SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 2005
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 000-29541
BRONCO ENERGY FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 86-0972709
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION
ORGANIZATION) NO.)
2920 N. SWAN ROAD, SUITE 206, TUCSON, AZ 85712
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (866) 305-0485
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
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 |_|
Indicate by check mark whether the Registrant is an accelerated filer
(as defined by Rule 12b-2 of the Act). Yes |_| No |X|
BRONCO ENERGY FUND, INC.
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS HISTORICAL INFORMATION AND
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS FORM 10-Q PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS
AND UNCERTAINTIES THAT MAY CAUSE BRONCO ENERGY FUND, INC.'S (THE "COMPANY'S")
ACTUAL RESULTS TO DIFFER FROM FUTURE PERFORMANCE SUGGESTED HEREIN.
INDEX PAGE NO.
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PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Balance Sheets as of March 31, 2005 and December 31, 2004 3
Statements of Operations for the three-month periods ended March 31, 2005 and March 31,
2004 4
Statements of Stockholders' Equity for the three-month periods ended March 31, 2005 and
March 31, 2004 5
Statements of Cash Flows for the three-month periods ended March 31, 2005 and March 31,
2004 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
BALANCE SHEETS
March 31, December 31,
2005 2004
--------------- -----------------
(unaudited)
Assets:
Cash and cash equivalents $ 23,284 $ -
Prepaid expenses 5,000 -
Deposits 12,147 -
-------------- ----------------
Total Assets $ 40,431 $ -
============== ================
Liabilities
Accounts payable $ 46,937 $ 10,318
Accrued expenses 33,000 -
Short-term notes payable - 250,000
-------------- ----------------
Total Liabilities 79,937 260,318
-------------- ----------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 11,376,000 and 200,000 Shares
at March 31, 2005 and December 31, 2004 11,376 200
Paid-In Capital 291,024 -
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (340,706) (259,318)
-------------- ---------------
Total Stockholders' Equity (39,506) (260,318)
-------------- ---------------
Total Liabilities and
Stockholders' Equity $ 40,431 $ -
============== ===============
The accompanying notes are an integral part of these financial statements.
3
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative
since
October 20,
For the three months ended 1999
March 31, March 31, inception of
----------------- ------------------ development
2005 2004 stage
----------------- ------------------ ------------------
Revenues: $ - $ - $ -
Expenses:
Consulting Expense 5,000 - 105,000
General and Administrative 76,388 300 90,094
----------------- ------------------ ------------------
Net Loss $ (81,388)$ (300)$ (195,094)
================= ================== ==================
Basic & Diluted loss per share $ (0.02)$ (0.00)
================= ==================
Weighted average shares outstanding 5,117,333 1,000,000
================= ==================
The accompanying notes are an integral part of these financial statements.
4
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE JUNE 19, 1997 (INCEPTION) TO DECEMBER 31, 2004
(UNAUDITED)
Deficit
Accumulated
Since
October 20,
1999
Inception of
Common Stock Paid-In Retained Development
Shares Par Value Capital Deficit Stage
--------------- ------------- ------------ ------------- -------------
Balance at June 19, 1997
(inception) - $ - $ - $ - $ -
November 4, 1997 Issuance of
Stock for Services and payment
of Accounts Payable 1,000,000 1,000 - - -
Net Loss - - - (1,100) -
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 1997 1,000,000 1,000 - (1,100)
Net Loss - - - (100) -
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 1998 1,000,000 1,000 - (1,200) -
Capital contributed by shareholder - - 350 - -
Net Loss - - - - (150)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 1999 1,000,000 1,000 350 (1,200) (150)
Capital contributed by shareholder - - 2,181 - -
Net Loss - - - - (2,181)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 2000 1,000,000 1,000 2,531 (1,200) (2,331)
Capital contributed by shareholder - - 1,057 - -
Net Loss - - - - (1,275)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 2001 1,000,000 1,000 3,588 (1,200) (3,606)
Net Loss - - - - (300)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 2002 1,000,000 1,000 3,588 (1,200) (3,906)
--------------- ------------- ------------ ------------- ------------
Net Loss - - - - (300)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 2003 1,000,000 1,000 3,588 (1,200) (4,206)
Purchase and retire Treasury Stock (800,000) (800) (3,588) - (145,612)
Net Loss - - - - (109,500)
--------------- ------------- ------------ ------------- ------------
Balance at December 31, 2004 200,000 $ 200 $ - $ (1,200) (259,318)
Conversion of note to stock 5,000,000 5,000 245,000 - -
Stock grants 5,200,000 5,200 - -
-
Exercise of stock options 900,000 900 8,100 -
-
Sale of stock 76,000 76 37,924 - -
Net Loss (81,388)
--------------- ------------- ------------ ------------- ------------
Balance at March 31, 2005 11,376,000 $ 11,376 $ 291,612 $ (1.200) $ (340,706)
=============== ============= ============ ============= ============
The accompanying notes are an integral part of these financial statements.
5
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
since October
For the For the 20, 1999
three months three months Inception of
ended March 31, ended March 31, Development
2005 2004 Stage
------------- ------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (81,388)$ (300) $ (195,094)
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock issued for services 5,200 - 5,200
Increase in Prepaids and Deposits (17,147) - (17,147)
Increase in Accounts Payable and Accrued Liabilities 69,619 300 79,737
------------- ------------- --------------
Net Cash Used in operating activities (23,716) - (127,304)
------------- ------------- --------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
------------- ------------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable 250,000
Purchase and cancel treasury stock - - (150,000)
Capital contributed by shareholder - - 3,588
Proceeds from exercise of stock options 9,000 - 9,000
Proceeds from sale of common stock 38,000 - 38,000
------------- ------------- --------------
Net Cash Provided by
Financing Activities 47,000 - 150,588
------------- ------------- --------------
Net (Decrease) Increase in
Cash and Cash Equivalents 23,284 - -
Cash and Cash Equivalents
at Beginning of Period - - -
------------- ------------- --------------
Cash and Cash Equivalents
at End of Period $ 23,284 $ - $ 23,284
============= ============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
None
The accompanying notes are an integral part of these financial statements.
6
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN
On December 21, 2004 the Company filed a Form N-54A, Notification
with the Securities and Exchange Commission electing to become a
Business Development Company pursuant to Sections 55 through 65
of the Investment Company Act of 1940.
Bronco has been in the developmental stage since inception and
its operations to date have been limited to issuing shares and
other organizational matters. At March 31, 2005, the Company has
no investments.
Bronco will attempt to locate and negotiate with eligible
portfolio companies for Bronco to invest in, lend funds to,
acquire an interest in and/or possibly manage. Bronco intends to
offer managerial assistance to eligible portfolio companies in
which it invests.
As a business development company, Bronco will be able to raise
money to acquire interests in small private business, as well as
larger companies.
The accompanying financial statements have been prepared on the
basis of accounting principles applicable to a "going concern",
which assume that the Company will continue in operation for at
least one year and will be able to realize its assets and
discharge its liabilities in the normal course of operations.
Several conditions and events cast doubt about the Company's
ability to continue as a "going concern." The Company has
incurred net losses of approximately $81,388 for the three months
ended March 31, 2005 and $109,500, $300 and $300 for the year
ended December 31, 2004, 2003 and 2002 respectively, has a
liquidity problem, and requires additional financing in order to
finance its business activities on an ongoing basis. The Company
is actively pursuing alternative financing and has had
discussions with various third parties, although no firm
commitments have been obtained. The Company's future capital
requirements will depend on numerous factors including, but not
limited to, continued progress in finding a merger candidate and
the pursuit of business opportunities.
These financial statements do not reflect adjustments that would
be necessary if the Company were unable to continue as a "going
concern". While management believes that the actions already
taken or planned, will mitigate the adverse conditions and events
which raise doubt about the validity of the "going concern"
assumption used in preparing these financial statements, there
can be no assurance that these actions will be successful. If the
Company were unable to continue as a "going concern," then
substantial adjustments would be necessary to the carrying values
of assets, the reported amounts of its liabilities, the reported
revenues and expenses, and the balance sheet classifications
used.
NATURE OF BUSINESS
The Company has no products or services as of March 31, 2005. The
Company was organized as a vehicle to seek merger or acquisition
candidates. The Company intended to acquire interests in various
business opportunities, which in the opinion of management would
provide a profit to the Company. On December 16, 2004 the Company
filed a notification under Form N54a with the United States
Securities and Exchange Commission ("SEC") indicating its
election to be regulated as a business development company ("a
BDC") under the Investment Company Act of 1940. In connection
with this election, the Company has adopted corporate resolutions
and intends to operate as a closed-end management investment
company.
7
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
(Continued)
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (CONTINUED)
ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the State of
Nevada on June 19, 1997. The Company ceased all operating
activities during the period from June 19, 1997 to October 20,
1999 and was considered dormant. Since October 20, 1999, the
Company is in the development stage, and has not commenced
planned principal operations.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies for Bronco Energy Fund, Inc.
(a development stage company) is presented to assist in
understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the
financial statements.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles required management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and 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.
CONCENTRATION OF CREDIT RISK
The Company has no significant off-balance-sheet concentrations
of credit risk such as foreign exchange contracts, options
contracts or other foreign hedging arrangements.
LOSS PER SHARE
The reconciliations of the numerators and denominators of the
basic loss per share computations are as follows:
Income Shares
------ ------ Per Share
(Numerator) (Denominator) Amount
For the three months ended March 31, 2005
BASIC LOSS PER SHARE
Loss to common shareholders $ (81,388) 5,117,333 $ (0.02)
============ ========= =============
For the three months ended March 31, 2004
BASIC LOSS PER SHARE
Loss to common shareholders $ (300) 1,000,000 $ -
============ ========= ==============
8
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
(Continued)
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
LOSS PER SHARE (CONTINUED)
The effect of outstanding common stock equivalents would be
anti-dilutive for March 31, 2005 and 2004 and are thus not
considered. At March 31, 2005 there are 4,900,000 outstanding
common stock equivalents. At March 31, 2004 there are no common
stock equivalents outstanding.
NOTE 3 - INCOME TAXES
As of March 31, 2005, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately
$191,888 that may be offset against future taxable income through
2025. Current tax laws limit the amount of loss available to be
offset against future taxable income when a substantial change in
ownership occurs. Therefore, the amount available to offset
future taxable income may be limited. No tax benefit has been
reported in the financial statements, because the Company
believes there is a 50% or greater chance the carryforwards will
expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the
same amount.
NOTE 4 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common
with a development stage company, the Company has had recurring
losses during its development stage. 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. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. In the
interim, shareholders of the Company have committed to meeting
its minimal operating expenses.
NOTE 5 - COMMITMENTS
As of March 31, 2005 substantially all activities of the Company
have been conducted by corporate officers from either their homes
or business offices. Currently, there are no outstanding debts
owed by the company for the use of these facilities and there are
no commitments for future use of the facilities.
Commencing on January 1, 2005, the Company entered into
employment agreements with Dan Baker, Jim Marshall and Kevin
Sherlock, the President, Treasurer and Secretary, in the amounts
of $60,000 $36,000 and 36,000, respectively. The officer salaries
are contingent on the Company having the cash flow and/or cash
reserves to meet the Company's operating expenses.
9
BRONCO ENERGY FUND, INC.
AND SUBSIDIARIES
(formerly known as Green Clover Luck Corporation)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
(Continued)
NOTE 6 - COMMON STOCK
On February 8, 2005 notes payable in the amount of $250,000 were
converted into 5,000,000 shares of common stock under the 1-E
exemption.
During January and February, 2005 the Company issued 5,200,000
shares of common stock to officers and directors at the rate of
$.001.
On January 24, 2005, the Company filed an offering to sell common
stock equal to $5,000,000 under Regulation E promulgated under
the Securities Act of 1933 at prices between $.05 and $5.00 per
share. The offering became effective on February 8, 2005. As of
March 31, 2005 the Company had sold 76,000 shares at $.50 per
share.
During January and February the Company granted 5,200,000 stock
options to Board of Directors exercisable at $.01.
During February and March, 2005, director's options for 900,000
common shares were exercised at $.01
NOTE 7 - SUBSEQUENT EVENTS
On April 21, 2005, Bronco Coal Company of Utah, a wholly owned
subsidiary of the Company, purchased the Columbia Coal Mine
("Columbia") located in Books Cliff, near Price Utah. The
estimated reserves of metallurgical coal at the mine are in
excess of 100 million tons. The mine has been out of operation
since 1966 and will require significant renovation and
improvement to meet current standards and achieve operating
efficiency. The Company does not expect significant production
operations at the mine until the first quarter of 2006.
The cost of Columbia was $16,300,632, for which the sellers took
back a note for $15, 203,647 of which $888,393 is due before the
end of June 2005, and on the 2nd, 3rd and 4th anniversaries of
the purchase payments of $4,264,297, $5,906,231 and $4,144,726,
respectively, plus interest imputed at 8% per annum are due. The
Company has secured a $3,000,000 line of credit, of which
$900,000 was applied to the purchase down payment and the balance
will be drawn over the next 5 months to meet the June purchase
payment and to fund some of the engineering studies, licensing
and improvement costs necessary put the mine in operating
condition. The line of credit bears interest at a rate of 8% per
annum and is due April 21, 2006.
In conjunction with the purchase, Bronco Coal Company of Utah
agreed to pay the sellers a mineral royalty of 2.25% of all sales
from the mine. Additionally, the Company agreed to sell the
lender 157,020 shares of its common stock at $0.001 per share.
The current sales price of the stock at the time of the
transaction was $.50 per share. The difference reflects an
addition to paid in capital of $78,353. The lender exercised this
option with the initial funding of the loan.
The following proforma balance sheet reflects the acquisitions of
the Columbia property as if it had occurred at March 31, 2005.
The property has not been in production since 1966, therefore, no
results of operations have been as if it had been in operation
during the three months ended March 31, 2005 are presented.
10
Historical Adjustments Proforma
Cash $ 23,284 $ (20,000) $ 3,284
Prepaid Expenses 5,000 - 5,000
------ ---------- -----
Current Assets 28,284 (20,000) 8,284
Investments 12,147 16,288,485 16,300,632
------- ------------- ----------
Total Assets $ 40,431 $16,268,485 $ 16,308,916
======= ============ ==============
Accounts payable $46,937 $86,328 $133,265
Accrued expenses 33,000 33,000
Notes payable due within one year - 900,000 900,000
------------ -------- -------
Current Liabilities 79,937 986,328 1,066,265
Long term notes payable - 15,203,647 15,203,647
---- ----------- ----------
Total Liabilities 79,937 16,189,975 16,269,912
------- ----------- ----------
Common Stock 11,376 157 11,533
Paid in Capital 291,024 78,353 369,377
Retained Deficit (1,200) - (1,200)
Deficit accumulated during development stage (340,706) - (340,706)
------------- -------- ---------
Stockholders' Deficit (39,506) 78,510 39,004
-------- --------- ------
Total Liabilities and Stockholders' Deficit $40,431 $16,268,485 $ 16,308,916
======= ============ ==============
- -------
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. THREE-MONTH PERIOD ENDED MARCH 31, 2005 AS COMPARED TO THE
SIMILAR PERIOD IN 2004
LIQUIDITY AND CAPITAL RESOURCES
We have conducted limited operations to date. We have been organized to provide
investors with the opportunity to participate, with a modest amount in venture
capital, in investments that are generally not available to the public and that
typically require substantially larger financial commitments. In addition, we
will provide professional management and administration that might otherwise be
unavailable to investors if they were to engage directly in venture capital
investing.
At March 31, 2005, the Company held $40,431 in assets as compared to $0 in
assets at December 31, 2004.
Cash and cash equivalents from inception to date have been insufficient to
provide the operating capital necessary to operate the Company. The necessary
capital to operate the Company was initially provided by the principals and
founders of the Company in the form of both debt and capital stock issuances as
set forth in the financial statements incorporated herein. In order to raise
capital, the Company, on January 24, 2005, filed a Form 1-E with the SEC,
proposing to sell up to $5,000,000 of its common stock at prices between $0.05
and $5.00. Pursuant to the 1-E exemption, the Company, through March 31, 2005,
converted outstanding promissory notes in the amount of $250,000 for 5,000,000
shares of common stock at the price of $0.05, and sold a total of 76,000 shares
of common stock at the price of $0.50 to 14 purchasers.
In summary, there has been an absence of liquidity and capital resources to
operate the Company self-sufficiently. Such inadequacy will continue until the
Company is able to raise additional funds pursuant to the filed 1-E exemption,
or by securing funding partners.
The Company believes that its liquidity and capital resources are adequate to
satisfy its current operational needs as well as its investment objectives.
RESULTS OF OPERATIONS
INVESTMENT INCOME AND EXPENSES
For the three months ended March 31, 2005, the Company had no investment income,
and operating expenses of $81,388, resulting in a net loss of ($81,388). For the
three months ended March 31, 2004, the Company had no investment income, and
operating expenses of $300, resulting in a net loss of ($300). The increase in
expenses for the three months ended March 31, 2005 over the same period in 2004
resulted from the Company commencing its primary operations. The expenses
consist of consulting expenses in the amount of $5,000 and general and
administrative expense of $76,388. The general and administrative expense
consisted primarily of accrued wages, director fees and expense, and general
business expenses.
NET ASSETS
The Company's net assets (liabilities) were $(39,506), excess of liabilities
over net assets, or a net liability value per share of $(0.003) at March 31,
2005. This represents a slight change from net assets of $0, at December 31,
2005. This decrease in net asset (liability) value per share resulted primarily
from the proceeds of the sale of stock pursuant to the Company's 1-E offering
exemption offset by operating costs during the period.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company's Valuation and Audit Committees, consisting of the independent
Directors of the Company, will make certain critical accounting estimates with
respect to the valuation of private portfolio investments. As the Company has
only commenced limited investing activities, the Company has no portfolio
investments at March 31, 2005.
12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
EQUITY PRICE RISK
The Company anticipates that a majority of its investment portfolio will consist
of securities in private companies and private investment funds, which are not
publicly traded. These investments would be recorded at fair value as determined
by the Investment Advisers in accordance with valuation guidelines adopted by
the Board of Directors. This method of valuation does not result in increases or
decreases in the fair value of these securities in response to changes in market
prices. Thus, these securities would not be subject to equity price risk
normally associated with public equity markets, except that to the extent that
the private investment funds hold underlying public securities, the Company is
indirectly exposed to equity price risk associated with the public markets.
Thus, there is no exposure to equity price risk, estimated as the potential loss
in fair value due to a hypothetical 10% decrease in quoted market prices. At
March 31, 2005, the Company held no publicly traded equity securities.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. As of March 31, 2005
(the end of the period covered by this report), the Company's principal
executive officers and principal financial officer evaluated the effectiveness
of the Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such
evaluation, the Company's disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company was made
known to them by others within those entities.
(b) Changes in Internal Controls. There were no changes in the Company's
internal control over financial reporting identified in connection with the
evaluation of such internal control that occurred during the Company's last
fiscal quarter, that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
USE OF PROCEEDS
During the three months ended March 31, 2005, we received a total of
$288,000 in proceeds from the sale of shares of commons stock being offered by
the Company pursuant to the Form 1-E filed January 24, 2005 with the SEC,
proposing to sell up to $5,000,000 of its common stock at prices between $0.05
and $5.00. Pursuant to the 1-E exemption, the Company, through March 31, 2005,
converted outstanding promissory notes in the amount of $250,000 for 5,000,000
shares of common stock at the price of $0.05. Additionally, the Company sold a
total of 76,000 shares of common stock at the price of $0.50 to 14 purchasers,
netting the Company $38,000. The directors also exercised options to purchase
900,000 shares of common stock for an exercise price of $9,000. We used the net
proceeds from this offering as follows:
Retirement of debt $250,000
Deposits on Columbia Mine Purchase and other deposits 17,147
Operating and administrative expenses 6,569
Working capital (cash) 23,284
---------
$297,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS.
31.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(B) REPORTS ON FORM 8-K.
(1) On February 10, 2005, the Company filed a Current Report on Form 8-K to
report under Item 5.02 appointment of additional Directors.
(2) On February 14, 2005, the Company filed a Current Report on Form 8-K to
report under Item 5.02 appointment of additional Directors.
(3) On May 4, 2005, the Company filed a Current Report on Form 8-K to report
under Item 4.01 that Robison, Hill & Co had resigned as the Company's
certifying accountant, and that Epstein, Weber & Conover, P.L.C. was
appointed the Company's certifying accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BRONCO ENERGY FUND, INC.
Date: May 13 2005 BY: /s/ Dan Baker
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Dan Baker
Chief Executive Officer/principal executive
officer
Date: May 13 2005 BY: /s/ James Marshall
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James Marshall
Chief Financial Officer/principal financial
officer
14