UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 333-118138
Quantum Energy, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 98-0428608
------------------------ ------------------------
(State of incorporation) (I.R.S. Employer ID No.)
7250 N.W. Expressway, Oklahoma City, OK 73132
---------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (405) 728-3800
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 twelve 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 large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer" and "smaller reporting company") in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of July 12, 2010, there were 47,000,000 shares of the registrant's common
stock outstanding.
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are "forward-looking statements" for purposes
of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of
the plans, strategies and objections of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or
belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words "may", "could", "estimate",
"intend", "continue", "believe", "expect" or "anticipate" or other similar
words. These forward-looking statements present our estimates and assumptions
only as of the date of this report. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements, which speak only as of
the dates on which they are made. We do not undertake to update forward-
looking statements to reflect the impact of circumstances or events that
arise after the dates they are made. You should, however, consult further
disclosures we make in future filings of our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to change and inherent
risks and uncertainties. The factors impacting these risks and uncertainties
include, but are not limited to:
o inability to raise additional financing for working capital and product
development;
o inability to fulfill and plan an event for an organization;
o deterioration in general or regional economic, market and political
conditions;
o the fact that our accounting policies and methods are fundamental to how we
report our financial condition and results of operations, and they may
require management to make estimates about matters that are inherently
uncertain;
o adverse state or federal legislation or regulation that increases the costs
of compliance, or adverse findings by a regulator with respect to existing
operations;
2
o changes in U.S. GAAP or in the legal, regulatory and legislative
environments in the markets in which we operate;
o inability to efficiently manage our operations;
o inability to achieve future operating results;
o our ability to recruit and hire key employees;
o the inability of management to effectively implement our strategies and
business plans; and
o the other risks and uncertainties detailed in this report.
In this form 10-Q references to "Your Event", "the Company", "we", "us", and
"our" refer to Your Event, Inc.
AVAILABLE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You can read these SEC filings and reports over the Internet at the
SEC's website at www.sec.gov. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street, NE, Washington, DC 20549 on official business days between the
hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for
further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including
audited financial statements, at no charge upon receipt to of a written
request to us at Quantum Energy, Inc., 7250 N.W. Expressway, Oklahoma City,
OK 73132.
3
QUANTUM ENERGY INC.
Balance Sheets
(Stated in US Dollars)
May 31, February 28,
2010 2010
Unaudited Audited
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 717 $ 784
------------ ------------
Total current assets $ 717 $ 784
============ ============
Liabilities and Stockholders' (Deficit)
Current liabilities
Accounts payable and accrued liabilities $ 617,289 582,093
Promissory notes payable 2,017,708 2,017,708
Due to related party 20,250 20,250
------------ ------------
Total current liabilities 2,655,247 2,620,051
Common stock issuance liability 762,500 762,500
------------ ------------
Total liabilities 3,417,747 3,382,551
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
Accumulated (deficit) (5,149,943) (5,114,680)
------------ ------------
Total stockholders' (deficit) (3,417,030) (3,381,767)
------------ ------------
Total Liabilities and Stockholders' (deficit) $ 717 $ 784
============ ============
The accompanying notes are an integral part of these financial statements
4
QUANTUM ENERGY INC.
Statements of Operations
(Stated in US Dollars)
(Unaudited)
Three Months Ended
May 31,
2010 2009
------------- -------------
Net oil and gas revenue $ - $ -
------------- -------------
Operating expenses
Amortization, depletion and depreciation - 59
Management fees - 3,000
Office and administration 69 404
Professional fees 7,958 3,869
------------- -------------
Total operating expenses 8,027 7,332
------------- -------------
Net loss before other income (expenses) (8,027) (7,332)
Other items
Interest expense (26,738) (26,738)
Currency translation (498) (3,589)
------------- -------------
Total other income (expenses) (27,236) (30,327)
------------- -------------
Net loss $ (35,263) $ (37,659)
============= =============
Basic and diluted loss per share $ (0.01) $ (0.00)
============= =============
Weighted average number of shares outstanding 47,000,000 47,000,000
============= =============
The accompanying notes are an integral part of these financial statements
5
QUANTUM ENERGY INC.
Statements of Cash Flows
(Stated in US Dollars)
(Unaudited)
Three Months Ended
May 31,
2010 2009
------------- -------------
Operating Activities
Net loss $ (35,263) $ (37,659)
Adjustment to reconcile net loss to net
cash used by operating activities
Amortization, depreciation and depletion - 59
Changes in operating assets and liabilities
Accounts payable and accrued liabilities 35,196 37,209
------------- -------------
Cash (used in) operating activities (67) (391)
------------- -------------
Decrease in cash during the period (67) (391)
Cash, beginning of the period 784 1,036
------------- -------------
Cash, end of the period $ 717 $ 645
============= =============
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ -
============= =============
The accompanying notes are an integral part of these financial statements
6
QUANTUM ENERGY INC.
Notes to the Interim Financial Statements
May 31, 2010
Note 1 Interim Reporting
The information presented in the accompanying interim three-month financial
statements is unaudited. In the opinion of management, the accompanying
financial statements reflect all adjustments necessary to present fairly our
financial position at May 31, 2010, results of operations and cash flows for
the three months ended May 31, 2010 and 2009. All such adjustments are of a
normal recurring nature. In preparing the accompanying financial statements,
management has made certain estimates and assumptions that affect reported
amounts in the financial statements and disclosures of contingencies. Actual
results may differ from those estimates. The results for interim periods are
not necessarily indicative of annual results.
These interim financial statements follow the same accounting policies and
methods of their application as Quantum Energy, Inc.'s ("the Company's")
audited February 28, 2010 annual financial statements. Accordingly, these
financial statements should be read in conjunction with the February 28, 2010
audited financial statements of the Company.
Note 2 Nature of Operations and Going Concern
QUANTUM ENERGY INC. ("the Company") was incorporated under the name "Boomers
Cultural Development Inc." under the laws of the State of Nevada on February
5, 2004. On May 18, 2006 the company changed its name to Quantum Energy Inc.
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. The continuation of the Company as a going
concern is dependent upon the continued financial support from its
shareholders, the ability of the Company to obtain necessary equity financing
to continue operations and to determine the existence, discovery and
successful exploitation of economically recoverable reserves in its resource
properties, confirmation of the Company's interests in the underlying
properties, and the attainment of profitable operations. At May 31, 2010, the
Company had not yet achieved profitable operations, has a working capital
deficiency of $2,654,530 and expects to incur further losses in the
development of its business. These factors raise substantial doubt regarding
the Company's ability to continue as a going concern.
7
QUANTUM ENERGY INC.
Notes to the Interim Financial Statements
May 31, 2010
Note 3 Summary of Significant Accounting Policies
The financial statements have, in management's opinion been properly prepared
within the framework of the significant accounting policies summarized below:
a) Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. As at May 31, 2010, cash and cash
equivalents consist of cash only.
b) Foreign Currency Translation
The Company's functional currency is the United States dollar. The
Company uses the United States dollar as its reporting currency for
consistency with registrants of the Securities and Exchange Commission
("SEC") and in accordance with the ASC 830-10.
Assets and liabilities were translated at the exchange rate in effect at
the period end and capital accounts are translated at historical rates.
Income statement accounts are translated at the average rates of exchange
prevailing during the period. Any exchange gains and losses are included
in the Statement of Operation.
Note 4 Common Stock
The authorized number of common shares remains at 75,000,000 common shares
with a par value of $0.001. At May 31, 2010, 47,000,000 shares of common
stock were issued and outstanding. The Company has agreed to issue an
additional 250,000 shares of the Company's common stock to a debt holder.
8
QUANTUM ENERGY INC.
Notes to the Interim Financial Statements
May 31, 2010
Note 5 Promissory Notes Payable
The Company's outstanding notes payable and accrued interest are summarized
as follows:
May 31, 2010
Note Payable Accrued Interest
----------------------------------
Fourteen (14) 4% notes payable to
investors in oil and gas investments
by the Company, unsecured and due
on demand $1,594,760 $309,875
10% note payable to an investor in
oil and gas investments by the Company,
unsecured and due on demand 172,948 69,659
10% note payable to a company that
sold oil and gas properties to the
Company, secured by the oil and gas
properties and due on demand 250,000 81,300
----------------------------------
$2,017,708 $460,834
==================================
In 2006 the Company agreed to issue 250,000 shares of its common stock in
connection with the purchase of oil and gas properties. Due to non-payment of
the $250,000 note payable by the Company these shares were valued at $3.05
per share and interest expenses of $381,250 was recognized for the years
ended February 28, 2007 and 2009. The 250,000 shares have not been issued as
of May 31, 2010, therefore, the liability section of the accompanying balance
sheet reflects a "Common stock issuance liability" of $762,500.
Interest expense related to the notes payable at May 31, 2010 was $26,738
($26,738 - 2009).
Note 6 Subsequent Events
The Company has evaluated subsequent events through July 12, 2010, the date
which the financial statements were available to be issued and has determined
that there were no subsequent events that warrant disclosure or recognition
in the financial statements.
9
ITEM 2. MANAGEMENT DISCUSSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
The following discussion and analysis is intended to help the reader
understand our business, financial condition, results of operations,
liquidity and capital resources. This discussion and analysis should be read
in conjunction with our financial statements and the accompanying notes
included in this report, as well as our audited financial statements and the
accompanying notes included in our annual report on Form 10-K/A for the year
ended February 28, 2010.
The financial information with respect to the three month periods ended
May 31, 2010 and May 31, 2009 that is discussed below is unaudited. In the
opinion of management, this information contains all adjustments, consisting
only of normal recurring accruals, necessary to state fairly the unaudited
financial statements. The results of operations for the interim periods are
not necessarily indicative of the results of operations for the full fiscal
year.
Unless the context otherwise requires, all preferences to "Quantum," "our,"
"us," "we" and the "Company" refer to Quantum Energy, Inc. and its
subsidiaries, as a combined entity.
We were incorporated on February 5, 2004, in the State of Nevada. Our
principal executive offices are located at 7250 NW Expressway, suite 260,
Oklahoma City, OK. Our telephone number is (405) 728-3800.
Starting in May of 2006, we decided to embark on a new business path in oil
and gas exploration and acquisitions. We acquired interests in numerous
oil & gas properties in the Barnett Shale area of West Texas. Our
business strategy is to acquire interest in the properties of, and working
interests in the production owned by, established oil and gas production
companies, whether public or private, in the United States oil producing
areas. We believe such opportunities exist in the United States. We also
believe that these opportunities have considerable future potential for the
development of additional oil reserves. Such new reserves might come from the
development of existing but as yet undeveloped reserves as well as from
future success in exploration.
Barnett Shale Developments; after the initial success of the Barnett Shale
leases, the production program in the Barnett Shale area encountered
substantial difficulties. Numerous wells throughout this extensive area
experienced production difficulties. In addition to the production problems
was the severe drop in natural gas prices. All of the wells in which the
Company had interests were suspended and all marginal wells have been capped,
resulting in the Company abandoning the Company's interest in the Barnett
Shale area
10
When and if funding becomes available, we plan to acquire high-quality oil
and gas properties, primarily "proven producing and proven undeveloped
reserves." We will also explore low-risk development drilling and work-over
opportunities with experienced, well-established operators.
Liquidity and Capital Resources
At May 31, 2010 the Company had a working capital deficiency of $2,654,530 as
compared to $2,619,267 as at February 28, 2010, The total assets of the
Company were $717, consisting of cash compared to total assets of $784 at
February 28, 2010.
At May 31, 2010 the total current liabilities of the Company increased to
$2,655,247 from $2,620,051 at February 28, 2010. This increase in current
liabilities was due to accrued interest.
The Company had a negative cash flow of $67 from operating activities for the
three months ended May 31, 2010 ($391 - 2009) a decrease of cash outflow of
$324.
Results of Operations
For the three (3) months ended May 31, 2010 operating expenses were $8,027
compared to $7,332 for the three (3) months ended May 31, 2009. This increase
of was due to an increase in professional fees.
The Company posted a net loss of $35,263 for the three (3) months ended
May 31, 2010, compared to a net loss of $37,659 for the three (3) months
ended May 31, 2009.
At May 31, 2010 there was no bank debt.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
11
Going Concern
The Company has not attained profitable operations and is dependent upon
obtaining financing to pursue its business objectives. For these reasons, the
Company's auditors stated in their report on the Company's 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 Company's 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.
Item 3. Controls and Procedures
As of the end of the nine (9) months ended January 31, 2010, there were no
changes in our internal control over financial reporting that occurred that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
12
PART II
Item 1. Legal Proceedings.
We are not currently a party to any legal proceedings and, to our knowledge,
no such proceedings are threatened or contemplated.
Item 1.A. Risk Factors
Not applicable.
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 a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
31.1 Rule 13a-14 Certification of Chief Executive Officer and
Chief Financial Officer
32.1 Section 1350 Certification of Chief Executive Officer and
Chief Financial Officer
13
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.
QUANTUM ENERGY INC.
By: /s/ Sharon Farris
---------------------------
Sharon Farris
President and
Chief Executive Officer
Date: July 12, 2010
-------------
14