) (c) total of $200,000, if the Company terminates more than 30 days following the date the Columbian government issues such authority. v) The Company has an office lease for a term of one year from September 1, 2006 to August 31, 2007 at a monthly lease of $1,300. It will automatically renew for the same term. The termination clause in the agreement requires a notice of three months. Note 10 SUBSEQUENT EVENTS - Note 7 i) On October 2, 2006, the Company entered into a securities purchase agreement to issue up to $5,000,000 of secured convertible debentures which shall be convertible into common stock and stock purchase warrants to purchase common stock. Pursuant to the securities purchase agreement, the Company entered into an Investor Registration Rights Agreement, Security Agreement, and a Pledge and Escrow Agreement with the Purchaser. The Company will pay the purchaser a commitment fee of 10% of $5,000,000, which shall be paid proportionately upon each disbursement. In addition, the Company will pay the purchaser a non-refundable fee of $22,500 for structuring and due diligence in connection with this transaction ($11,250 paid during the nine months ended September 30, 2006). The Company received $3,500,000 and the remaining $1,500,000 shall be funded within three business days after a registration statement for this debenture is declared effective by the Securities and Exchange Commission. Pursuant to the securities purchase agreement, the Company issued to the purchaser 3,333,333 stock purchase warrants at an exercise price of $0.75 per share, 2,500,000 stock purchase warrants at an exercise price of $1.00 per share, 2,333,333 stock purchase warrants at an exercise price of $1.50 per share, and is obligated to issue to the purchaser an additional 1,000,000 stock purchase warrants at an exercise price of $1.50 per share when the final funding is received. The warrants will be exercisable for a term of five years. The Company has the option to force the purchaser to exercise the warrants within five days following the forced exercise notice assuming that there is sufficient number of shares of common stock to cover the underlying amount of warrants to be exercised and the daily Volume Weighted Average Price of the common stock for each of the five consecutive trading days prior to the forced exercised notice date is above the exercise price. The forced exercise notice shall be limited to 1/5 of the trading volume during the five day period. Any allowable forced exercise notice shall be reduced by any warrant amounts exercised by the purchaser during the five day period. 16 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 9 Note 10 SUBSEQUENT EVENTS - Note 7 - (cont'd) i) - (cont'd) The debentures bear interest at 7.0% per annum, are due on October 2, 2009, secured by the assets of the Company and a pledge of common stock which shall include common stock held by the Company's officers and directors and the remaining shares shall be delivered in the form of a stock certificate in the name of the Company, to be held in escrow and are convertible into the Company's common stock, at the option of the purchaser at any time prior to redemption by the Company. The debentures will be convertible at a conversion price equal to the lesser of $1.0536 or 90% of the lowest volume weighted average daily closing price of the Company's common stock, during the 15 trading days immediately prior to the conversion date. The notes contain a provision whereby no holder is able to convert any part of the note into shares of the Company's common stock, if such conversion would result in beneficial ownership of the holder and its affiliates of more than 4.99% of the Company's then outstanding shares of common stock. The Company has the right at its option to redeem a portion or all amounts outstanding under the debentures by paying the holder the principal amount being redeemed plus a redemption premium of 20 to 30%. ii) On October 6, 2006, the Company entered into a Letter of Intent with two companies in Denver, Colorado to participate in an Acreage Earning Agreement with a third party on acres of federal Wasatch/Mesa Verde formation leasehold interests which are located in Uintah County, Utah. Pursuant to the agreement, the Company shall commit to the drilling of a minimum of three wells in 2007 and three wells in 2008 to test the property. The Company will carry the parties for 37.5% interest in the first three wells and will carry the parties for 12.5% working interest in the second three wells. Upon completion of the respective drilling obligations, the parties shall bear their 37.5% interest of all further wells, with the Company bearing the remaining 62.5% working interest. In the event the parties enter into an area of mutual interest with respect to any additional related acreage, such acreage shall be owned 62.5% by the Company and 12.5% by the two Colorado companies with the remaining 25% being offered to the third party. Should the Company fail to fund its share of the required wells during the first 2 year-period, it shall earn interest only in the drillsite spacing units and all undrilled acreage will revert back to the two companies. The Company was required to enter into a Definitive Agreement setting out the final terms of the agreement by no later than October 25, 2006 and was required to pay to the two Colorado companies' finders' fees in the amount of $100,000. This amount was paid on October 19, 2006. This agreement has been extended to November 14, 2006. 17 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 4 Note 11 NON-CASH TRANSACTIONS Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows. During the nine month period ended September 30, 2006: - the Company repurchased 116,000,000 common shares by the issuance of a promissory note for $29,000. - the Company issued 1,500,000 common shares at $0.80 totalling $1,200,000 to a director of the Company pursuant to an employment agreement. - the Company issued 20,000 common shares for a financing fee valued at $19,600 pursuant to a promissory note. During the period ended September 30, 2005 - the Company issued 286,356 common shares at $0.20 per share pursuant to the conversion of the $57,271 convertible debentures. These transactions have been excluded from the statements of cash flows. Note 12 DISCONTINUED OPERATIONS During the nine months ended September 30, 2006, concurrent with the name change of the Company (Note 7), the Company announced its intention to shift its direction of business towards the acquisition, exploration and development of oil and gas projects. Previously, the Company's business was the collection, analysis and banking of personal DNA data. Assets, liabilities and results of operations from the Company's previous business have been disclosed as discontinued operations for the nine months ended September 30, 2006 and prior periods have been restated to conform with the current presentation. The balance sheets include the following amounts related to discontinued operations:
September 30, December 31, 2006 2005 _____________ ____________ Current assets of discontinued operations: Accounts receivable $ - $1,000 ===== ====== Current liabilities of discontinued operations: Unearned revenue $ - $7,500 ===== ======
18 Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (A Development Stage Company) Notes to the Financial Statements September 30, 2006 (Stated in US Dollars) (UNAUDITED) - Page 11 Note 12 DISCONTINUED OPERATIONS - (cont'd) Net income (loss) from discontinued operations are as follows:
June 30, 2000 (Date of Three months ended Nine months ended Inception) to September 30, September 30, September 30, 2006 2005 2006 2005 2006 ____ ____ ______ ____ _____________ Revenues License fees $ - $ - $ - $ - $ 24,000 Other income - - 8,500 480 10,180 ____ ____ ______ ____ ________ - - 8,500 480 34,180 ____ ____ ______ ____ ________ Administrative expenses Bad debt - - - - 1,000 Intellectual property acquisition costs - - - - 50,000 Marketing research and development - - - - 10,000 ____ ____ ______ ____ ________ - - - - 61,000 ____ ____ ______ ____ ________ Income (loss) from discontinued operations $ - $ - $8,500 $480 $(26,820) ==== ==== ====== ==== ======== Cash flows from discontinued operations are as follows: June 30, 2000 (Date of Nine months ended Inception) to September 30, September 30, 2006 2005 2006 _______ ______ _____________ Net income (loss) from discontinued operations $ 8,500 $ 480 $(26,820) Changes in non-cash working capital balances related to operations Accounts receivable 1,000 - - Unearned revenue (7,500) 7,500 - _______ ______ ________ Increase (decrease) in cash from discontinued operations $ 2,000 $7,980 $(26,820) ======= ====== ========
Note 13 COMPARATIVE FIGURES Certain of the comparative figures for the nine months ended September 30, 2005, have been reclassified to conform with the current periods presentation. 19 ITEM 2. MANAGEMENT'S PLAN OF OPERATION CAUTIONARY STATEMENT You should read the following discussion and analysis in conjunction with the financial statements and related notes thereto contained in Part I, Item 1 of this report. The information contained in this Quarterly Report on Form 10-QSB is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission, or SEC, including our Registration Statement on Form SB-2 filed with the SEC on November 1, 2006, that discuss our business in greater detail. This report contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "believe," "estimate," "anticipate," "intend," "continue," or similar terms, variations of such terms or the negative of such terms. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation and other circumstances affecting anticipated revenues and costs, and the risk factors set forth below under the heading "Risk Factors." We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. As used in this Form 10-QSB, "we," "us" and "our" refer to Radial Energy Inc., which is also sometimes referred to as the "Company." CORPORATE HISTORY Our company was incorporated in the State of Nevada on June 30, 2000, under the name of "All Printer Supplies.com." On April 17, 2003, we changed our name to "BV Pharmaceuticals, Inc." and became a provider of information and services in the areas of personal DNA collection, analysis, profiling, banking and DNA profile database maintenance. Effective as of April 3, 2006, through a statutory merger with our wholly owned subsidiary in which we were the surviving corporation, we changed our name to "Radial Energy Inc.", and we also changed our business plan as discussed below. GENERAL In March 2006, we began a new business plan concentrating on the acquisition, exploration, development, and production of domestic and international oil and gas projects. Radial Energy's primary focus is on identifying previously drilled but subsequently abandoned wells that encountered and/or tested live oil or natural gas indicating the presence of marketable hydrocarbons, reservoir, and trap. As of the date of filing of this report, we have acquired working interests in projects in South America and in Texas and are continuing to explore other opportunities in North America and Latin America. 20 ================================================================================ We are a development stage company that has not generated revenues from our current operations in the oil and gas industry. There is no historical financial information about Radial Energy upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our new core business or in any business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and in the exploration of oil and gas reserves. We have no assurance that future financing will be available on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue with our current business plan. If equity financing is available to us on acceptable terms, it could result in additional dilution to our existing stockholders. BUSINESS BLOCK 100, HUAYA ANTICLINE, PERU Pursuant to a Letter of Intent dated April 19, 2006, and a related Joint Operating Agreement effective as of May 11, 2006, we have acquired rights to a 20% working interest and 18% revenue interest in the Huaya Anticline Project, Block 100 oil prospect located in the Ucayali Basin, Peru. The project encompasses a structural closure of approximately 500 acres, with the potential for up to 41 well locations. We acquired the interest in the Block 100 project from Ziegler-Peru, Inc., an American company based in Texas, which sold the interest to us and will retain a 10 percent interest. The majority interest is owned by the concession-holder, Compania Consultora de Petroleo, S.A., a well-known consulting company based in Lima, Peru. While Compania Consultora is the operator of record for the concession, Ziegler-Peru will act as contract driller and operator for the block. As consideration for this interest, which is only for one well, we agreed to pay a total of $1,650,000, which funds also cover the acquisition of certain equipment to be used for drilling, testing, and evaluation of the first well. As of the date of the filing of this report, we have paid in full our total financial obligation for the first well. After drilling of the first well is complete, we will have the option to proceed with the project by funding the drilling, testing and evaluation of another two wells on the property for an additional $1,650,000, which funds are expected to cover the acquisition and installation of all production facilities required to bring the hydrocarbons produced to market. Thereafter, we will have the option to pay for our 20% working interest share of the development and operation of the project. In the event Radial Energy and the other participating parties decide that the project is not feasible, the equipment acquired will be sold and we will be entitled to 67% of the proceeds. A third-party geological assessment conducted by Gustavson Associates of Boulder, Colorado, a consultant contracted by Radial Energy, estimates that the Block 100 project, if successful, may have recoverable in place reserves between 15.3 and 29.5 million barrels of oil (MMBO). While management believes the prospect is a low-risk opportunity to discover and develop a field with production potential, there can be no assurance the prospect will achieve such potential. The first well is expected to be drilled during the fourth quarter of 2006, with production anticipated by year end. CHEROKEE COUNTY, TEXAS Pursuant to an Assignment Agreement dated June 27, 2006, we acquired all of the rights and obligations of Pin Petroleum Partners Ltd., a Canadian company, under three leasehold assignment agreements to properties located in Cherokee County, Texas (collectively, the "Cherokee Agreements") with Skyline Energy LLC, a company based in Texas. The prospects involve three separate exploratory oil and gas prospects, known as the Junction Prospect, the Northwest Jacksonville 21 ================================================================================ Prospect, and the Highway 79 Prospect. As consideration for the assignment, we agreed to pay Pin Petroleum Partners a total of $700,000 by October 25, 2006 along with a four percent overriding royalty interest from our share of net revenue interest. On September 29, 2006, we entered into an amendment to the Assignment Agreement with Pin Petroleum Partners extending the payment date to November 17, 2006. We have not yet made any payments for the assignment as of the date of this report. Prior to the assignment, Pin Petroleum Partners had provided to the operator of the prospects, MLC Operating, LP, $443,790 to cover the original estimates for the drilling and completion costs for the initial well on each of the three prospects. This pre-payment by Pin Petroleum Partners has been assigned to Radial Energy. The funds will cover our share of the estimated capital expenditures to drill the first test wells on each of the three prospects. If one or more of these initial wells results in a successful discovery, the operator may request additional funds to cover completion costs if the original funds do not cover the current costs of completion. For each of the three prospects, we hold a 30% working interest before payout of initial investment, and a 22.5% working interest after payout, with payout determined on a project basis. The Junction Prospect is located in northwestern Cherokee County, approximately five miles southwest of Jacksonville, Texas. This oil and natural gas prospect's leasehold covers approximately 500 acres. The Northwest Jacksonville Prospect leasehold covers approximately 350 acres located in northern Cherokee County. The Highway 79 Prospect is located in northwestern Cherokee County, one mile west of Jacksonville, Texas, and the prospect leases cover approximately 340 net acres. While calculations based on preliminary geological analysis, reservoir studies and interpretation estimate that the prospects have oil and natural gas production potential, there is no assurance that any such potential will be achieved. We have begun drilling and testing in the prospects. Our drilling and testing in the Highway 79 Prospect resulted in an unsuccessful test, and we will not continue to explore in that prospect. We will continue to explore in the Junction Prospect and the Jacksonville Prospect. BLOCK, MIDDLE MAGDALENA VALLEY OF COLOMBIA Pursuant to a binding letter of intent dated August 23, 2006, Maxim Well Services Ltd. ("Maxim"), a company with its principal place of business in Bogota, Colombia, we agreed to negotiate and enter into a joint operating agreement, the purpose of which is for Radial Energy to acquire a 20% working interest in the right to explore and develop oil reserves and production on the 9,000 hectare (22,239 acre) "Bosque Block" located in prolific Middle Magdalena Valley of Colombia. We will be required to contribute $2.2 million in cash in stages beginning on execution of the joint operating agreement. Three Hundred Fifty Thousand Dollars ($350,000) will be due upon signing the joint operating agreement and another $350,000 will be due sixty (60) days following the signing of the joint operating agreement. The remaining $1,500,000 will be due 15 days following any capital call made by Maxim at any time following the execution of the joint operating agreement. Until such time that we recoup $1,500,000 of our investment, we will receive a 33.33% participation in distributions. Following recoupment of $1.5 million of our investment, our interest will remain at 20 percent. The parties intend to enter into the joint operating agreement by November 22, 2006. If the parties fail to enter into the joint operating agreement by November 22, 2006, then Maxim will have no obligation to enter into the joint operating agreement or accept the investment from us on the terms expressed in the letter of intent. Further, if we fail to properly execute the joint operating agreement, we will be liable to Maxim for a termination fee of up to $200,000 as follows: (a) $50,000 if we terminate at any time on or before the date the Colombian government issues the appropriate authority to Maxim to begin operations at the site, (b) a total of $100,000 if we terminate following the date the Colombian government issues such authority, and (c) a total of $200,000 if we terminate more than thirty (30) days following the date the Colombian government issues such authority. 22 ================================================================================ ONGOING ACTIVITIES Additionally, management is currently investigating and in some cases is in negotiations with various parties in both the U.S. and Colombia to acquire both producing and prospective assets, but as of the date of this report had not reached formal agreement on any of these opportunities. DESCRIPTION OF PROPERTY The agreements relating to the Block 100 prospect entitle us to a 20% working interest in oil and gas leases covering approximately 500 acres in the Huaya Anticline Project, Block 100 oil prospect located in the Ucayali Basin, Peru. The leases have a primary term of 30 years from and after March 2004. Pursuant to the Assignment Agreement and our resulting rights under the Cherokee Agreements for each of the Junction Prospect, the Northwest Jacksonville Prospect, and the Highway 79 Prospect, we hold a 30% working interest before payout of initial investment and a 22.5% working interest after payout. The leases have primary terms of three years and are renewable so long as drilling operations occur during the primary terms. Our principal office is located at 1200 Smith Street, Suite 1600, Houston, Texas 77002. We also rent a single office space located at 225 Marine Drive, Blaine, Washington 98230. The monthly rent for the Houston office is approximately $1,300 and the monthly rent and incidentals for the Washington office is approximately $800. PLAN OF OPERATION Our business plan is to identify, acquire, and develop low-risk oil and gas exploration and development opportunities throughout North and South America, with a primary focus on identifying previously drilled but subsequently abandoned exploratory wells that encountered and/or tested live oil or natural gas. We are flexible in our approach and will pursue opportunities as they arise both in North America and in countries throughout Latin America that are friendly to foreign investments, where factors such as lower production taxes and positive government incentives provide for significant opportunities with low risk. We plan to become the operator of record in the majority of our future projects. To date, execution of our business plan has largely focused on acquiring prospective rights to oil and gas leases and properties. We intend to establish a going forward exploration and development plan. Since inception, we have funded our operations primarily from the private placement of common stock and warrants. Although we expect that, during the next 12 months, our operating capital needs will be met from our current economic resources and by additional private capital stock transactions, there can be no assurance that funds required will be available on terms acceptable to us or at all. Without additional financing, we expect that our current working capital will be able to fund our operations through the first half of 2007. If we are unable to raise sufficient funds on terms acceptable to us, we may be unable to complete our business plan. If equity financing is available to us on acceptable terms, it could result in additional dilution to our stockholders. As of the date of the filing of this report, we have two full-time employees, our Chief Executive Officer and our Chief Operating Officer. We do not expect any material changes in the number of employees over the next 12 months. However, if we are successful in our initial and any subsequent drilling programs, we may retain additional employees. We have relied on, and will continue to rely on, outside consultants for services. 23 ================================================================================ COMPETITORS The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial, and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations, and necessary drilling equipment, as well as for access to funds. There are other competitors that have operations in South America and the Texas area and the presence of these competitors could adversely affect our ability to acquire additional leases and rights to properties. GOVERNMENT REGULATIONS Our oil and gas operations are subject to various United States federal, state, and local governmental regulations. Matters subject to regulation include discharge permits for drilling operations, drilling and abandonment bonds, reports concerning operations, the spacing of wells, and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and gas wells below actual production capacity in order to conserve supplies of oil and gas. The production, handling, storage, transportation and disposal of oil and gas, by-products thereof, and other substances and materials produced or used in connection with oil and gas operations are also subject to regulation under federal, state, provincial and local laws and regulations relating primarily to the protection of human health and the environment. To date, expenditures related to complying with these laws, and for remediation of existing environmental contamination, have not been significant in relation to the results of operations of our company. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. RISK FACTORS An investment in our common stock is speculative and involves a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in this report, including financial statements and notes thereto of our company, before deciding to invest in our common stock. In addition, you should carefully review the "Risk Factors" set forth in our Registration Statement on Form SB-2 filed with the SEC on November 1, 2006 and hereby incorporated by reference. The risks described therein are not the only ones facing our company. Additional risks not presently known to us or that we presently consider immaterial may also adversely affect our company. If any of the following risks occur, our business, financial condition and results of operations and the value of our common stock could be materially and adversely affected. RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 From inception to September 30, 2006, we had a loss of $1,970,471. Of this amount, $379,470 was generated in the three-month period ended September 30, 2006 and $1,799,501 was generated in the nine-month period ended September 30, 2006, as compared to $4,321 and $25,907, respectively, for the comparable periods in 2005. Administrative expenses increased from $4,321 for the three-month period ended September 30, 2005 to $379,470 for the comparable period in 2006 and increased from $26,387 for the nine-month period ended September 30, 2005 to $1,817,408 for the same period in 2006. The costs expended for the three and nine months ended in 2006 include $39,063 and $68,580, respectively, for consulting fees; $34,505 and $76,162, respectively, for investor relations 24 ================================================================================ services; $67,493 and $84,944, respectively, for travel and related costs; $82,800 and $1,342,000, respectively, for executive compensation and benefits; $63,281 and $88,693, respectively, for professional fees; $17,460 and $46,610, respectively, for marketing management services; $5,097 and $7,419, respectively, for rent for office space; and $29,179 and $30,567, respectively, for interest and bank charges. During the comparable periods in 2005, we expended $425 and $425, respectively, for consulting fees; $24 and $2,588, respectively, for interest and bank charges; and $3,399 and $11,009, respectively, for professional fees. We are spending considerable time traveling in Latin America for our ongoing operations, especially in Peru and Colombia. We expect to continue to undertake trips to manage and represent our company during any operational activities occurring on existing assets, and to perform and manage all new business development activities, especially those relating to due diligence efforts for new projects under letters of intents or in various stages of negotiation. For this reason, operating expenses related to this effort are expected to be higher than the past through the end of 2006. Currently, we plan to have a representative present during the drilling of the first well on the Block 100 project, now scheduled to start mid-November. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2006, our total assets were $2,428,263, which included prepaid expenses of $7,857 and $1,980 in computer equipment. In addition, it included $2,418,426 we invested in the Anticline project and the Cherokee County project. Our total liabilities were $1,198,388, all of which were current, resulting in a deficiency in working capital of $1,190,531. As of December 31, 2005, our total assets were $2,211, all of which were current, and our total liabilities were $15,935. The increase in total assets is a result of an increase in cash from the sale of our equity units as part of a private placement which commenced in February 2006 from which we received total cash proceeds of $1,850,000. For a discussion on our investments to date with respect to our current exploratory projects, see also the discussion in the Business section above. Despite our net loss from continuing activities of $1,808,001 for the nine-month period ended September 30, 2006 and our investment and costs associated with our oil and gas exploration participations of $2,418,426, we have been able to obtain additional operating capital through private equity funding sources. Our Management's plan includes the continued development and eventual implementation of our business plan as discussed in the Plan of Operation section above. We have relied upon equity funding since inception. As of the date of this report, we have yet to generate any revenues from operations of our new core business. From inception to September 30, 2006, we have accumulated losses of $1,970,471 and expect to incur further losses in the development of our business, all of which casts doubt about Radial Energy's ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements at September 30, 2006. ITEM 3. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term 25 ================================================================================ is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods prescribed by the SEC. CHANGES IN INTERNAL CONTROLS There were no significant changes in our internal controls or in other factors that could materially affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken. 26 ================================================================================ PART II--OTHER INFORMATION ITEM 6. EXHIBITS 10.1 Letter of Intent by and between Radial Energy Inc. and Maxim Well Services Ltd. dated August 23, 2006. (Translated into English and filed pursuant to Rule 306 of Regulation S-T). 10.2 Amendment to Assignment Agreement by and between Radial Energy Inc. and Pin Petroleum Partners Ltd. dated September 29, 2006. 31.1 Certifications of the Chief Executive Officer provided pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certifications of the Chief Financial Officer provided pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certifications of the Chief Executive Officer and Chief Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 27 ================================================================================ SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RADIAL ENERGY INC. By: /s/ G. LEIGH LYONS ___________________________________________ G. Leigh Lyons President, Chief Executive Officer, and Chief Financial Officer (Principal Executive and Financial Officer) Date: November 14, 2006 28 ================================================================================ EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 10.1 Letter of Intent by and between Radial Energy Inc. and Maxim Well Services Ltd. dated August 23, 2006. (Translated into English and filed pursuant to Rule 306 of Regulation S-T). 10.2 Amendment to Assignment Agreement by and between Radial Energy Inc. and Pin Petroleum Partners Ltd. dated September 29, 2006. 31.1 Certifications of the Chief Executive Officer provided pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certifications of the Chief Financial Officer provided pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certifications of the Chief Executive Officer and Chief Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 29 ================================================================================ EX-10 2 ex10-1.txt EXHIBIT 10.1 EXHIBIT 10.1 Translated into English from the executed Spanish document and filed pursuant to Rule 306 of Regulation S-T. LETTER OF INTENT Between the undersigned, ALEXANDER ARELLANO SUAREZ, identified as his signature appears below, doing business as MAXIM WELL SERVICES LTDA, a legally formed partnership, principally domiciled in the city of Bogota, as stated in the annexed original certificate of existence and legal representation, issued by the Bogota Chamber of Commerce, dated one month prior to the execution of the present agreement, hereinafter the OPERATOR, on the one part, and, on the other part, RADIAL ENERGY INC, incorporated in Nevada, in the United States, represented by GREGORY LEIGH LYONS and OMAR HAYES, of legal age and identified as their respective signatures appear below, domiciled in Bellingham, Washington, United States, duly empowered to enter into and execute the present instrument, all of which is accredited by way of the annexed legal document, properly added and made an integral part of the present document, hereinafter the INVESTORS, having completed favorable negotiations to solidify the participation of the INVESTORS in the development of the E&P Bloque Bosques No. 014 contract dated April 21, 2006, its additions, clarifications, and/or modifications, hereinafter, and indistinctly, the CONTRACT or the PROJECT, which text is an integral part of the present document, which the INVESTORS declare they understand and/or accept, awarded to the OPERATOR by the NATIONAL AGENCY OF HYDROCARBONS of Colombia (ANH), hereinafter the AGENCY, to which the INVESTORS shall have access to participate in, through the ECONOMIC INVESTMENT stipulated below, having arrived at an understanding of the essential conditions of the business, to endorse the intention to formalize it through the JOINT OPERATING AGREEMENT, hereinafter the JOA, in the measure in which the terms are carried out and conditions formed in the present agreement, hereinafter the LETTER or the LETTER OF INTENT, which are stated in the following clauses. FIRST CLAUSE: OJBECTIVE: The objective of the business consists in the subscription of a JOA between the OPERATOR and the INVESTORS, that will permit the parties the joint execution of the CONTRACT awarded to the OPERATOR by the AGENCY, in exchange for that which the INVESTORS shall provide to the PROJECT in the total disbursement of TWO MILLION TWO HUNDRED THOUSAND AMERICAN DOLLARS (USD$2,200,000), which shall be applied in the form and under the conditions specified in the subsequent clauses. PARAGRAPH: The Terms in which the CONTACT was accepted by the OPERATOR, no discussion of which is admitted for dealing with an awarded contract, which pursuant to the Colombian legislation, is Law for the parties. In this way it is clear that, the object of the JOA that is subscribed to by the intervening parties as well as the investment here agreed to by the investors, relates directly with the goal established in the CONTRACT, according to which, the Colombian State granted to the OPERATOR the right to explore the area contracted and to exploit the Hydrocarbons of the property of the Colombian State that can be discovered in said area, and equally establishing that the OPERATOR will have 1 right to the Hydrocarbons produced from the area which corresponds to it, of which the INVESTORS shall have the percent participation that is established below. SECOND CLAUSE: VALUE OF THE INVESTMENT AND FORM OF PAYMENT. The sum that INVESTORS shall invest in the OPERATOR'S PROJECT is TWO MILLION TWO HUNDRED THOUSAND AMERICAN DOLLARS, which shall be paid in the following manner: 1) ONE MILLION FIVE HUNDRED THOUSAND AMERICAN DOLLARS, which shall be invested by the OPERATOR in the development of the PROJECT and shall be disbursed in its totality by the INVESTORS through the "cash call" system, in favor of the OPERATOR within fifteen (15) calendar days following the written "cash call" request, in the amounts determine therein, in the place and time that each "cash call" establishes, without prejudice to that which is particularly established by the JOA. It is clear that the present LETTER and each "cash call" or in its place the JOA, or both if necessary, constitute executive title to effectuate the performance of the obligations emanating from the present LETTER OF INTENT. 2) The value remaining, that is to say the sum of Seven Hundred Thousand American Dollars (USD $700,000) shall be applied to past costs of the PROJECT as capital recoupment, compensation and remuneration of the OPERATOR. The OPERATOR shall dispose of this payment without need for any other authorization and shall be paid by the INVESTORS in the follow manner: a) Fifty percent (50%), that is to say THREE HUNDRED FIFTY THOUSAND AMERICAN DOLLARS (USD $350,000) on the same date as the execution of the JOA, and b) the remaining fifty percent (50%), that is THREE HUNDRED FIFTY THOUSAND AMERICAN DOLLARS (USD $350,000) within sixty (60) days of the execution of the JOA. PARAGRAPH: THE JOA THAT FORMALIZES THE PRESENT NEGOTIATION SHOULD, AT A MINIMUM, INCLUDE THE CONDITIONS ESTABLISHED IN THIS LETTER OF INTENT. CLAUSE THIRD: INVESTORS' PERCENT PARTICIPATION. The disbursements made by the INVESTORS in favor of the OPERATOR under the terms established in the previous clause and in the JOA, shall give the INVESTORS the right to participate in the development of the PROJECT that is provided by the CONTRACT, its additions, clarifications and/or modifications, in the proportion of twenty percent (20%) of all its effects and requirements, rights and obligations, under the terms established in the JOA, including the risk factor and in the same proportion, the possibility of gain and/or loss. PARAGRAPH: Until the INVESTORS recoup the sum of ONE MILLION FIVE HUNDRED THOUSAND AMERICAN DOLLARS (USD $1,500,000) that corresponds to that part of the investment that the OPERATOR has earmarked for the development of the PROJECT as was agreed in number 1) of the Second Clause of this LETTER, the INVESTORS' percent participation shall be Thirty-three point Thirty-three percent (33.33%). It is understood that the percentage that is established here is strictly provisional and only until the established condition is met. Once the stated amount is recouped by the INVESTOR, his percent participation shall be Twenty percent (20%) as agreed. 2 PARAGRAPH TWO: The previous investment or about TWO MILLION TWO HUNDRED THOUSAND AMERICAN DOLLARS (USD $2,200,000) will be realized in accord with the Percent Participation as much from the OPERATOR as the INVESTORS. Also, the gains or benefits generated by the PROJECT shall be distributed in the same proportion in accord with the Percent Participation. CLAUSE FOURTH: EXCLUSIVITY: The OPERATOR grants to the INVESTORS a Sixty (60) calendar day term following the execution of this LETTER OF INTENT to proceed to execute the JOA, extendable an additional thirty (30) days, according to the decision of the OPERATOR, pursuant to INVESTORS' previous written request, five (5) calendar days prior to the expiration of the initial term, or, in the event of a proved fortuitous case or force majuer. Upon the expiration of the initial term or the extended term, in which they were to appear, having failed to execute the JOA due to fault attributable to the INVESTORS, which shall be presumed by the simple passage of time, the OPERATOR understands that the JOA was not possible, in which case he himself shall be released from agreeing to contracts with other sources of funds. The OPERATOR expects to impart in the present negotiation all the seriousness and transparency necessary to reach closing of the operation. CLAUSE FIFTH: DATE AND TIME TO EXECUTE THE JOA. The JOA by which performance of the present LETTER OF INTENT is completed, shall be executed by the PARTIES in the city of Bogota, prior to October 31, 2006, on Street 93B #12-30 office 203, the OPERATOR's offices, at 11 a.m. which signatures shall be submitted for authentication to a Notary. CLAUSE SIXTH: CONFIDENTIALITY. For the development of the objective of the present contract, independently of that which the parties particularly determine in the JOA, the INVESTORS obligate themselves to maintain and provide confidentiality, oral as well as written, to all information, relating to the PROJECT, received from the OPERATOR. In performance of the above, the INVESTORS obligate themselves with regard to access previously permitted to any of its employees or associates to the PROJECT material, that these same shall be informed of the terms of confidentiality contained in this LETTER, and shall be subject to it in its entirety, in such case the INVESTORS maintain their obligations of confidentiality. The PROJECT material will include any information, oral or written, supplied to the INVESTORS by the OPERATOR. Whatever report or information that is produced by the INVESTORS, based on the PROJECT material, or that is reflected or contained therein is also subject to the reserve of confidentiality. The INVESTORS shall be released from maintaining the reserve of confidentiality of the PROJECT material under the following cases: (I) when it is or becomes available to third parties or the general public, as a consequence distinct from the violation by the INVESTORS of the reserve of confidentiality contained in the present document, (II) when the information has been obtained by the INVESTORS without being subject to confidentiality, previous to its delivery by the OPERATOR, and (III) when it becomes available for INVESTORS in such a manner which it could not or should not be understand to be under the reserve of confidentiality with respect to the 3 information supplied. The INVESTORS obligate themselves to utilize the PROJECT material exclusively as support for the analysis and support for decision making, especially with respect to the present LETTER OF INTENT and only permit the access to such information to its employees and/or third parties, when strictly necessary. If the INVESTORS or one of their employees or associates are required to reveal the PROJECT material or any other related information, in relation to any legal proceeding or administrative investigation, the INVESTORS shall be released from complying with the reserve of confidentiality contained in the present document. To that effect, the INVESTORS shall notify the OPERATOR in writing of the judicial or administrative requirement no later than within five (5) days following its occurrence. As well as the obligations previously stated the INVESTORS pledge to carry out the present CONFIDENTIALITY CLAUSE in the determined cases, for a term of four (4) years from the signing of this LETTER. CLAUSE SEVENTH: RESPONSIBILITY FOR BREACH. The INVESTORS assume responsibility for the obligations contracted for as effected by the signing of the present LETTER OF INTENT, especially: A) The obligation to sign the JOA and B) the INVESTORS shall also respond for the losses and for any harm or damage which the OPERATOR may suffer as a consequence for the DISCLOSURE OF INFORMATION regarding any aspect of the PROJECT, which will cause the presumption of, besides fraud, violation of the confidentiality clause agreed to in the present LETTER. They shall be exempt from responsibility for judicial and administrative requests. PARAGRAPH: The breach of the LETTER in those areas detailed in the present clause, shall bring as a consequence to the INVESTORS, an economic sanction if the JOA is not signed and/or a violation of the obligations of confidentiality is presented, of: A) FIFTY THOUSAND AMERICAN DOLLARS (USD $50,000) from the date of the signing of the present LETTER until the presentation of the Act or other document on the part of the AGENCY that permits the commencement of the operations in the Campo Sogamoso, hereinafter the ACT. From the moment of the presentation of the Act the economic sanction, if the JOA is not signed and/or a violation of their obligations of confidentiality is presented, shall be: B) ONE HUNDRED THOUSAND AMERICAN DOLLARS (USD $100,000), up to the thirtieth (30th) day counted from the presentation of the ACT and C) TWO HUNDRED THOUSAND AMERICAN DOLLARS (USD $200,000), from the thirty-first (31st) day counted from the presentation of the ACT. The sums above shall be charged to the INVESTORS by way of penalty for their breach, without prejudice of any other available legal actions, for the payment of additional damages, without need for private or judicial requests, nor establishment of default, of which the PARTIES expressly renounce. To guaranty the performance of the present clause, the INVESTORS shall establish a POLICY OF PERFORMANCE with an insurance company recognized in Colombia, for the value that corresponds to one hundred percent (100%) of the value of the penalty herein established, for the term of one hundred days, and shall be established no later than ten (10) days after the date of the presentation of the ACT and delivered to the OPERATOR in its office. The OPERATOR is responsible to send the INVESTORS a copy of the ACT the same day of its receipt by way of electronic means and certified mail. 4 CLAUSE EIGHTH: DUE DILIGENCE. After the first business day following the execution of the present LETTER OF INTENT and until the signing of the JOA, the PARTIES here intervening shall complete a process of "DUE DILIGENCE", to determine the legal situation, commercial, financial and accounting of the OPERATOR and the PROJECT as well as the INVESTORS, so that the parties may determine the number and the specialty of the natural and legal persons that will participate in the process. The parties' representatives should submit themselves to the previous acceptance of the other party and should obtain authorization for each of them, prior to the realization of this work. To effect the above, the PARTIES promise among each other, to be at the disposal of each other, the designated and accepted persons, and conducive elements to that end. As well, to designate a representative to attend to the personnel requirements of the DUE DILIGENCE for each one of the PARTIES. During the time it takes to conduct the DUE DILIGENCE, each one of the PARTIES promises to submit to each other, the technical information, operational, legal, commercial, financial and accounting which are required. The diligence referred to in this clause grants liberty to the parties to have access to the information that it believes pertinent but is prohibited from making magnetic reproductions, imprints or any other kind of reproduction of the information to which it has access. CLAUSE NINTH: CONTRACTUAL DOMICILE. For the effects related to the present contract, the city of Bogota shall be the city of contractual domicile. CLAUSE TENTH: APPLICABLE LAW AND LANGUAGE. This LETTER OF INTENT is governed and interpreted in accordance with the laws of the Republic of Colombia. The official language in which the JOA shall be made and in which all communications relative to the same during its validity and for all effect, is the Spanish language but there will be an English translation. CLAUSE ELEVENTH: DIRECT ARRANGEMENT AND ABRITRATION. The Parties agree to resolve their differences through conciliation in the Chamber of Commerce of Bogota. To that effect, they will be provided a term of thirty (30) calendar days from the date in which any one of them requests this in writing of the other party. The communications may be sent by mail, fax or telegram at the address provided in this instrument. Once the time period has lapsed for the direct arrangement, the PARTIES shall submit any differences or disputes that may arise in relation to this contract, exclusively to a Tribunal of Arbitration organized in conformity with the rules of the Center for Merchant Arbitration and Conciliation of the Chamber of Commerce of Bogota. The tribunal of arbitration shall be comprised of an arbitrator, who is designated by mutual agreement of the PARTIES, who shall have a term of thirty (30) calendar days for this. Once the above has expired without an agreement for an arbitrator, one shall be designated by the Chamber of Commerce of Bogota, and whose acts shall 5 be governed by the rules of the Center and as provided in Columbian law. The corresponding decision should be stated in law. PARAGRAPH: Each one of the parties obligates itself to designate its corresponding arbitrator, within fifteen (15) business days following the date in which the Chamber of Commerce designates the arbitrator that it is required to name within the term of this clause. In the event either one of the parties does not designate the corresponding arbitrator within the term indicated, the breaching party shall expressly authorize that its designation be effectuated by the Center of Merchant Arbitration and Conciliation of the Chamber of Commerce of Bogota. CLAUSE TWELFTH: ASSIGNMENT. Neither party may assign, transfer, substitute, nor subrogate its rights and obligations incurred by virtue of this contract without prior written consent of the other party. Whatever attempt in doing so without written consent of the other party will be considered without effect. CLAUSE THIRTEENTH. COPIES. This contract is signed in two copies, each of which constitutes one original, with authentication of signatures by each party that signs. ADDRESSES: Each party's address, to which all necessary requests and correspondence for the fulfillment of this contract shall be sent, is as follows: FOR THE OPERATOR: MAXIM WELL SERVICES LTDA Attn: ALEXANDER ARELLANO SUAREZ Address: Street 93 B #12-30 Office 203 Bogota D.C., Colombia Telephone: +57-1-6218158 E-mail: MAXIMWELL@ETB.NET.CO FOR THE INVESTORS: RADIAL ENERGY INC. Attn: GREGORY LEIGH LYONS Address: 1313 East Maple St, Suite 223 Bellingham, Washington 98225 USA Telephone: +1-360-685-4200 E-mail: LYONS@RADIALENERGYINC.COM The above stated has been agreed to and is signed in the city of Bogota, on the twenty-third (23) day of the month of August, 2006. THE OPERATOR THE INVESTORS MAXIM WELL SERVICES LTDA RADIAL ENERGY INC /s/ ALEXANDER ARELLANO SUAREZ /s/ GREGORY LEIGH LYONS _____________________________ _______________________ Alexander Arellano Suarez Gregory Leigh Lyons 6 EX-10 3 ex10-2.txt EXHIBIT 10.2 EXHIBIT 10.2 AMENDMENT AGREEMENT THIS AGREEMENT (the "Amendment Agreement") is made and entered into on this 29th day of September, 2006: BETWEEN: PIN PETROLEUM PARTNERS LTD., a company incorporated under the laws of the Province of British Columbia, having an office address of Suite 2410, 650 West Georgia Street, Vancouver, British Columbia, Canada, V6B 4N7 (the "Assignor") AND: RADIAL ENERGY INC., a company organized under the laws of the State of Nevada, having an office at Suite 223, 1313 East Maple Street, Bellingham, Washington, USA, 98225 (the "Assignee") WHEREAS, the Assignor and the Assignee entered into an assignment agreement (the "Assignment Agreement") dated the 27th day of June, 2006; AND WHEREAS, the Assignment Agreement call for the payment, by the Assignee to the Assignor, of the sum of US$700,000 within ninety (90) days of the date of the Assignment Agreement; AND WHEREAS, the parties have agreed to extend the time for payment of the US$700,000 to November 17, 2006. NOW THEREFORE THIS AMENDMENT AGREEMENT WITNESSES THAT: 1. The Assignment Agreement is amended hereby such that section 4(a) is revised to read as follows: "(a) pay to the Assignor the sum of Seven Hundred Thousand Dollar ($700,000) in US funds on or before November 17, 2006; and" 2. With the exception of the amendment to section 4(a), the Assignment Agreement remains unamended and in full force and effect. 3. This Amendment Agreement may be executed in counterpart and by facsimile. IN WITNESS WHEREOF, the Assignor and the Assignee have executed this Amendment Agreement on the day and first year written above. PIN PETROLEUM PARTNERS LTD. RADIAL ENERGY INC. /s/ WILLIAM FRIESEN /s/ G. LEIGH LYONS _____________________________________ _______________________________ Per: William Friesen, President Per: G. Leigh Lyons, President EX-31 4 ex31-1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATIONS I, G. Leigh Lyons, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Radial Energy Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting. 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Dated: November 14, 2006 /s/ G. LEIGH LYONS _______________________________________ G. LEIGH LYONS PRESIDENT, CHIEF EXECUTIVE OFFICER, AND CHIEF FINANCIAL OFFICER (PRINCIPAL EXECUTIVE OFFICER) EX-31 5 ex31-2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATIONS I, G. Leigh Lyons, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Radial Energy Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting. 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Dated: November 14, 2006 /s/ G. LEIGH LYONS _______________________________________ G. LEIGH LYONS PRESIDENT, CHIEF EXECUTIVE OFFICER, AND CHIEF FINANCIAL OFFICER (PRINCIPAL EXECUTIVE OFFICER) EX-32 6 ex32-1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Radial Energy Inc. (the "Company") on Form 10-QSB for the quarterly period ended September 30, 2006, as filed with the Securities and Exchange Commission on November __, 2006 (the "Report"), I, G. Leigh Lyons, President, Chief Executive Officer, and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ G. LEIGH LYONS ________________________________________ G. Leigh Lyons President, Chief Executive Officer, and Chief Financial Officer November 14, 2006 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----