UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2009
Commission File Number 333-151300
SEARS OIL AND GAS CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada |
20-3455830
| |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
3625 Cove Point Drive
Salt Lake City, Utah 84109
(801) 209-0740
(Registrant’s address and telephone number, including area code)
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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer o | Accelerated filer o | |
| Non-accelerated filer o | Smaller reporting company x | |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).
Yes x No o
36,200,000 shares of Common Stock, par value $0.001, were outstanding on January 31, 2013.
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INDEX
| Page | |
| Number | |
| PART I - FINANCIAL INFORMATION | 3 |
| Item 1 – Financial Statements -Unaudited | 3 |
| Balance Sheets | F-2 |
| Statements of Operations | F-3 |
| Statements of Cash Flows | F-4 |
| Notes to Financial Statements | F-5 |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3 – Quantitative and Qualitative Disclosure About Market Risk | 5 |
| Item 4 – Controls and Procedures | 5 |
| PART II – OTHER INFORMATION | 7 |
| Item 1 - Legal Proceedings | 7 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
| Item 3 - Defaults upon Senior Securities | 7 |
| Item 4 – Submission of Matters to a Vote of Security Holders | 7 |
| Item 5 - Other Information | 7 |
| Item 6 – Exhibits | 7 |
| Signatures | 8 |
| 2 |
PART I ― FINANCIAL INFORMATION
SEARS OIL AND GAS CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2009
| 3 |
C O N T E N T S
| Page(s) | ||
| Balance Sheets | F-2 | |
| Statements of Operations | F-3 | |
| Statements of Cash Flows | F-4 | |
| Notes to the Financial Statements | F-5 | |
| F-1 |
| F-2 |
| F-3 |
| F-4 |
SEARS OIL & GAS, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2009 and 2008
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2009 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2008 audited financial statements. The results of operations for the period ended June 30, 2009 and 2008 are not necessarily indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had no revenues and has generated losses from operations.
In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and to develop a consistent source of revenues. Management’s plans include of investing in and developing all types of businesses related to the entertainment industry.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – RESTATED FINANCIAL STATEMENTS
The financial statements for the year ended December 31, 2008 were restated to reflect corrections identified during a subsequent audit of the financial statements. Management concluded this restatement is necessary to reflect the changes described below.
| RESTATEMENT CHANGES | ||||||||||||
| For the Year Ended December 31, | ||||||||||||
| 2008 | 2008 | Change | ||||||||||
| (Restated) | (As Previously Filed) | |||||||||||
| Accounts Payable | $ | 8,955 | $ | — | $ | 8,955 | ||||||
| Total Liabilities | $ | 8,955 | $ | — | $ | 8,955 | ||||||
| General & Administrative Expenses | $ | 40,586 | $ | 31,631 | $ | 8,955 | ||||||
| Net Income (Loss) | $ | (40,586 | ) | $ | (31,631 | ) | $ | (8,955 | ) | |||
| Basic & Diluted Net Loss Per Share | $ | (0.00 | ) | $ | (0.00 | ) | $ | — | ||||
NOTE 4 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events for the period of June 30, 2009 through the date the financial statements were issued, and concluded there were no other events or transactions occurring during this period that required recognition or disclosure in its financial statements.
| F-5 |
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations .
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing and actual results may differ materially from historical results or our predictions of future results.
General
Sears Oil & Gas Corporation (the “Company”) is a development stage company that was incorporated on October 18, 2005, in the state of Nevada. The Company was organized for the purpose of exploiting the opportunities that exists in the oil and gas sector. The Company has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, Sears Oil & Gas has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations and the Company owns no subsidiaries. The fiscal year end is December 31st. The Company has not had revenues from operations since its inception and/or any interim period in the current fiscal year.
Plan of Operation
Three months ended June 30, 2009 Compared to the Three months ended June 30, 2008
For both the three months-ended June 30, 2009 and 2008, the Company had no revenue. For the three months-ended June 30, 2009, the Company incurred $2,874 of selling, general and administrative expenses, primarily for professional services, a decrease of $9,323, or 77% from the $12,197 for the corresponding period of the prior year. This decrease resulted from incurring fewer professional fees. For the three months-ended June 30, 2009, the Company also incurred $403 of interest expense on the loan from a related party. There was no interest expense for the corresponding period of the prior year.
As a result of the foregoing the Company incurred a loss of $3,277 for the three months-ended June 30, 2009 compared to a loss of $12,197 for the corresponding period of the prior year.
Six months ended June 30, 2009 Compared to the Six months ended June 30, 2008
For both the six months ended June 30, 2009 and 2008, the Company had no revenue. For the six months ended June 30, 2009, the Company incurred $3,734 of selling, general and administrative expenses, primarily for professional services, a decrease of $22,048, or 86% from the $25,782 for the corresponding period of the prior year. This decrease resulted from incurring fewer professional fees. For the six months ended June 30, 2009, the Company also incurred $507 of interest expense on a loan from a related party. There was no interest expense in the corresponding period of the prior year.
As a result of the foregoing, the Company incurred a loss of $4,241 for the six-months ended June 30, 2009 compared to a loss of $25,782 for the corresponding period of the prior year.
Liquidity
As of June 30, 2009, the Company had $3,103 of cash and negative working capital of $12,604. This compares with cash of $592 and negative working capital of $8,363 as of December 31, 2008.
For the six months-ended June 30, 2009, the Company used $12,489 in operations consisting of the loss of $4,241 which was partially offset by changes in accounts payable and accrued expenses of $8,248. This compares with $25,782 used in operations for the corresponding period of the prior year, all from the operating loss.
There were no investing activities during either the six months-ended June 30, 2009 or 2008.
For the six months-ended June 30, 2009, the Company had net proceeds from financing activities of $15,000, all from a loan from a related party. There were no proceeds from financing activities for the corresponding period of the prior year.
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As a result of the foregoing, there was a net increase in cash of $2,511 for the six months-ended June 30, 2009 from the cash on hand as of December 31, 2008.
From the date of inception (October 18th, 2005) to June 30, 2009 the Company has recorded a net loss of $114,604 most of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form S-1, and expenses relating to maintaining Reporting Company status with the SEC. In order to survive as a going concern, the Company will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business. Failure to secure additional financing would result in business failure and a complete loss of any investment made into the Company.
The Company filed a registration statement on Form S-1 on July 21, 2008, which was deemed effective on July 25, 2008. The Company received no funds from this offering. The registration was done for the benefit of the selling shareholders and we continue to fund the expenses associated with maintaining a reporting company status.
To date there is no public market for the Company’s common stock. There can be no guarantee or assurance that a public market will ever exist for the common stock. Failure to create a market for the Company’s common stock would result in business failure and a complete loss of any investment made into the Company.
Employees
There were no employees of the Company, excluding the current President and Director, G. Reed Petersen and the Company does not anticipate hiring any additional employees within the next twelve months.
Off-Balance Sheet Arrangements
The Company did not have any off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable
Item 4. Controls and Procedures
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
As of June 30, 2009, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures
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for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the review of our financial statements as of June 30, 2009 and communicated the matters to our management.
Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years.
We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company:
i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Changes in Internal Controls.
There were no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.
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The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
This item is not applicable to smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
None.
| (a) Exhibits furnished as Exhibits hereto: | |
| Exhibit No. | Description | |
| 31.1 | Certification of G. Reed Petersen pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 7 |
Pursuant to the requirements 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.
| Sears Oil & Gas Corporation | ||
| Date: February 13, 2013 | By: | / s / G. Reed Petersen |
| G. Reed Petersen | ||
|
President, Chief Executive Officer, Chief Financial Officer
| ||
| 8 |
|
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-Q/A of Sears Oil & Gas Corporation (the "Company") for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacity and date indicated below, hereby certifies that:
1. I have reviewed this quarterly report on Form 10-Q of Sears Oil & Gas Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this amended quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: February 13, 2013 By: /s/ G. Reed Petersen G. Reed Petersen, President, Chief Executive Officer, Principal Financial and Accounting Officer |
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, G. Reed Petersen, Chief Executive Officer and Chief Financial Officer of Sears Oil & Gas Corporation (the "Company") certify that:
1. I have reviewed the quarterly report on Form 10-Q of Sears Oil & Gas Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report; and
3. Based on my knowledge, the financial statements, and other financial information included in this amended quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this amended quarterly report.
Date: February 13, 2013
/s/ G. Reed Petersen
__________________
G. Reed Petersen,
Chief Executive Officer
Chief Financial Officer