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UNITED STATES FORM 10-QSB [X] Quarterly Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period ended August 31, 2007
Commission File Number 333-118138 QUANTUM ENERGY, INC.
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12B-2 of the Exchange Act) State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable Transitional Small Business Disclosure Format (check one): Yes
[ ] No [X]
QUANTUM ENERGY, INC. F-1 SEE ACCOMPANYING NOTES QUANTUM ENERGY, INC. F-2 SEE ACCOMPANYING NOTES QUANTUM ENERGY, INC. F-3 SEE ACCOMPANYING NOTES QUANTUM ENERGY, INC. F-4 SEE ACCOMPANYING NOTES QUANTUM ENERGY, INC. While the information presented in the accompanying
interim three-month financial statements is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows for
the interim period presented. All adjustments are of a normal recurring
nature. Except as disclosed below, these interim financial statements
follow the same accounting policies and methods of their application as
Quantum Energy, Inc.s (the Companys) audited February 28, 2007 annual
financial statements. The results of operations for the sixe-month period ended
August 31, 2007, are not necessarily indicative of the results to be
expected for the year ending February 28, 2008. These unaudited interim financial statements should be
read in conjunction with the February 28, 2007 audited financial
statements of the Company. Nature and Continuance of Operations
a) Organization
Boomers Cultural Development Inc. (the Company) was
incorporated in the State of Nevada, United States of America, on February
5, 2004. On May 18, 2006, the name of the Company was changed from Boomers
Cultural Development Inc. to Quantum Energy, Inc. b) Going
Concern These financial statements have been prepared in
accordance with generally accepted accounting principles applicable to a
going concern, which assumes that the Company will be able to meet its
obligations and continue its operations for its next fiscal year.
Realization values may be substantially different from carrying values as
shown and these financial statements do not give effect to adjustments
that would be necessary to the carrying values and classification of
assets and liabilities should the Company be unable to continue as a going
concern. At August 31, 2007, the Company had not yet achieved profitable
operations, has accumulated losses of $3,254,900 since its inception, has
a working capital deficiency of $2,083,838 and expects to incur further
losses in the development of its business, all of which casts substantial
doubt about the Companys ability to continue as a going concern. The
Companys ability to continue as a going concern is dependent upon its
ability to generate future profitable operations and/or to obtain the
necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due. Management has
no formal plan in place to address this concern but considers that the
Company will be able to obtain additional funds by equity financing and/or
related party advances, however there is no assurance of additional
funding being available. F-5 QUANTUM ENERGY, INC. Significant Accounting Policies The financial statements of the Company have been
prepared in accordance with generally accepted accounting principles in
the United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the preparation of
financial statements for a period necessarily involves the use of
estimates, which have been made using careful judgment. Actual results may
vary from these estimates. The financial statements have, in managements opinion,
been properly prepared within reasonable limits of materiality and within
the framework of the significant accounting policies summarized below:
a) Cash
and Cash Equivalents For purposes of the balance sheet and the statement of
cash flows, the Company considers all highly liquid debt instruments
purchased with maturity of three months or less to be cash equivalents. As
at August 31, 2007, the Company had no cash equivalents. b) Foreign
Currency Translation The Companys uses the U.S. dollar as its reporting
currency for consistency with registrants of the Securities and Exchange
Commission (SEC) and in accordance with the SFAS No. 52.Transactions in
Canadian dollars are translated into U.S. dollars as follows:
monetary items at the rate prevailing at the balance
sheet date; non monetary items at the historical exchange
rate revenue and expenses at the average rate in effect during
the period Gains and losses are recorded in the
statement of operations. c) Capital Assets Capital assets are recorded at cost.
Depreciation of computer equipment is at a rate of 30% per annum, on a
straight-line basis. Depreciation of office equipment is at a rate of 20% per
annum, on a straight-line basis. Depreciation of other equipment is at a rate of
20% per annum, on a straight-line basis. d) Website Development
Costs Website development costs represent
capitalized costs of design, configuration, coding, installation and testing of
the Companys web-site up to its initial implementation. The asset is being
amortized over its estimated useful life of three years using the straight-line
method. Ongoing website maintenance costs will be expensed as incurred. e) Impairment of
Long-Lived Assets The Company has adopted SFAS 144, Accounting
for the Impairment and Disposal of Long-lived Assets, which requires that
long-lived assets to be held and used be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. An impairment charge is recognized for the amount, if any,
which the carrying value of the asset exceeds the fair value. F-6 QUANTUM ENERGY, INC. In accordance with SFAS No. 128 Earnings per Share,
the basic loss per common share is computed by dividing net loss available
to common stockholders by the weighted average number of common shares
outstanding. Diluted loss per common share is computed similar to basic
loss per common share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional common
shares were dilutive. At August 31, 2007, the Company had no stock
equivalents that were anti-dilutive and excluded in the earnings per share
computation. g) Financial
Instruments The carrying value of the Companys financial instruments
consisting of cash, accounts payable, accrued liabilities and notes
payable approximate their fair value due to the short term maturity of
such instruments. Unless otherwise noted, it is managements opinion that
the Company is not exposed to significant interest, currency or credit
risks arising from these financial statements. F-7 (Continued) QUANTUM ENERGY, INC. Oil and Gas Properties The Company uses the successful efforts method of
accounting for oil and gas producing activities. Costs to acquire mineral
interests in oil and gas properties, to drill and equip exploratory wells
that find proved reserves, to drill and equip development wells and
related asset retirement costs are capitalized. Costs to drill exploratory
wells that do not find proved reserves, geological and geophysical costs,
and costs of carrying and retaining unproved properties are expensed.
Unproved oil and gas properties that are individually
significant are periodically assessed for impairment of value, and a loss
is recognized at the time of impairment by providing an impairment
allowance. Other unproved properties are amortized based on the Companys
experience of successful drilling and average holding period. Capitalized
costs of producing oil and gas properties, after considering estimated
residual salvage values, are depreciated and depleted by the
unit-of-production method. Support equipment and other property and
equipment are depreciated over their estimated useful lives. On the sale or retirement of a complete unit of a proved
property, the cost and related accumulated depreciation, depletion, and
amortization are eliminated from the property accounts, and the resultant
gain or loss is recognized. On the retirement or sale of a partial unit of
proved property, the cost is charged to accumulated depreciation,
depletion, and amortization with a resulting gain or loss recognized in
income. On the sale of an entire interest in an unproved property
for cash or cash equivalent, gain or loss on the sale is recognized,
taking into consideration the amount of any recorded impairment if the
property had been assessed individually. If a partial interest in an
unproved property is sold, the amount received is treated as a reduction
of the costs of the interest retained. Depletion for the six months ended August 31, 2007 was
$400. Corsicana Field JMT pilot project On October 11, 2005, KOKO (KOKO) Petroleum Inc. signed
a letter of intent with JMT Resources Ltd., a majority owner and operator
of certain oil and gas leases, comprising 4,000 acres of mineral
leasehold, located in Corsicana, Navarro County, Texas. KOKO provided an
initial equity contribution of $602,300 during the year ended 2005. KOKO
contributed a further $150,000 on May 23, 2006 which brought its joint
venture partnership interest to 25%. On May 31, 2006, the Company entered into an asset
purchase agreement with KOKO, whereby the Company would purchase KOKOs
interest in the oil and gas leases located in Corsicana, Texas. The
effective date of the KOKO Purchase agreement was July 1, 2006 with the
following terms: The Company would acquire all of the oil and gas
operations, leases and wells in the Corsicana, Texas and Barnett Shale,
Texas properties. The Company would assume all of the promissory notes
payable. See Note 6. The Company agreed to contribute up to $100,000 to assist
KOKO in its common stock SEC registration. To date, the Company has
contributed $27,000. F-8 (Continued) QUANTUM ENERGY, INC. Oil and Gas Properties (continued)
Corsicana Field JMT pilot project (continued)
d) The Company
will cause to be issued 1,500,000 common stock shares of the Company to
KOKO. Any reference to the KOKO acquisition of oil and gas
assets means an acquisition by the Company pursuant to this agreement
purchase agreement. On January 31, 2007, the Company reached a settlement
with JMT Resources whereby the Company sold its interest in the Corsicana
field for gross settlement proceeds of $308,200. The proceeds were
received on May 27, 2007. Boyd #1, Barnett Shale Project, Texas On May 1, 2006, by letter of agreement with KOKO, the
company acquired a 10% undivided working interest in and to a lease known
as Boyd #1, Barnett Shale Project in Cooke County, Texas, containing
approximately 40 acres and burdened by a total of 25% royalty and
overriding royalty interest for $140,000. The undivided 10% working
interest is subject to a pro-rata share of the royalty and overriding
royalty interest equal to a 7.5% net revenue. The operator of record is
Rife Energy Operating Inc. A standard operating lease governs the day to
day operations. Inglish #2, Barnett Shale Project, Texas
On May 1, 2006, by letter of agreement with KOKO, the
company acquired a 10% undivided working interest in and to a lease known
as Inglish #2, Barnett Shale Project in Cooke County, Texas, containing
approximately 40 acres and burdened by a total of 25% royalty and
overriding royalty interest for $140,000. The undivided 10% working
interest is subject to a pro-rata share of the royalty and overriding
royalty interest equal to a 7.5% net revenue. The operator of record is
RIFE Energy Operating Inc. A standard operating lease governs the day to
day operations. Corsicana Seismic Project The Company has also acquired a 23.5% working interest
the lands under lease by JMT Resources and Rife Energy Operating Inc. and
referred to as the Corsicana Field - JMT Project. The Company's geologist
believes there are substantial potentials for deeper zone discoveries in
this project. At present, only the Nacatoch zone is being produced at 900
feet. This area is known to possess significant oil bearing structures or
traps in the Pecan Gap, Woodbine, Wolf City, Cotton Valley and Smackover
down to 11,000 feet. The intention of the Corsicana partners and the purpose
of the 3 dimensional seismic is to "shoot" seismic lines over the 8 square
miles and 4,000 acres of land, which upon interpretation will identify the
existence of potential traps for exploratory or development drilling in
one or more of the above mentioned reservoirs. Total cost to shoot is
approximately $500,000. The Company has paid $100,000 towards 50% of the
cost and will pay the next $150,000 upon seismic completion.
F-9 Continued QUANTUM ENERGY, INC. Oil and Gas Properties (continued)
Inglish #1H - Barnett Shale Project The Company acquired a 5% working interest for gross
proceeds of $135,000. This is the first horizontal well drilled by REO
Energy Ltd. (the operator) in the Barnett Shale. All previous wells were
vertical wells. Total cost of this well is approximately $2,700,000. The
well has been drilled, completed and is now in production. Inglish #4, #5, #D1, #D2, Craig Muncaster #6 and
#7 On September 1, 2006, the Company acquired a 50% working
interest in oil and gas projects located in the State of Texas. Terms of
the asset purchase agreement were for gross proceeds of $400,000 payable
by way of a non- interest bearing promissory note, due November 1, 2006.
On February 28, 2007 an extension was granted by way of a
promissory note, with an extended due date to October 31, 2007, which
bares interest at 10% per annum and is secured by a general security
agreement. As part of the extension, the Company agreed to issue 250,000
common shares to the seller, free and clear of all liens and encumbrances.
If the Company duly observes and performs all of the Companys covenants,
one-half of the common stock issued (125,000 shares) shall be returned to
the Company by the seller. The Company recognized and has recorded a charge to
interest expense of $381,250 which represented the fair value ($3.05 per
share) of the 125,000 shares of common stock which will not be returned to
the Company. The Company and the seller have a director in common.
Other properties On November 17, 2006 the Company acquired an oil lease,
located in Oklahoma ("Cannon Lease") for gross proceeds of $14,000 and
future stock, (amount to be determined) in the Company. On September 11, 2006 the Company completed the waste
water disposal project for gross proceeds of $20,000. The Company has recorded an impairment of oil and gas
properties in the amount of $573,120 for the six month period ending
August 31, 2007. Promissory Notes Payable In accordance with the KOKO Purchase Agreement, the
Company has accepted financing for $1,594,760 due on demand, interest
compounded annually at 4% and $550,000 at 10%. At any time the Company may
pay off all or any part of the principal that remains unpaid together with
applicable interest. Gross promissory notes of $1,774,760 are not secured,
and have no defined terms of repayment. Promissory notes of $250,000 are
secured, by way of 250,000 shares in the capital stock of the Company and
a collateral interest in the oil and gas properties. Interest of $51,196
has been accrued in the August 31, 2007 financial statements.
F-10 Continued QUANTUM ENERGY, INC. The authorized number of common shares remains at
75,000,000 common shares with a par value of $0.001. The Company also
issued 250,000 shares in the capital stock of the Company as a collateral
interest against a promissory note issued by the Company. In July 2007, the Company advanced $25,000 to a financial
consultant on the recommendation of the Companys principle executive
officer, who was familiar with the financial consultant. No written
agreement was entered into. The consultant failed to perform to the
Companys expectations, and the Companys principle executive officer has
agreed with the board of directors that because the Company paid the
consultant on his recommendation, he will repay the $25,000 to the
Company, with interest, on or before October 31, 2007.
F-11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Exact name of small business issuer as specified in its
charter)
Nevada
98-0428608
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
401 1529 West 6th Avenue
Vancouver, British Columbia, Canada
V6J1R1
(Address of principal executive offices)
(Zip Code)
604-737-8180
Issuers telephone number
the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been
subject to such filing requirements for the past
90 days. [X] Yes [ ] No
[
] Yes [X] No
date: As of October
10, 2007, 47,000,000 shares of common stock of the issuer were issued and
outstanding.
ITEM 1. FINANCIAL STATEMENTS
(formerly Boomers Cultural
Development Inc.)
INTERIM BALANCE SHEETS
August 31, 2007
(Stated in
US Dollars)
Aug 31,
February 28,
2007
2007
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
121,053
$
58,316
Notes receivable
25,000
-
Accounts receivable
Trade
44,421
15,722
Sale of
assets
-
308,200
Prepaid expense
-
2,500
Other receivables
193
-
Total current assets
190,667
384,738
Oil and gas properties
Proved properties, net
of accumulated depletion
845,100
845,500
Well equipment, net of accumulated
depreciation
89,599
102,398
Total oil and gas properties
934,699
947,898
Other assets
Other equipment, net of
accumulated depreciation
2,106
2,686
Website development, net of accumulated
amortization
6,296
8,394
Total other assets
8,402
11,080
TOTAL ASSETS
$
1,133,768
$
1,343,716
LIABILITIES AND
STOCKHOLDERS (DEFICIT)
Current liabilities
Accounts payable and accrued
liabilities
$
210,212
$
179,165
Accounts payable to
related parties
69,533
69,533
Promissory notes payable
1,994,760
2,144,760
Total current liabilities
2,274,505
2,393,458
Common stock issuance liability
381,250
381,250
Total liabilities
2,655,755
2,774,708
Stockholders (deficit)
Common stock, par value $0.001 per
share:
75,000,000 shares authorized: 47,000,000
Shares
issued and outstanding, respectively
47,000
47,000
Additional paid-in
capital
1,685,913
1,685,913
Retained (deficit)
(3,254,900
)
(3,163,905
)
Total stockholders (deficit)
(1,521,987
)
(1,430,992
)
TOTAL LIABILITIES AND STOCKHOLDERS
(DEFICIT)
$
1,133,768
$
1,343,716
(formerly Boomers Cultural
Development Inc.)
INTERIM STATEMENTS OF OPERATIONS
for the six months
ended August 31, 2007 and 2006
(Stated in US Dollars)
(Unaudited)
Three months ended
Six months ended
August 31
August 31,
2007
2006
2007
2006
Oil and gas revenue
$
21,064
$
10,879
$
85,419
$
10,879
Lease operating expenses
(8,473
)
(9,270
)
(33,413
)
(9,270
)
Production taxes
(1,259
)
-
(5,245
)
-
Net oil and gas revenue
11,332
1,609
46,761
1,609
Operating expenses
Amortization depletion and depreciation
7,840
10,825
15,878
11,447
Management fees
11,100
15,000
21,600
15,000
Marketing
6,039
4,041
16,039
4,041
Office and administration
1,881
41,906
5,302
42,348
Professional fees
19,938
87,465
24,438
92,993
Total operating expenses
46,798
159,237
83,257
165,829
Net loss before other income (expenses)
(35,466
)
(157,628
)
(36,496
)
(164,220
)
Other items
Interest income
193
-
193
-
Interest expense
(23,795
)
-
(51,243
)
-
Currency translation
(5,856
)
9,534
(3,449
)
9,534
Total other income (expenses)
(29,458
)
9,534
(54,499
)
9,534
Net loss
$
(64,924
)
$
(148,094
)
$
(90,995
)
$
(154,686
)
Basic and diluted loss per share
$
(0.01
)
$
(0.00
)
$
(0.01
)
$
(0.00
)
Weighted average number of shares outstanding
47,000,000
47,000,000
47,000,000
47,000,000
(formerly Boomers Cultural
Development Inc.)
INTERIM STATEMENTS OF CASH FLOWS
for the six months
ended August 31, 2007 and 2006
(Stated in US Dollars)
(Unaudited)
Three months ended
Six months ended
August 31
August 31,
2007
2006
2007
2006
Operating activities
Net loss
$
(64,924
)
$
(148,094
)
$
(90,995
)
$
(154,686
)
Adjustment to reconcile
net loss to net cash used by
operating
activities
Amortization,
depreciation and depletion
7,840
10,825
15,878
11,447
Changes in operating assets and
liabilities
Accounts
receivable trade
(11,705
)
(3,036
)
(28,699
)
(3,036
)
Accounts receivable
sale of assets
-
-
308,200
-
Other
receivables
(193
)
-
(193
)
-
Prepaid expenses
-
-
2,500
-
Accounts
payable and accrued liabilities
20,622
24,951
31,046
29,196
Accounts payable
to related party
(3,500
)
-
-
-
Cash provided by (used in) operating activities
(51,860
)
(115,354
)
(237,737
)
(117,079
)
Investing Activities
Acquisition of oil
and gas properties
-
(385,000
)
-
(385,000
)
Acquisition of equipment
-
(11,592
)
-
(11,592
)
Cash provided by (used) in investing activities
-
(396,592
)
-
(396,592
)
Financing Activities
Notes receivable
(25,000
)
-
(25,000
)
-
Promissory notes payable
(150,000
)
565,050
(150,000
)
565,050
Due to related party
-
(10,534
)
-
(5,000
)
Cash provided by (used in) financing activities
(175,000
)
554,516
(175,000
)
560,050
Increase (decrease) in cash during the period
(226,860
)
42,570
62,737
46,379
Cash, beginning of the period
347,913
4,825
58,316
1,016
Cash, end of the period
$
121,053
$
47,395
$
121,053
$
47,395
Supplemental disclosure of cash flow information:
Cash paid for income tax purposes
$
-
$
-
$
-
$
-
Cash paid for interest
$
-
$
-
$
-
$
-
(formerly Boomers Cultural
Development Inc.)
INTERIM STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
for the six months ended August 31, 2007
(Stated in US Dollars)
(Unaudited)
Common Shares
Paid-in
Accumulated
Number
Par
Value
Capital
Deficit
Total
Balance February 2006
45,500,000
$
45,500
$
40,500
$
(89,508
)
$
(3,508
)
Acquisition of oil and gas properties
1,500,000
1,500
1,645,413
-
1,646,913
Net loss
-
-
(3,074,397
)
(3,074,397
)
Balance February 28, 2007
47,000,000
47,000
1,685,913
(3,163,905
)
(1,430,992
)
Net loss for the period
-
-
-
(90,995
)
(90,995
)
Balance August 31, 2007
47,000,000
$
47,000
$
1,685,913
$
(3,254,900
)
$
(1,521,987
)
(formerly Boomers Cultural
Development Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 1
Basis of Presentation of
Interim Financial Statements
Note 2
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 2
i)
ii)
iii)
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 2
Significant Accounting
Policies (continued)
f) Basic and
Diluted Loss Per Share
Note 3
Other Assets
Cost
Accumulated
Net Book Value
Net Book Value
Depreciation
August 31, 2007
February 2007
Office equipment
$
3,629
$
1,753
$
1,876
$
2,239
Computer equipment
1,433
1,203
230
447
$
5,062
$
2,956
$
2,106
$
2,686
Note 4
Website Development
Cost
Accumulated
Net Book Value
Net Book Value
Amortization
August 31, 2007
February 2007
Website development
$
12,591
$
6,296
$
6,295
$
8,394
$
12,591
$
6,296
$
6,295
$
8,394
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5
a)
b)
c)
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 5
Note 6
(formerly Boomers
Cultural Development Inc.)
NOTES TO THE INTERIM FINANCIAL
STATEMENTS
August 31, 2007
(Stated in US Dollars)
(Unaudited)
Note 7
Common Stock
Note 8
Well Equipment
Accumulated
Net Book Value
Net Book Value
Cost
Depreciation
August 31, 2007
February 28, 2007
Well equipment
$
127,998
$
38,399
$
89,599
$
102,398
Note 9
Note Receivable Related
Party
ITEM 2. MANAGEMENT DISCUSSSION AND ANALYSIS
OR PLAN OF OPERATION
Overview
Quantum Energy Inc. (referred to as Quantum or the Company) was incorporated on February 5, 2004, in the State of Nevada. The Company's principal executive offices now are located at 401 1529 West 6th Avenue, Vancouver, British Columbia, Canada, V6J1R1. The Companys telephone number is (604) 737-8180.
Starting in May of 2006 the Company embarked on a new business path in oil and gas exploration and acquisitions. The Company intends to acquire interests in the properties and working interests in the production owned by established oil and gas production companies, whether public or private, in United States oil producing areas. The Company believes this opportunity may have considerable future potential.
The degree of expansion of the Companys oil and gas business will depend on availability of funds. When and if funding becomes available, the Company plans to acquire high-quality oil and gas properties. The Company will also explore low-risk development drilling and work-over opportunities with experienced, well-established operators.
Financial Condition and Results of Operations
For the three and six-month periods ended August 31, 2007, the Company received revenue of $21,064 and $85,419, respectively from production of oil and gas from the Barnett Shale properties, as compared to $10,879 and $10,879, respectively, three and six-month periods ended August 31, 2006.
For the three and six-month period ended August 31, 2007, the Company had a net loss of approximately $64,924 and $90,995, respectively, as compared to a net loss of $148,094 and $154,686 respectively, for the three and six-month period ended August 31, 2006, a decrease of approximately 56% and 41%, respectively.
This decrease in the net loss was the result of additional oil and gas revenues reported during the second quarter, as well as a decrease in general and administrative expenses, as compared to this same period one year ago. General and administrative expenses totaled $46,768 and $83,257 for the three and six months ended August 31, 2007, respectively, compared to $159,237 and $165,829 for the three and six months ended August 31, 2006, respectively. This was the result of an increase in legal and accounting fees incurred by the Company during this quarter.
Liquidity and Capital Resources
For the six-month period ended August 31, 2007, the Company had cash of $121,053, compared to cash of $47,395 for the six-month period ended August 31, 2006, an increase of approximately 255%. The increase is due to $308,185 received June 4, 2007 for assets sold in the prior year.
For the six-month period ended August 31, 2007, the Company had a working capital deficit of $2,083,838, compared to working capital deficit of $1,678,228 for the six-month period ended August 31, 2006, a increase of approximately 24%. The increase in working capital deficit was substantially due to settlement and subsequent sale of assets transacted during the prior fiscal year.
The Company will continue to utilize the free labor of its directors and stockholders until such time as funding is sourced from the capital markets. It is anticipated that substantial additional funding will be required to maintain the Company for the next twelve months.
The Companys continued operations will depend upon its ability to raise additional funds through bank borrowings, equity or debt financing. While the Company has been successful in raising funds to date, there is no assurance that the Company will be able to obtain additional funding when needed, or that such funding, if available, can be
2
obtained on terms acceptable to the Company. If the Company cannot obtain needed funds, it may be forced to curtail or cease its activities.
If additional shares are issued to obtain financing, current shareholders may suffer a dilutive effect on their percentage of stock ownership in the Company. A large portion of the Company's financing to date has been through the issuance of shares or through equity financing with share based collateral. There can be no assurances that the Company will become self-sufficient. Therefore, the Company may continue to issue shares to further the business, and existing shareholders may suffer a dilutive effect on the price of their shares as well as a loss of voting power in the Company.
Going Concern
The Company has not attained profitable operations and is dependent upon obtaining financing to pursue its business objectives. For these reasons, the Companys auditors stated in their report on the Companys audited financial statements that they have substantial doubt the Company will be able to continue as a going concern without further financing.
The Company may continue to rely on equity sales of the common shares in order to continue to fund the Companys business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that the Company will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned business activities.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Companys financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
ITEM 3. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by it in the reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commissions rules and forms, and that information is accumulated and communicated to management, including the Companys principal executive and principal financial officers (whom the Company refers to in this periodic report as its Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. The Companys management evaluated, with the participation of its Certifying Officers, the effectiveness of the Companys disclosure controls and procedures as of August 31, 2007, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, the Companys Certifying Officers concluded that, as of August 31, 2007, the Companys disclosure controls and procedures were effective.
Changes in internal controls
There were no changes in the Companys internal control over financial reporting that occurred during its most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
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ITEM 6. EXHIBITS
Exhibit Number* |
Description of Exhibit |
Location |
Item 3 | Articles of Incorporation and Bylaws |
|
3.1 | Articles of Incorporation |
Incorporated by reference from the Registration Statement Amendment 2 on Form SB-2 filed October 26, 2004, SEC File No. 333-118138. |
3.2 | Bylaws, as amended |
Incorporated by reference from the Registration Statement Amendment 2 on Form SB-2 filed October 26, 2004, SEC File No. 333-118138. |
3.3 | Articles of Amendment |
Incorporated by reference from 10- KSB annual report filed on June 14, 2006, SEC File No. 333- 118138. |
Item 31 | Rule 13a-14(a)/15d-14(a) Certifications |
|
31.1 | ||
Item 32 | Section 1350 Certifications |
|
32.1 |
* |
The number preceding the decimal indicates the applicable SEC reference number in Item 601, and the number following the decimal indicating the sequence of the particular document. |
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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 18th day of October, 2007.
QUANTUM ENERGY INC.
By: | /s/ Shane Lowry | |
Shane Lowry | ||
President |
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EXHIBIT 31.1
CERTIFICATIONS
I, Shane Lowry, Chief Executive Officer and Chief Financial Officer of Quantum Energy Inc., certify that;
(1) |
I have reviewed this quarterly report on Form 10-QSB of Quantum 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 issuers other certifying officers 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 issuers 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 that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and | |
(5) |
The small business issuers other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the small business issuers auditors and the audit committee of small business issuers 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 issuers 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 issuers internal control over financial reporting. |
Date: | October 18, 2007 | |
By: | /s/ Shane Lowry | |
By: | Shane Lowry | |
Title: | Chief Executive Officer and | |
Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF
FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Shane Lowry, Chief Executive Officer and Chief Financial Officer of Quantum Energy Inc. (the Company), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) |
the Quarterly Report on Form 10-QSB of the Company for the fiscal quarter ended August 31, 2007 (the Quarterly Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(ii) |
the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Shane Lowry | |
Name: | Shane Lowry | |
Title: | Chief Executive Officer and | |
Chief Financial Officer | ||
Date: | October 18, 2007 |
This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Companys Quarterly Report on Form 10-QSB. A signed original of this statement 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.
This certification accompanies this Quarterly Report on Form 10-QSB pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.