Unassociated Document

-----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, Dq8+6vCG1ccfCLmTkEtHpyySbWOz8kR5b/LpuM6ZJxKek2IkZA04pKmCvB3UuRdq 4f1ydgix+n/Ayk9NMC2lvQ== 0001144204-07-025626.txt : 20070515 0001144204-07-025626.hdr.sgml : 20070515 20070515140933 ACCESSION NUMBER: 0001144204-07-025626 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070331 FILED AS OF DATE: 20070515 DATE AS OF CHANGE: 20070515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIAL ENERGY, INC. CENTRAL INDEX KEY: 0001282496 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721580091 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-113726 FILM NUMBER: 07851728 BUSINESS ADDRESS: STREET 1: 225 MARINE DRIVE STREET 2: SUITE 210 CITY: BLAINE STATE: WA ZIP: 98230 BUSINESS PHONE: 360-332-0905 MAIL ADDRESS: STREET 1: 225 MARINE DRIVE STREET 2: SUITE 210 CITY: BLAINE STATE: WA ZIP: 98230 FORMER COMPANY: FORMER CONFORMED NAME: BV PHARMACEUTICAL INC DATE OF NAME CHANGE: 20040303 10QSB 1 v075208_10qsb.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

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 incorporation or organization)	(I.R.S. Employer Identification No.)

1200 SMITH STREET, SUITE 1600, HOUSTON, TEXAS 77002
(Address of principal executive offices)

Issuer's telephone number: (713) 353-4963

(Former address, if changed since last report)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Number of shares outstanding of Registrant's class of common stock as of May 15, 2007: 44,585,824

Page 1

FORWARD-LOOKING STATEMENTS

This Report on Form 10-QSB 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." In our Annual report on Form 10-KSB for the fiscal year ended December 31, 2006, filed on April 2, 2007.

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."

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

The forward-looking statements made in this report on Form 10-QSB relate only to events or information as of the date on which the statements are made in this report on Form 10-QSB. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

AVAILABLE INFORMATION

Radial Energy Inc. files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy documents referred to in this Report on Form 10-QSB that have been filed with the Commission at the Commission's Public Reference Room, 100 F Street, N.E., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC website at http://www.sec.gov

Page 2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Radial Energy Inc.

(A Development Stage Company)

Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

Page 3

Radial Energy Inc.
(A Development Stage Company)
Interim Balance Sheets
(Stated in US Dollars)
(Unaudited)

		March 31, 2007			December 31, 2006
ASSETS

Current
Cash	$	887,672		$	1,926,251
Prepaid expenses and deposit (note 6)		91,373			97,709
		979,045			2,023,960

Deferred acquisition costs (note 7)		41,801			28,667
Equipment, net		8,609			3,853
Oil and gas properties (note 3)		4,025,240			2,650,666

	$	5,054,695		$	4,707,146

LIABILITIES and SHAREHOLDERS' EQUITY

Current
Accounts payable and accrued liabilities (note 6)	$	1,251,137		$	541,944
Notes payable		350,000			350,000
		1,601,137			891,944

Convertible debentures, net of discount (note 4)		2,332,676			2,215,268

		3,933,813			3,107,212


STOCKHOLDERS' EQUITY

Capital stock (notes 5 and 9) 75,000,000 common stock authorized, $0.001 par value
44,585,824 shares issued and outstanding		44,586			44,586
Additional paid in capital - shares		2,250,808			2,250,808
Additional paid in capital - warrants		2,291,552			2,291,552
Additional paid in capital - convertible debentures		860,235			860,235
Deficit accumulated prior to development stage		(194,472	)		(194,472
Deficit accumulated during development stage		(4,131,827	)		(3,652,775

		1,120,882			1,599,934

	$	5,054,695		$	4,707,146

The accompanying notes are an integral part of these financial statements.

Page 4

Radial Energy Inc.
(A Development Stage Company)
Interim Statements of Operations
For the Periods Ended
(Stated in US Dollars)
(Unaudited)

		For the three months ended March 31,						Cumulative from April 1, 2006 (Date of Development Stage)
		2007			2006			to March 31, 2007
Expenses
Amortization		313			-			600
Consulting fees		-			13,954			21,466
Executive compensation and benefits (note 6)		85,200			-			1,516,400
Filing and transfer fees		7,808			1,981			27,569
Interest and bank charges		12,225			473			54,355
Interest and financing fees on convertible debentures (note 4)		117,408			-			1,452,011
Investor relations		50,797			10,000			199,890
Marketing, advertising and promotion		20,168			-			103,298
Office and administrative		60,406			2,713			162,633
Professional fees		61,372			6,868			293,983
Travel		61,155			5,420			182,829
Loss before other items		(476,852	)		(41,409	)		(4,015,034	)

Other items
Impairment of oil and gas properties (note 3)		(2,200	)		-			(116,793	)
Gain on note payable forgiven		-			9,407			-
Not loss from continuing operations		(479,052	)		(32,002	)		(4,131,827	)

Income from discontinued operations		-			8,500			-
Not loss for the period	$	(479,052	)	$	(23,502	)	$	(4,131,827	)


Loss per share from continuing operations - basic and diluted		(0.01	)		0.00

Income per share from discontinued operations - basic and diluted		0.00			0.00

Weighted Average Shares Outstanding		44,585,824			87,910,268

The accompanying notes are an integral part of these financial statements.

Page 5

Radial Energy Inc.
(A Development Stage Company)
Interim Statement of Shareholders' Equity (Deficiency)
For the period from April 1, 2006 [Date of Development Stage] to March 31, 2007
(Stated in US Dollars)
(Unaudited)

														Accumulated			Accumulated
														Deficit during			Deficit Prior to			Total
	Common Stock						Additional Paid-In Capital							Development			Development			Stockholders'
	Shares			Amount			Shares			Warrants		Debentures		Stage			Stage			Equity

Balance, at inception	-		$	-		$	-		$	-	$	-	$	-		$	-		$	-
Stock issued 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
Stock issued for cash at $0.0025	27,108,400			27,108			40,663													67,771
Stock issued for cash 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
Stock issued for cash 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	)
Stock issued for 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	)
Stock returned to treasury	(116,000,000	)		(116,000	)		87,000													(29,000	)
Stock issued for executive compensation at $0.80	1,500,000			1,500			1,198,500													1,200,000
Stock issued for loan fee at $0.98	20,000			20			19,580													19,600
Stock issued for cash at $0.25	8,000,000			8,000			1,087,048			904,952										2,000,000
Finders' fees							(147,500	)												(147,500	)
Convertible debentures (note 4)										1,386,600		860,235								2,246,835
Net loss for the year														(23,502	)		(3,652,775	)		(3,676,277	)
Balance, December 31, 2006	44,585,824			44,586			2,250,808			2,291,552		860,235		(194,472	)		(3,652,775	)		1,599,934
Net loss for the period																	(479,052	)		(479,052	)
Balance, March 31, 2007	44,585,824			44,586			2,250,808			2,291,552		860,235		(194,472	)		(4,131,827	)		1,120,882

The accompanying notes are an integral part of these financial statements.

Page 6

Radial Energy Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
For the Periods Ended
(Stated in US Dollars)
(Unaudited)

		For the three months ended March 31,						Cumulative from April 1, 2006 (Date of Development Stage) to
		2007			2006			March 31, 2007

Cash Flows from (used in) Operating Activities
Net loss from operations	$	(479,052	)	$	(23,502	)	$	(4,131,827	)
Items not affecting cash:
- amortization		313			-			600
- gain on note payable forgiven		-			(9,407	)		-
- impairment of oil and gas properties		2,200			-			116,793
- stock issued for executive compensation		-			-			1,200,000
- interest accrued for convertible debentures		117,408			-			1,079,511
- stock issued for financing fee		-			-			19,600
Changes in non-cash working capital balances related to operations:								-
- accounts receivable		-			1,000			-
- prepaid expenses and deposits		6,336			(10,011	)		(81,362	)
- accounts payable and accrued expenses		709,193			9,453			1,233,656
- unearned revenue		-			(7,500	)		-

Cash Flows - Operating Activities		356,398			(39,967	)		(563,029	)

Cash flows from (used in) Investing Activities
Acquisition of equipment		(5,069	)		-			(9,209	)
Oil and gas properties		(1,376,774	)		-			(4,142,033	)
Deferred acquisition costs		(13,134	)		-			(41,801	)

Cash Flows - Investing Activities		(1,394,977	)		-			(4,193,043	)

Cash flows from Financing Activities
Proceeds from notes payable		-			(20,000	)		350,000
Proceeds from convertible debentures		-			-			3,500,000
Shares subscribed		-			250,000			-
Proceeds from issue of common stock		-			-			1,602,500

Cash Flows - Financing Activities		-			230,000			5,452,500


Net increase (decrease) in cash		(1,038,579	)		190,033			696,428

Cash, beginning of period		1,926,251			1,211			191,244

Cash, end of period	$	887,672		$	191,244		$	887,672


SUPPLEMENTAL NON-CASH DISCLOSURES

Shares issued for debt		-			-			19,600
Shares issued for executive compensation		-			-			1,200,000
Shares repurchased by the issuance of a promissory note		-			29,000			-

The accompanying notes are an integral part of these financial statements.

Page 7

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

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 Company’s December 31, 2006 audited financial statements.

The results of operations for the three months ended March 31, 2007 are not indicative of the results that may be expected for the full year.

2.	Nature and continuance of operations

The Company was incorporated in the State of Nevada, United States of America, on June 20, 2000 under the name All Printer Supplies.com. On April 17, 2003, the Company changed its name to BV Pharmaceutical, Inc., and on March 29, 2006, the Company changed its name to Radial Energy Inc. In April 2006, the Company effected a change in business and commenced concentrating on the acquisition, exploration, development and production of American and international oil and gas projects. The Company is listed on the Over-the-Counter Bulletin Board under the symbol RENG.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next 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 March 31, 2007, the Company had not yet achieved profitable operations, has accumulated losses of $4,326,299 since its inception, has a working capital deficiency of $622,092 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 expects to continue to incur substantial losses and will require substantial capital to execute its business plan and does not expect to attain profitability in the near future. Since its inception, the Company has funded operations through short-term borrowings and equity investments in order to meet its strategic objectives. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation.

Page 8

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

3. Oil and gas properties

	March 31, 2007										December 31, 2006
	United States			Peru		Colombia		Total			United States			Peru		Colombia		Total

Unproved properties	$	617,986		$	2,699,022	$	825,025	$	4,142,033		$	604,693		$	1,689,653	$	470,913	$	2,765,259

Less:impairement		(116,793	)		-		-		(116,793	)		(114,593	)		-		-		(114,593	)
	$	501,193		$	2,699,022	$	825,025	$	4,025,240		$	490,100		$	1,689,653	$	470,913	$	2,650,666

a.	Huaya Anticline, Peru

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 was complete, the Company had 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.

If at any time during the project the Company and the transacting parties decide not to proceed with the project, the equipment acquired will be sold and the Company will be entitled to 67% of the proceeds.

On January 31, 2007, the Company acquired an additional 3% working interest in the project for cash consideration of $450,000 and amended the buy in price of the second and third wells on the property to $900,000 and $650,000, respectively for consideration of the Company advancing an additional $100,000 to cover cost overruns on the first well.

By an Amendment Agreement dated March 30, 2007, the buy in consideration for the second and third wells on the property are due as follows:

By March 30, 2007	$	350,000	(accrued and paid subsequent to March 31, 2007)
Upon spudding of the second well		350,000
Upon completion of surface casing on second well		250,000
Upon decision to proceed with the third well		600,000	($50,000 has been paid	)

	$	1,550,000

During the three months ended March 31, 2007, the Company incurred $59,370 in exploration costs.

Page 9

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

3.	Oil and gas properties - (cont’d)

b. Cherokee County, Texas, USA

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 paid $700,000 with the assignor 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. The Company also incurred an additional $6,124 in exploration costs.

In December 2006, the Company received a refund of $238,673, net of joint operating costs, for capital expenditures not incurred on the first well drilled as this well was abandoned.

During the three months ended March 31, 2007, the Company incurred $1,092 in exploration costs.

c. Bosques Block, Columbia

By Letter of Intent dated August 23, 2006 and JOA dated December 2, 2006, the Company acquired a 20% working interest in the right to explore and develop oil reserves and production on the nine hectare property located in the Middle Magdalena Valley of Columbia, referred to as Bosques Block.

The Company is required to contribute $2,200,000 as follows: i) $350,000 upon signing the JOA; ii) $350,000, 60 days following the execution of the JOA, and $1,500,000 upon receiving cash calls from the operator. The Company will receive 33.33% participation in distributions until payout of $1,500,000 of its investment, after which the Company’s interest will be 20%.

In the event the Company fails to forward payment to the Operator for cash calls, the JOA shall be considered terminated and the interest held by the Company will revert to the operator.

At March 31, 2007, the Company had not yet disbursed the first and second payments as required pursuant to the Joint Operating Agreement due to a delay in the operator obtaining the required permits from the Colombian government, but has recorded this commitment as part of its accrued liabilities. During the three months ended March 31, 2007 the Company incurred $4,113 in exploration costs.

4.	Convertible debentures

On October 2, 2006, the Company entered into a securities purchase agreement to issue up to $5,000,000 of secured convertible debentures. The Company is to pay the purchaser a commitment fee of 10% of $5,000,000, which shall be paid proportionately upon each disbursement. In addition, the Company paid the purchaser a non-refundable fee of $22,500 for structuring and due diligence in connection with this transactions.

On October 2, 2006, the Company received $2,000,000, less the 10% fee and $41,250 for legal and structuring fees, and on November 2, 2006, the Company received a further $1,500,000 less the 10% fee and $40,000 for legal costs, with the remaining $1,500,000 to be funded within three business days after a registration statement for this debenture was declared effective by the Securities and Exchange Commission (“SEC”).

Page 10

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

4.	Convertible debentures - (cont’d)

The debentures bear interest at 7.0% per annum, are due on October 2, 2009, 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 are 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 debentures contain a provision whereby no holder is able to convert any part of the debenture 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 reserved 27,333,333 common shares for issuance pursuant to debentures issued under the Securities purchase agreement. 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%.

Pursuant to the securities purchase agreement, the Company entered into a freestanding investor registration rights agreement on October 2, 2006. Under the terms of this agreement, the Company filed a registration statement on November 1, 2006 for 13,333,333 common shares underlying the debentures and warrants. The Company had the obligation to use their best efforts to have the registration statement declared effective by the SEC by March 1, 2007. Further, the Company had the continuing obligation to keep the registration statement continuously effective for a period of two years or until all of the securities had been sold by the purchaser. Failure to meet this obligation would result in the Company incurring liquidated damages in the amount of 1% of the liquidated value of the debentures for each 30 day period after the scheduled effective date. In no event shall the liquidated damages exceed 20% of the aggregate purchase price for the purchaser.

The Company evaluated the free-standing investor registration rights agreement and concluded that it meets the definition of a derivative instrument under SFAS 133 “Accounting for Derivative Instruments and Hedging Activities”. The fair value of this derivative liability is immaterial based on a probability-weighted cash flow evaluation of its terms.

The debentures are 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 certain shareholders delivered in the form of a stock certificate in the name of the Company, to be held in escrow. Accordingly, 7,672,000 shares or common stock have been pledged and are held in escrow.

Pursuant to the securities purchase agreement, the Company issued to the purchaser 3,333,333 stock purchase warrants exercisable at $0.75 per share, 2,500,000 stock purchase warrants exercisable at $1.00 per share and 2,333,333 stock purchase warrants exercisable at $1.50 per share. These warrants expire on October 2, 2011. The Company is obligated to issue to the purchaser an additional 1,000,000 stock purchase warrants exercisable at $1.50 per share when the final funding is received, exercisable for a term of five years from the date of issuance.

Page 11

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

4.	Convertible debentures - (cont’d)

The Company has the option to force the purchaser to exercise some of the warrants within five days following a 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 by a stated amount between 35-60%. 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 preceding five day period.

An amount of $860,235 has been recorded in additional paid-in capital at December 31, 2006, for the fair value of the beneficial conversion feature of the debentures and $860,235 has been amortized into income as interest on convertible debentures. The convertible debentures are presented net of a discount of $1,279,517 at March 31, 2007, representing the unamortized relative fair value of the detachable warrants issued in connection with the $2,000,000 debenture. This discount is being amortized to interest expense over the stated term of the debenture. During the three months ended March 31, 2007, the Company accreted $56,996 of the discount in relation to the debentures.

On March 1, 2007, the Company announced it was negotiating an agreement to redeem the $3,500,000 convertible debentures at a redemption premium of 18% of the principal amount, and will be canceling the remaining $1,500,000 debenture. Under the terms of the proposed agreement, the purchaser would have the right to retain the share purchase warrants issued in connection with this financing and the Company would have no obligation to pay liquidating damages under the investor registration rights agreement. Final terms of the cancellation are subject to a definitive agreement.

At March 31, 2007, the Company was in default under the registration rights agreement as it had withdrawn its registration statement on Form SB-2 filed on November 1, 2006, and amended on February 21, 2007.

5.	Capital stock

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.

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.

Page 12

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

5.	Capital stock - (cont’d)

Stock Purchase Warrants:

At March 31, 2007, 16,166,666 warrants were outstanding, as follows:

	# of Warrants Issued		Expiry		Weighted Average Exercise Price		Number Outstanding as at December 31, 2006 and March 31, 2007		Weighted Average Remaining Contractual Life (in years)

Issued, July 21, 2006		8,000,000		4-Aug-08	$	0.30		8,000,000		1.35

Issued, October 2, 2006		3,333,333		1-Oct-11	$	0.75		3,333,333		4.51

Issued, October 2, 2006		2,500,000		1-Oct-11	$	1.00		2,500,000		4.51

Issued, October 2, 2006		2,333,333		1-Oct-11	$	1.50		2,333,333		4.51

		16,166,666			$	0.67		16,166,666		2.95

6.	Related party transactions

During the three months ended March 31, 2007, the Company incurred $85,200 (2006: $nil) in executive compensation and benefits to directors of the Company.

Included in prepaid expenses and deposit at March 31, 2007 is $29,219 (December 31, 2006: $33,400) paid to directors of the Company for prepaid salaries and for advances for expenses to be incurred on behalf of the Company.

Included in accounts payable at March 31, 2007 is $23,004 (December 31, 2006: $6,762) due to directors of the Company for expenses incurred on behalf of the Company.

7.	Commitments - Notes 3, 4, 5 and 9

On March 2, 2007, the Company entered into a Memorandum of Understanding (“MOU”) whereby the Company would acquire all the issued and outstanding shares of Rancho Hermoso S.A., a privately held Columbian corporation engaged in the exploration and production of oil and gas within the republic of Columbia. The terms of the acquisition are subject to the parties entering into a definitive Share Purchase Agreement. At March 31, 2007, the Company had incurred related acquisition costs totaling $41,801;

8.	Comparative Figures

Certain of the prior year period’s comparative figures for the three months ended March 31, 2007 and for the period from April 1, 2006 (date of Development Stage) to March 31, 2007 have been reclassified to conform to the presentation adopted in the current period.

Page 13

Radial Energy Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

March 31, 2007

(Stated in US Dollars)

(Unaudited)

9.	Subsequent Events

On April 20, 2007, the Company engaged Knight Capital Markets LLC to act as the Company’s exclusive advisor and placement agent in connection with the private placement of the Company’s securities until April 20, 2008. The placement is to be completed on a best effort basis and be comprised of equity, debt and/or other securities of the Company for gross proceeds of not less than $5,000,000. Pursuant to the terms of the engagement, Knight Capital Markets LLC will receive a cash consideration of 6% of gross proceeds of the offering and a two-year agent’s warrant to purchase 6% of the number of shares issued under the placement. In addition, Knight Capital Markets LLC will be entitled to further consideration of 1% of the gross proceeds of the offering in cash and two year warrants to purchase 1% of the number of shares issued under a lead placement arrangement. A non-refundable payment of $10,000 is due upon execution of this agreement.

Page 14

ITEM 2. MANAMEGMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

Our company was incorporated in the State of Nevada on June 20, 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 March 29, 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.

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. Radial Energy identifies, evaluates, acquires and develops oil and natural gas reserves in investor-friendly countries in the Americas, initially targeting overlooked or under-developed reserves that are under the radar of the majors and out of the reach of the small independents and, with the establishment of operating infrastructure in each country, transitioning to the development of higher reward, company-operated exploration and development opportunities.

Radial Energy focuses on historically productive regions and on situations where known oil and gas reserves are being underexploited. In certain regions of the Americas, we will bring North American drilling techniques, specialized technology and operational expertise to fully exploit those resources. We operate in a niche business environment between large multinational oil companies and under-funded, unqualified independent companies.

During the fiscal year ended December 31, 2006, we acquired working interests in projects in South America and in Texas and are continuing to explore other opportunities in North America and Latin America.

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 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 retains 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. On January 31, 2007 the Company entered into an agreement with Compania Consultora de Petroleo, S.A. and Zeigler-Peru, Inc., which modified certain terms in the Letter of Intent dated April 19, 2006 and the Joint Operating Agreement dated May 11, 2006. According to the January 2007 agreement, the Company will advance an additional $450,000 to increase the working interest to 23% and revenue interest to 20.7%. The Company has now advanced a total of $2,699,000 towards the drilling, testing, and completion of 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 $1,550,000, 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 23% 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 currently being drilled, with production anticipated by year end.

Page 15

Drilling Activities

In November 2006, drilling of the Huaya 100-1X well commenced, and reached a depth of 235 feet before experiencing mechanical problems. Upon completion of repairs, drilling resumed in February 2007 and the Company announced that the Huaya 100-1X well reached final total depth of 926 feet on March 17^th, 2007, and was logged by Schlumberger on March 18, 2007. The operator intends on casing the Huaya 100-1X well upon arrival of 4 ½ casing pipe with a production test following shortly thereafter.

On April 27, 2007 drilling of the Huaya 100-2X well commenced, and reached a total depth of 305.1 meters on May 3, 2007. Resistivity and Neutron-Density logs were run from 302.5 to 61.7 meters and Gamma Ray to surface. The target Vivian formation was found at 255.1 meters, 3.7 meters above the oil-water contact established in the Huaya 100-1X and 4X wells. The Huaya 100-2X well was cased and cemented on May 4, 2007 and a production test is expected to commence shortly.

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 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. On November 20, 2006, the Company paid the full amount of $700,000 owed to PIN Petroluem Partners Ltd. 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 was assigned to Radial Energy pursuant to the Assignment Agreement dated June 27^th, 2006. 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.

In November 2006 Freedom Resources, Inc., which owns a majority working interest in all three exploratory wells, notified us that they do not intend to drill the remaining two prospects. We requested reimbursement of the prepaid drilling expenses paid to the operator and received the remaining balance of $238,672.52 on November 30^th, 2007.

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 intend to continue to explore in the Junction Prospect and the Jacksonville Prospect.

Bosques Block, Middle Magdalena Valley, Colombia

In the event the Company fails to forward payment to the Operator for cash calls, the JOA shall be considered terminated and the interest held by the Company will revert to the operator.

At March 31, 2007, the Company has not disbursed the first payment, has accrued for the second payment and has incurred $121,398 in exploration costs.

Page 16

RESULTS OF OPERATIONS

The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of the Company should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 filed on April 2, 2007.

Limited Operating History

There is limited historical financial information about our company upon which to base an evaluation of our future performance. Our company has yet to generate revenues from operations. We cannot guarantee that we will be successful in our business. We are subject to risks inherent in a fast growing company, including limited capital resources, possible delays in product development and manufacturing, and possible cost overruns due to price and cost increases. There is no assurance that future financing will be available to our company on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

As discussed above, in 2006, we effected a change in our business focus to the exploration and development of oil and gas assets, from DNA sampling and banking services. Due to the significant changes, part of our results for the year ended December 31, 2006 and 2005 are being reported as discontinued operations, and we believe that a comparison of results of operations for the quarter ended March 31, 2007 and March 31, 2006 should not be relied on as an indication of future performance.

We have financed our operations since inception primarily through private sales of securities. As of March 31, 2007, we had $887,672 in cash, and working capital deficit of $622,092.

Three month period ended March 31, 2007

Expenses
Corporate development and promotion			20,168
Executive compensation			85,200
Exploration costs			2,200
Financing and finder's fees			117,408
Professional fees			61,372
Other, general and administrative			192,704

Loss from continuing operations			479,052

Loss (income) from discontinued operations			-


Net loss			479,052

Revenues

For the quarter ended March 31, 2007, we had no revenues from our continuing operations. We expect to start earning revenues in the second half of 2007, once we have successfully drilled and tested the Block 100 project in Peru. Our future revenues will depend not only on successful drilling activities, but also on our ability to identify and acquiring producing properties.

Exploration costs

In October 2006, the Company entered into a letter of intent 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. After assessing certain risks and economic variables related to the Wasatch/Mesa Verde formation and the general area geologically as a potential investment for ongoing potential hydrocarbon development, as well as taking into consideration Management's focused agenda to develop assets with high reward potential, Management elected to allow the letter of intent to lapse. The Company has written-off the $114,593 in finders’ fees and geological consulting fees it incurred during the year ended December 31, 2006, and another $2,200 during the quarter ended March 31, 2007.

Page 17

Expenses and general and administrative expenses

During the quarter ended March 31, 2007, the Company incurred total expenses from continuing operations of $479,052. These expenses were related mainly to executive compensation and to financing activities, such as $117,408 in interest and accretion of discount related to convertible debentures. Other expenses were incurred in relation to activities associated with maintaining a public listing, such as communication with shareholders, legal and accounting fees, as well as corporate development and promotion.

The anticipated expenditures for the Company are described elsewhere. Readers should not assume that expenses or other cash flows in this period are indicative of future periods as the Company is in the early exploration stage.

Discontinued Operations

During the quarter ended March 31, 2007, no revenue (2006 - $8,500) were reported in discontinued operations. Amounts related to discontinued operations included in prior period financial statements presented herein have been reclassified to conform to the current period presentation.

Development stage

The Company complies with Financial Accounting Standard Board Statement No. 7 the Securities and Exchange Commission Act Guide 7 for its characterization of the Company as a Development Stage Company. For the purpose of providing cumulative amounts for the statements of operations and cash flows, these amounts consider only those losses for the period from the Company’s new exploration stage activity effective April 1, 2006.

Net Loss

Our net loss was $479,052 for the quarter ended March 31, 2007, as compared to $23,502 in 2006. The net loss reflects our expenses relating to our financings, cost of communication with shareholders, legal and accounting fees, corporate development and promotion, as well as executive compensation and office expenses. These expenses have been incurred ahead of our ability to recognize revenues from our new strategy.

Liquidity and Capital Resources

As of March 31, 2007, we had cash of $887,672, and working capital deficiency of $622,092. During the quarter ended March 31, 2007, we funded our operations from the proceeds of private sales of equity and convertible debentures, which took place in the last quarter of fiscal 2006. We believe our current financing activities will provide sufficient working capital to fund our operations for at least the next 9 months. Changes in our operating plans, increased expenses, additional acquisitions, or other events, may cause us to seek additional equity or debt financing in the future.

For the quarter ended March 31, 2007, we had positive cash flows from operations of $356,398. Net cash from operating activities reflected $6,336 in prepaid expenses and deposits and an increase in accounts payable of $709,193. Investment activities used $1,394,977 of cash during the quarter, which was primarily related to the acquisition of oil and gas assets.

We had no financing activities during the quarter ended March 31, 2007.

Our current cash requirements are significant due to the exploration and development of our current prospects. During the second quarter of our fiscal year 2007, we expect to need significant cash as we will be required to advance additional funds to complete the development of the Block 100 prospect in Peru. Accordingly, we expect to continue to use cash to fund operations for at least fiscal 2007 as we expand our asset base and fund exploration of our properties.

Recent Financings

Notes payable

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. At March 31, 2007, $21,534 in interest was accrued in relation to this note.

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. At March 31, 2007, $7,989 in interest was accrued in relation to this note.

Page 18

Convertible debentures

On October 2, 2006, the Company entered into a securities purchase agreement to issue up to $5,000,000 of secured convertible debentures.

At March 31, 2007, the Company accrued $112,575 in interest in relation to the debentures.

The Company determined that the free-standing investor registration rights agreement meet the definition of a derivative instrument under SFAS 133 “Accounting for Derivative Instruments and Hedging Activities”. The fair value of this derivative liability is immaterial based on a probability-weighted cash flow evaluation of its terms.

An amount of $860,235 has been recorded in additional paid-in capital at December 31, 2006, for the fair value of the beneficial conversion feature of the debentures and $860,235 was amortized into income as interest on convertible debentures. The convertible debentures are presented net of a discount of $1,279,517 at March 31, 2007, representing the unamortized relative fair value of the detachable warrants issued in connection with the $2,000,000 debenture. This discount is being amortized to interest expense over the stated term of the debenture. At March 31, 2007, the Company accreted $107,083 of the discount in relation to the debentures.

On March 1, 2007, the Company announced it was negotiating an agreement to redeem the $3,500,000 convertible debentures at a redemption premium of 18% of the principal amount, and will be canceling the remaining $1,500,000 debenture. The Company would have no obligation to pay liquidating damages under the investor registration rights agreement. Final terms of the cancellation are subject to a definitive agreement.

At March 31, 2007, the Company is in default under the registration rights agreement as it has withdrawn its registration statement on Form SB-2 filed on November 1, 2006, and amended on February 21, 2007.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management of our company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. Our significant accounting policies are discussed in Note 2 to our consolidated financial statements for the fiscal year ended December 31, 2006 included in this Report. We have identified the following accounting policies, described below, as the most important to an understanding of our current financial condition and results of operations.

Development Stage

The Company complies with Financial Accounting Standard Board Statement (“SFAS”) No. 7 for its characterization of the Company as a Development Stage Company. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. For the purpose of providing cumulative amounts for the statements of operations and cash flows, these amounts consider only those losses for the period from the Company’s new development stage activity effective April 1, 2006.

Page 19

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.

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproven properties within the cost centre.

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 relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre. Royalties paid net of any tax credits received are netted with oil and gas sales.

Impairment of Long-lived Assets

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, the carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. Oil and gas properties accounted for using the full cost method of accounting, a method utilized by the Company, is excluded from this requirement, but will continue to be subject to the ceiling test limitations.

Accounting for Convertible Instruments

When the Company issues convertible instruments with detachable instruments, the proceeds of the issuance are allocated between the convertible instrument and other detachable instruments based on their relative fair values pursuant to Emerging Issues Task Force (“EITF”) Issue No. 00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments”. The resulting discount of the convertible instrument is amortized into income as interest expense over the term of the convertible instrument.

When the Company issues convertible debt securities with a non-detachable conversion feature that provides for an effective rate of conversion that is below market value on the commitment date, it is known as a beneficial conversion feature (“BCF”) and pursuant to EITF Issue No. 98-5 “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” and EITF Issue No. 00-27, the conversion feature of the security that has characteristics of an equity instrument is measured at its intrinsic value at the commitment date and is recorded as additional paid in capital. A portion of the proceeds of the security issued is allocated to the conversion feature equal to its intrinsic value to a maximum of the amount allocated to the convertible instrument. The resulting discount of the debt instrument is amortized into income as interest expense over the conversion feature’s vesting period.

Plan of Operation

Our future operations are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to roll out our business plan. If not, we will likely be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy our working capital and other cash requirements.

We continue to operate with very limited administrative support, and our current officers and directors continue to be responsible for many duties to preserve our working capital.

Page 20

Projected Expenditures Over The Next 12 Months

The following chart provides an overview of our budgeted expenditures by major area of activity, for the next 12 months

General and Administration Expenses		$1,200,000
Block 100 - Peru		$3,000,000
Bosques Block - Colombia		$1,500,000
Cherokee County - Texas		$1,000,000
Repayment of Cornell Capital Partners, LP Debenture		$4,500,000

The amounts noted above reflect our current cash resources and assume that we will raise, through equity or other financing, approximately $10,000,000 in the next 12 months. There can be no assurance that the Company will be successful in raising these additional funds and, if the Company is unsuccessful in raising these additional funds, its plans for expanding operations and business activities may have to be curtailed.

Other than as detailed above, we do not anticipate making any major purchases of capital assets in the next 6 months, or conducting any large-scale research and development. We believe we have sufficient cash resources to satisfy our needs over the next twelve months. Our ability to satisfy cash requirements thereafter will determine whether we achieve our business objectives, including but not limited to drilling of the block 100 well in Peru and the closing of the intended acquisition of Rancho Hermoso S.A. in Bogota, Colombia. Should we require additional cash in the future, there can be no assurance that we will be successful in raising additional debt or equity financing on terms acceptable to our company, if at all.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined in Item 303(c)(2) of Regulation S-B.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as amended (the "Exchange Act"). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that we are required to apply our judgment in evaluating the benefits of possible controls and procedures relative to our costs.

Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2006, our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure, and (ii) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Report on Form 10-QSB that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 21

PART II - OTHER INFORMATION

ITEM 6. EXHIBITS.

Exhibit Index

10.1

Huaya Lote 100 - Agreement with Compania Consultora de Petroleo, S.A. and Zeigler-Peru, inc., dated January 31, 2007, amending Joint Operating Agreement dated May 11, 2006. (Incorporated by reference to Exhibit 10.1 of Radial Energy Inc.'s Current Report on Form 8-K filed on February 6, 2007).

31.1

Section 302 Certification - Chief Executive Officer

31.2

Section 302 Certification - Chief Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer.

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer.

Page 22

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15^th day of May, 2007.

	Radial Energy, Inc.


Date: May 15, 2007
	By:	*/s/ Gregory Leigh Lyons*
		Gregory Leigh Lyons
		President/CEO
		(Principal Executive, Financial and Accounting Officer)