-----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, NUAKJrEt1CrcLtcTf0uK84GMN3dgCc5Ei1VWmD8HMVNWr/DvXHQC+rQ9pxkjif5j JfGldVCtF46x9y1Anok68g== 0001227528-09-000074.txt : 20090522 0001227528-09-000074.hdr.sgml : 20090522 20090520161557 ACCESSION NUMBER: 0001227528-09-000074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20090331 FILED AS OF DATE: 20090520 DATE AS OF CHANGE: 20090520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGO ENERGY, INC. CENTRAL INDEX KEY: 0000278165 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 020314487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09047 FILM NUMBER: 09842738 BUSINESS ADDRESS: STREET 1: 2580 ANTHEM VILLAGE DRIVE CITY: HENDERSON STATE: NV ZIP: 89052 BUSINESS PHONE: 702-399-9777 MAIL ADDRESS: STREET 1: 2580 ANTHEM VILLAGE DRIVE CITY: HENDERSON STATE: NV ZIP: 89052 FORMER COMPANY: FORMER CONFORMED NAME: STRATEGIC GAMING INVESTMENTS, INC. DATE OF NAME CHANGE: 20060501 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MARKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20031002 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MAKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20030815 10-Q 1 l10q033109.txt AMERIGO ENERGY, INC. FORM 10-Q U.S. 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: March 31, 2009 AMERIGO ENERGY, INC. --------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 20-3454263 --------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2580 Anthem Village Drive Henderson, NV 89052 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (702) 399-9777 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO[ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES [ ] NO [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. YES [ ] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 20,400,435 shares of common stock, $0.001 par value, as of May 20, 2009 TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES [ ] NO [X] TABLE OF CONTENTS ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET.............................................3 CONSOLIDATED STATEMENT OF OPERATIONS...................................4 STATEMENT OF STOCKHOLDER'S EQUITY......................................5 CONSOLIDATED STATEMENT OF CASH FLOWS...................................6 NOTES TO FINANCIAL STATEMENTS..........................................7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................................16 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK........18 ITEM 4. CONTROLS AND PROCEDURES..........................................19 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS................................................20 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........................20 ITEM 3. DEFAULTS UPON SENIOR SECURITIES..................................20 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............20 ITEM 5. OTHER INFORMATION................................................20 ITEM 6. EXHIBITS.........................................................20 SIGNATURES.................................................................21 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERIGO ENERGY, INC. CONSOLIDATED BALANCE SHEET
As of As of March 31, 2009 December 31, 2008 (Audited) -------------- ----------------- ASSETS Current assets Cash $ 6,485 $ 1,300 Accounts receivable 57,227 22,187 -------------- ----------------- Total current assets 63,712 23,487 Other current assets Loans to related party 69,433 30,559 Notes receivable - related party 365,595 358,949 Accrued interest receivable - related party 23,671 18,287 -------------- ----------------- Total other current assets 458,698 407,795 Property, plant and equipment Leasehold Improvements 73,161 76,460 Office equipment, net of depreciation 18,811 20,648 Vehicles, net of depreciation - 12,883 Property and Equipment, net 126,715 129,372 Proved reserves, net of depletion 6,097,711 6,032,016 Unproved reserves, net of depletion 5,694,794 5,512,163 Software, net 6,419 6,724 -------------- ----------------- Total property, plant and equipment 12,017,611 11,790,265 Other Assets Investment in GreenStart 42,236 42,236 Note receivable 397,259 386,590 Deposits 950 950 -------------- ----------------- Total other assets $ 440,445 $ 429,776 -------------- ----------------- Total assets $ 12,980,467 $ 12,651,323 ============== ================= LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities Accounts payable and accrued liabilities $ 169,276 $ 164,186 Accounts payable - related party 69,691 46,216 Loans from related parties 42,155 38,361 Payroll liabilities 51,730 70,666 -------------- ----------------- Total current liabilities 332,852 319,429 -------------- ----------------- Total liabilities 332,852 319,429 Stockholders' (deficit) Preferred stock (25,000,000 shares auth & 0 shares outstanding at March 31, 2009 and December 31, 2008) - - Common stock; $.001 par value; 100,000,000 shares authorized; 20,071,235 shares outstanding at March 31, 2009 and December 31, 2008 30,942 30,613 Additional paid-in capital 26,329,794 25,968,778 Stock receivable (665,600) (665,600) Common stock payable 195,776 12,000 Accumulated deficit (13,243,296) (13,013,897) -------------- ----------------- Total stockholders' (deficit) 12,647,615 12,331,894 -------------- ----------------- Total liabilities and stockholders' (deficit) $ 12,980,467 $ 12,651,323 ============== ================= See Accompanying Notes to Financial Statements 3
AMERIGO ENERGY, INC. CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Three months ended March 31, 2009 March 31, 2008 -------------- -------------- Revenue Oil revenues 40,535 - Gas revenues 11,495 - Rental income 3,390 - -------------- -------------- Total Revenue 55,419 - Operating expenses Lease operating expenses 25,857 - Consulting expense 22,500 529,313 Selling, general and administrative 31,641 9,203 Professional fees 129,288 - Depreciation and amortization expense 8,099 - Depletion expense 80,871 - -------------- -------------- Total operating expenses 298,254 538,516 -------------- -------------- Loss from operations 242,835 (538,516) Other income (expenses): Loss on sale of automobile (1,883) - Interest income 15,246 - Other income 72 - -------------- -------------- Total other income (expenses) 13,435 - -------------- -------------- Loss before provision for income taxes (229,400) (538,516) -------------- -------------- Provision for income taxes Net loss $ (229,400) $ (538,516) ============== ============== Basic and diluted (loss) per common share (0.01) (0.06) ============== ============== Basic and diluted weighted average common shares outstanding 20,400,435 9,721,867 ============== ============== See Accompanying Notes to Financial Statements 4
AMERIGO ENERGY, INC. STATEMENT OF STOCKHOLDER'S EQUITY
Additional Stock Stock Total Paid-in Subscriptions Subscriptions Accumulated Stockholders' Shares Amount Capital Receivable Payable Deficit Deficit ---------- -------- ----------- ------------- ------------- ------------ ------------ Balance, December 31, 2008 20,071,235 $ 30,613 $25,968,776 $ (665,600) $ 12,000 $(13,013,896) $ 12,331,893 ========== ======== =========== ============= ============= ============ ============ Shares issued for purchase of oil interests 329,200 329 328,871 329,200 Adjustment to value of the assets purchased 32,147 32,147 Stock payable for warrants 183,776 183,776 Net loss - - - - - (229,400) (239,262) ---------- -------- ----------- ------------- ------------- ------------ ------------ Balance, March 31, 2009 20,400,435 $ 30,942 $26,329,794 $ (665,600) $ 195,776 $(13,243,296) $ 12,647,615 ========== ======== =========== ============= ============= ============ ============ See Accompanying Notes to Financial Statements 5
AMERIGO ENERGY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited 3 months ended 3 months ended March 31, 2009 March 31, 2008 -------------- -------------- Cash flows from operating activities: Net loss $ (229,400) $ (538,516) Adjustments to reconcile net loss to net cash used by operating activities: Changes in operating assets and liabilities: Increase in accounts receivable (35,040) (397) Increase in note receivable and interest due from GreenStart (12,030) - Increase in note receivable and interest (9,862) Stock options issued - 476,418 Depletion, depreciation and amortization 88,970 - (Increase) / decrease in loans and bank receivables 31,341 - Increase / (decrease) in accounts payable 5,091 193,565 Increase / (decrease) in accounts payable - related party 23,475 (179,533) Increase / (decrease) in accrued payroll (18,936) (16,865) Lawsuit settlement payable - 18,000 -------------- -------------- Net cash used by operating activities (156,391) (47,328) Cash flows from investing activities: Purchase of oil and gas interests 12,881 - -------------- -------------- Net cash used by investing activities 12,881 - Cash flows from financing activities: Increase in bank overdraft 4,366 Loan to (from) related party (35,081) 50,078 Increase in stock payable 183,776 - -------------- -------------- Net cash provided by financing activities 148,695 54,444 -------------- -------------- Net increase in cash 5,185 7,116 Cash, beginning of period 1,300 (7,116) -------------- -------------- Cash, end of period 6,485 - -------------- -------------- Supplementary cash flow information: Cash payments for income taxes $ - $ - ============== ============== Cash payments for interest $ - $ - ============== ============== See Accompanying Notes to Financial Statements 6
AMERIGO ENERGY, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY Description of Business and History - Strategic Gaming Investments, Inc., a Delaware corporation ("SGME" or the "Company"), formerly named Left Right Marketing Technology, Inc., was incorporated in 1973. Prior to June 2003, the Company was involved in various businesses, none of which were successful. On June 30, 2003, the Company executed a binding letter of intent which resulted in a merger with Left Right Marketing & Technology, Inc., a Nevada corporation ("LRMT"), in September 2003. On November 4, 2005, the Company entered into an agreement and plan of reorganization, or the Merger Agreement, with Strategic Gaming Investments, Inc., a Nevada corporation, or SGI. The transaction between the Company and SGI has been accounted for as a recapitalization. Since SGI was the only operating company in the exchange and the stockholders of SGI received a substantial majority of the voting securities of the combined companies, the transaction exchange has been accounted for as a "reverse acquisition" and, effectively, as a recapitalization, in which SGI has been treated as the accounting acquirer (and the legal acquiree), and the Company has been treated as the accounting acquiree (and the legal acquirer). In August of 2008, our Board of Directors voted to get approval from the shareholders of the Company for a name change from Strategic Gaming Investments, Inc. to Amerigo Energy, Inc. The company received the approval from a majority of its stockholders and filed the amendment to its Articles of Incorporation with the State of Delaware. The name change became effective by the State of Delaware on August 26, 2008. The Company also requested a new stock symbol as a result of the name change. Our new trading symbol is "AGOE". On October 31, 2008, the Company entered into a Reorganization pursuant to Reorganization Agreement dated as of October 31, 2008. In the Reorganization, Granite Energy, Inc. transferred to the Company substantially all of its assets and operations, including its subsidiary, Amerigo, Inc., and its controlling interest in GreenStart, Inc. in exchange for 10,000,000 restricted shares of Common Stock of the Company. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation. 7 CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 period. Actual results could differ from those estimates. COMPREHENSIVE INCOME Statement of Financial Accounting Standards No 130, "Reporting Comprehensive Income" ("SFAS 130")), requires that total comprehensive income be reported in the financial statements. SFAS 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company's financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2008 and the quarter ended March 31, 2009. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. PROPERTY AND EQUIPMENT On October 31, 2008, as part of the reorganization agreement, the Company acquired substantially all of the assets from Granite Energy, Inc., including an office building, equipment, furniture and fixtures, an automobile, and oil interests. The Company transferred these assets at their depreciated historical cost and has continued depreciating them using their historical cost and remaining estimate lives. The current and long term portions were of the asset retirement obligation was estimated based on historical experience. Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other unproved properties are amortized based on the Company's experience of successful drilling and average holding period. 8 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 has been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained. Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives: ESTIMATED CATEGORY LIFE ---------------------- --------- Office building 20 years Vehicles 7 years Equipment 7 years Leasehold Improvements 7 years Furniture and Fixtures 5 years All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements. OIL AND GAS PRODUCING ACTIVITIES Suspended well cost - Statement of Financial Accounting Standards Statement No. 19 "Financial Accounting and Reporting by Oil and Gas Producing Companies" (SFAS 19) as amended by Staff Position 19-1 "Accounting for Suspended Well Costs" allows suspended well costs to remain capitalized beyond one year from drilling if certain specific criteria are met and additional disclosures provided. Exploratory costs, excluding the cost of exploratory wells and acquired exploration rights, are charged to expense as incurred. Drilling costs for exploratory wells are capitalized pending the determination of the existence of proved reserves. If reserves are not found, the drilling costs are charged to operating expense. Oil and gas lease acquisition costs are capitalized when incurred. 9 Unproved properties with individually significant acquisition costs are assessed quarterly on a property-by-property basis, and any impairment in value is recognized. Unproved properties with acquisition costs that are not individually significant are aggregated, and the portion of such costs estimated to be nonproductive, based on historical experience, is amortized over the average holding period. If the unproved properties are determined to be productive, the appropriate related costs are transferred to proved oil and gas properties. Development costs incurred to drill and equip development wells, including unsuccessful development wells, are capitalized. REVENUE RECOGNITION Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured. CONCENTRATIONS OF CREDIT RISK Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below. The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Teppco Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk. During the year ended December 31, 2008, Teppco Oil (US) Company accounted for approximately 13% of the Company's oil revenues. In the coming year and forward, we anticipate the percentage of oil revenues from Teppco Oil Company to be approximately 66%. The low percentage for the year ended December 31, 2008 is directly related to the acquisition of the oil interests that Teppco Oil Company purchases from in December 2008 and not receiving normal levels of purchases for the short period we held those interests. Management does not believe the loss of Teppco Oil (US) Company would materially affect the ability to sell the oil. ACCOUNTS RECEIVABLE Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements at December 31, 2008 and March 31, 2009; the Company's financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders' equity. 10 NET LOSS PER COMMON SHARE SFAS 128, Earnings per Share, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation. INCOME TAXES The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. STOCK-BASED COMPENSATION In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 123R, Share-Based Payment ("SFAS No. 123R"). SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock- Based Compensation ("SFAS No. 123"), and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), and its related implementation guidance. The Company has adopted SFAS No. 123R, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of SFAS No. 123R, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock. DIVIDENDS The Company has not yet adopted any policy regarding payment of dividends. 11 GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. RECENT ACCOUNTING PRONOUNCEMENTS In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one-year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. The Company is currently evaluating the impact of adopting SFAS 157 with respect to non-financial assets and non- financial liabilities, essentially goodwill and identifiable intangible assets, but does not believe the adoption will have a significant impact on the Company's consolidated financial statements. The provisions of SFAS 157 will be applied to non-financial assets and non-financial liabilities beginning March 1, 2009. In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133, as amended and interpreted, which requires enhanced disclosures about an entity's derivative and hedging activities and thereby improves the transparency of financial reporting. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format provides a more complete picture of the location in an entity's financial statements of both the derivative positions existing at period end and the effect of using derivatives during the reporting period. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At December 31, 2008, the Company did not have any derivative instruments or hedging activities. Management is aware of the requirements of SFAS 161 and will disclose when appropriate. 12 In April 2008, the FASB issued FSP 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets . FSP 142-3 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact FSP 142-3 will have on the useful lives of our intangible assets but do not expect it to have a material impact on our financial statements. In May of 2008, the FASB issued Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles." This statement identifies literature established by the FASB as the source for accounting principles to be applied by entities which prepare financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States. This statement is effective 60 days following approval by the SEC of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." This statement will require no changes in the Company's financial reporting practices. In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. SFAS 163 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of SFAS 163 will have a material impact on its financial condition or results of operation. NOTE 3 - ACQUISITION AND DISPOSAL OF ASSETS DURING THE YEAR ENDED DECEMBER 31, 2008 On October 31, 2008, The Company entered into a Reorganization pursuant to Reorganization Agreement dated as of October 31, 2008. In the Reorganization, Granite Energy, Inc. transferred to the Company substantially all of its assets and operations, including its subsidiary, Amerigo, Inc., and its controlling interest in GreenStart, Inc. in exchange for 10,000,000 restricted shares of Common Stock of the Company. The following is an analysis of the consideration given and assets received in connection with the reorganization: Assets acquired: Proved reserves $ 2,001,368 Unproved reserves 345,912 Software 6,927 Building 103,133 Leasehold improvements 78,659 Furniture & fixtures 21,873 Vehicle 13,301 Equipment 28,010 Receivables 48,056 Deposit 950 Notes receivable 775,816 ----------- Total assets acquired 3,424,006 =========== Consideration given: Common stock (10,000,000 shares) 3,424,006 ----------- Total consideration given $ 3,424,006 =========== 13 On December 1, 2008, The Company started the process to issue 9,307,970 shares of our Company Common Stock in exchange for the transfer of various oil interests that were previously sold by Granite Energy, Inc. DURING THE QUARTER ENDED MARCH 31, 2009: During the first quarter ended March 31, 2009, The Company issued 275,659 shares of our Company Common Stock in exchange for the transfer of various oil interests that were previously sold by Granite Energy, Inc. The following is an analysis of the consideration given and assets received in the purchase of the oil interests: NOTE 4 - NOTES PAYABLE As of March 31, 2009, there are no outstanding notes payable. NOTE 5 - STOCKHOLDERS' EQUITY As of March 31, 2009, there were 20,400,435 shares of common stock outstanding and no preferred shares outstanding. During the quarter ended March 31, 2009, the Company issued common stock and warrants as follows: COMMON STOCK During the quarter ended March 31, 2009, the Company issued 329,200 shares of our Company Common Stock at $1.00 per share in exchange for the purchase of various oil interests. WARRANTS No warrants were issued during the quarter ended March 31, 2009. An adjustment was made to Additional Paid in Capital during the three months ended March 31, 2009 for the interest on the note receivable that was transferred to the Company as part of the reorganization on October 31, 2008. During our lawsuit investigation with South Texas Oil Company, it was discovered that interest on the note that was transferred to the Company had not been accrued and the balance was adjusted accordingly. NOTE 6 - RELATED PARTY TRANSACTIONS As of March 31, 2009, the Company holds $365,595 in notes receivable from GreenStart, Inc., in which the Company is the majority shareholder. $356,820 of the note was transferred to the Company from Granite Energy as part of the reorganization on October 31, 2008. This asset is due on demand and accrues interest at 6% annually. The accrued interest receivable on this loan totaled $23,671 at March 31, 2009. The amounts are considered short term due to the demand status of the note. As of March 31, 2009, the Company had $51,730 in accrued payroll payable to the Company's current and former officers. As of March 31, 2009, the Company has $38,361 in liabilities due to a firm controlled by the Company's Chief Financial Officer. This loan is non-interest bearing and has no due date assigned to it. Effective October 1, 2008, the Company entered into a consulting agreement with a firm controlled by the Company's Chief Financial Officer for a fee of $7,500 per month. The consulting firm has been engaged to assist in organizing and completing the process of filings with the Securities and Exchange Commission and other tasks. The Company owed the firm $46,216 as of March 31, 2009 which is included as part of Accounts payable - related party in the accompanying financial statements. At March 31, 2009, the Company had paid expenses in advance of oil revenue from SWJN Oil Company of $ 9,458. Our CFO has an ownership interest in this Texas operator company. Additionally, $59,976 was paid as expenses for Granite Energy, the Company's majority shareholder. 14 NOTE 7 - COMMITMENTS AND CONTINGENCIES The Company issued warrants for the purchase of our Company's Common Stock at $0.35, $0.40 and $1.00 per share. A total of 2,335,945 shares of common stock were subscribed to through the warrants. The shares will be issued if all payments from warrant holders are received no later than December 31, 2009. As per the warrant exercise documentation, the shares of common stock will be issued upon the Company receiving the final payment for the shares. In the event of default, all payments will be forfeited to the Company and no shares will be issued. If all warrants are exercised and none are defaulted on, the Company will be obligated to issue 2,335,945 shares of our Common Stock on or before December 31, 2009 at a price of either $0.35, $0.40, or $1.00, as set forth in the warrant documentation. NOTE 8 - DEFERRED INCOME TAX The Company records its income taxes in accordance with Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which was fully allowed for in a valuation allowance. As a result, the net benefit and expense resulted in no income taxes. NOTE 9 - ENVIRONMENTAL MATTERS Various federal and state authorities have authority to regulate the exploration and developments of oil and gas and mineral properties with respect to environmental matters. Such laws and regulations, presently in effect or as hereafter promulgated, may significantly affect the cost of its current oil production and any exploration and development activities undertaken by the Company and could result in loss or liability to the Company in the event that any such operations are subsequently deemed inadequate for purposes of any such law or regulation. NOTE 10 - SUBSEQUENT EVENTS On April 27, 2009, The Company issued shares of our Company Common Stock at $1.00 per share in exchange for the acquisition of additional certain oil and gas interests that were previously sold by Granite Energy, Inc. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission this Form 10-Q, including exhibits, under the Securities Act. You may read and copy all or any portion of the registration statement or any reports, statements or other information in the files at SEC's Public Reference Room located at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You can request copies of these documents upon payment of a duplicating fee by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings, including the registration statement, will also be available to you on the website maintained by the Commission at http://www.sec.gov. We intend to furnish our stockholders with annual reports which will be filed electronically with the SEC containing consolidated financial statements audited by our independent auditors, and to make available to our stockholders quarterly reports for the first three quarters of each year containing unaudited interim consolidated financial statements. We maintain a website at www.amerigoenergy.com. Our website and the information contained on that site, or connected to that site, is not part of or incorporated by reference into this prospectus. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This discussion contains forward-looking statements. The reader should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the Company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward- looking statements contained herein will be realized. Based on actual experience and business development, the Company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the Company's results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. A complete discussion of these risks and uncertainties are contained in our Annual Financial Statements included in the Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission on May 15, 2009. INTRODUCTION The Company derives its revenues from its producing oil and gas properties, of which the substantial majority are predominantly oil properties. These properties consist of working interests in producing oil wells having proved reserves. Our capital for investment in producing oil properties has been provided by the sale of common stock to its shareholders. The following is a discussion of the Company's financial condition, results of operations, financial resources and working capital. This discussion and analysis should be read in conjunction with the Company's financial statements contained in this Form 10-Q. OVERVIEW RESULTS OF OPERATIONS REVENUES For the year ended March 31, 2009, the Company generated $55,419 in revenues from royalties on producing oil and gas properties and rental income on a building we own. For the period ended March 31, 2008, the Company did not recognize any revenues because we did not have any significant business operations during that time. 16 OPERATING EXPENSES Lease Operating - Lease operating expense for the quarter ended March 31, 2009 totaled $25,857 as compared to $0 for the quarter ended March 31, 2008. The Company acquired its oil and gas interest during the quarter ended December 31, 2008 therefore we did not have any lease operating expenses prior to that acquisition. Consulting- Consulting expenses were $22,500 for the quarter ended March 31, 2009 as compared to $0 for the quarter ended March 31, 2008. The increase of $22,500 was related to the services performed by a company controlled by our chief financial officer. General and Administrative - General and administrative expenses were $31,641 for the quarter ended March 31, 2009, compared to $9,203 for the quarter ended March 31, 2008, representing an increase of $22,438. The increase in general and administrative expense reflects the lack of significant operations for most of 2008 until the reorganization on October 31, 2008. Professional Fees - Professional fees for the quarter ended March 31, 2009 were $129,288 as compared to $0 for the period ended March 31, 2008. The increase was related to the increase in operations and the use of consultants in addition to filing fees and stock transfer agent fees and associated filings that took place during the year. Depreciation, Amortization, and Depletion - Depreciation and amortization expenses on the acquired assets from the reorganization were $8,099 for the quarter ended March 31, 2009. The depletion expense for the quarter ended March 31, 2009 was $80,871 and was calculated based on an estimate using the straight line method over the estimated lives of the proved interests until production studies have been completed on the recently acquired oil and gas properties. There was $0 in depreciation, amortization, and depletion for the year ended March 31, 2008 because the Company had no depreciable assets until 2008. OTHER INCOME AND EXPENSES During the three months ended March 31, 2009, interest income was $15,246, compared to $0 during three months ended March 31, 2008, representing an increase of $15,246. The increase relates to the accrued interest on the $365,595 notes receivable from a related party and the note receivable on the sale of a rig in the amount of $397,259. See Note 6 for further information on the related party note payable. During the three months ended March 31, 2009, the Company sold a vehicle for $11,000 that had a book value of $12,883 for a loss of $1,883. NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS We realized a net loss of $229,400 for the quarter ended March 31, 2009, compared to a net loss of $538,516 for the quarter ended March 31, 2008, a decrease of $309,116. The decrease in net loss is partially attributable to a decrease of $506,813 in consulting expenses as compared to the three months ended March 31, 2008 and the increase in revenues due to the acquisition of oil and gas producing properties in 2008 and the current period. 17 LIQUIDITY AND CAPITAL RESOURCES At March 31, 2009, we had cash in the amount of $6,485, and a working capital deficit of $269,140, as compared to cash in the amount of $1,300 and a working capital deficit of $295,942 as of December 31, 2008. In addition, our stockholders' deficit was $12,647,615 at March 31, 2009, compared to stockholders' deficit of $12,331,894 at December 31, 2008. Our accumulated deficit increased from $13,013,897 at December 31, 2008 to $13,243,296 at March 31, 2009. Our operations used net cash of $156,391 during the quarter ended March 31, 2009, compared to $47,328 during the quarter ended March 31, 2008, a increase of $109,063. Our cash used for investing activities was $12,881 for the quarter ended March 31, 2009 and $0 for the quarter ended March 31, 2008. Our financing activities provided net cash of $148,695 during the quarter ended March 31, 2009, compared to net cash of $54,444 during the quarter ended March 31, 2008. INFLATION The Company's results of operations have not been affected by inflation and management does not expect inflation to have a material impact on its operations in the future. OFF- BALANCE SHEET ARRANGEMENTS The Company currently does not have any off-balance sheet arrangements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not Applicable 18 ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS We evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2009, the end of the period covered by this Quarterly Report on Form 10-Q. This evaluation was undertaken by our chief executive officer, S. Matthew Schultz, and our Chief Financial Officer, Jason F. Griffith. Mr. Schultz serves as our principal executive officer and Mr. Griffith serves as our principal accounting and financial officer. We reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the fiscal quarter covered by this report, as required by Securities Exchange Act Rule 13a-15, and concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management on a timely basis, including our principal executive officer and principal financial and accounting officer. CONCLUSIONS Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file pursuant to the Exchange Act are recorded, processed, summarized, and reported in such reports within the time periods specified in the Securities and Exchange Commission's rules and forms. CHANGES IN INTERNAL CONTROLS There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter, i.e., the three months ended March 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 19 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. During the first quarter of 2009, the Company became the plaintiff in a petition filed against South Texas Oil Company for defaulting on the terms of a purchase agreement entered into in September of 2007 by being late of several payments and entirely not paying other payments due. As of the date of this filing, no restitution has occurred. As of March 31, 2009, other than the lawsuit disclosed in the previous paragraph, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company's Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS (a) Exhibits. 31.1 Certification of our Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) 20 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 20, 2009 By: /s/ S. Matthew Schultz By: /s/ Jason F. Griffith ---------------------- ------------------------- S. Matthew Schultz Jason F. Griffith Chief Executive Officer, Chief Financial Officer and Principal Executive Officer and Principal Accounting Officer 21 EX-1 2 ex_31-1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A)/15(D)-14(A) I, S. Matthew Schultz, certify that: 1.I have reviewed this quarterly report on Form 10-Q of Amerigo Energy, Inc. for the fiscal quarter ended March 31, 2009; 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 registrant as of, and for, the periods presented in this 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 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 registrant, 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) 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. 6.I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 20, 2009 /s/ S. Matthew Schultz ---------------------- Chief Executive Officer (Principal Executive Officer) EX-2 3 ex_31-2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A)/15(D)-14(A) I, Jason F. Griffith, certify that: 1.I have reviewed this quarterly report on Form 10-Q of Amerigo Energy, Inc. for the fiscal quarter ended March 31, 2009; 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 registrant as of, and for, the periods presented in this 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 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 registrant, 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) 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. 1.I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 20, 2009 /s/ Jason F. Griffith --------------------- Chief Financial Officer (Principal Financial Officer) EX-3 4 ex_32-1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Amerigo Energy, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), S. Matthew Schultz, Chief Executive Officer and Jason F. Griffith, Chief Financial Officer of the Company do certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ S. Matthew Schultz - ---------------------- Chief Executive Officer /s/ Jason F. Griffith - --------------------- Chief Financial Officer May 20, 2009 -----END PRIVACY-ENHANCED MESSAGE-----