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EX-32.1 - CERTIFICATIONS PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - LILIS ENERGY, INC. | f10q0909ex32i_recoveryengy.htm |
EX-31.1 - CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - LILIS ENERGY, INC. | f10q0909ex31i_recoveryengy.htm |
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 September 30, 2009
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from
______to______.
RECOVERY
ENERGY, INC.
(Exact
name of registrant as specified in Charter)
NEVADA
|
333-152571
|
74-3231613
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
File No.)
|
(IRS
Employee Identification No.)
|
1515
Wynkoop Street, Suite 200
Denver,
CO 80202
(Address
of Principal Executive Offices)
_______________
1
(888) 887-4449
(Issuer
Telephone number)
_______________
Universal
Holdings, Inc.
PO
Box 8851, Rocky Mount, NC 27804
(252)
407-7782
(Former
Name or Former Address if Changed Since Last Report)
Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
Yes ¨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 filer.
See definition of “accelerated filer” and “large accelerated filer”
in Rule 12b-2 of the Exchange Act (Check one):
Large
Accelerated Filer o Accelerated
Filer o Non-Accelerated
Filer o Smaller
Reporting Company x
Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
Yes o No x
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of November 13, 2009 9,534,000 shares of Common Stock.
Recovery
Energy, Inc.
(Formerly,
Universal Holdings, Inc.)
FORM
10-Q
September
30, 2009
INDEX
PART
I-- FINANCIAL INFORMATION
Item
1.
|
Financial
Statements
|
1
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
11
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
14
|
Item
4T.
|
Control
and Procedures
|
14
|
PART
II-- OTHER INFORMATION
Item
1
|
Legal
Proceedings
|
15
|
Item
1A
|
Risk
Factors
|
15
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
15
|
Item
3.
|
Defaults
Upon Senior Securities
|
15
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
16
|
Item
5.
|
Other
Information
|
16
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
16
|
SIGNATURE
Item
1. Financial Information
RECOVERY
ENERGY
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
|
||||||||
September
30, 2009
|
April
30, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 140 | $ | 1,049 | ||||
Prepaid
expenses
|
188,889 | - | ||||||
Total
current assets
|
189,029 | 1,049 | ||||||
Property,
plant and equipment, net
|
3,250,000 | 0 | ||||||
TOTAL
ASSETS
|
$ | 3,439,029 | $ | 1,049 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY:
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 82,575 | $ | 1,550 | ||||
Accrued
payroll
|
9,583 | 0 | ||||||
Total
current liabilities
|
92,158 | 1,550 | ||||||
TOTAL
LIABILITIES
|
92,158 | 1,550 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
- | - | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT):
|
||||||||
Preferred
stock, $0.0001 par value, 10,000,000 shares authorized,
|
||||||||
none
issued and outstanding
|
- | - | ||||||
Common
stock, $0.0001 par value, 100,000,000 shares authorized;
|
||||||||
9,284,000
and 7,099,000 shares issued and outstanding, respectively
|
928 | 710 | ||||||
Additional
paid-in-capital
|
3,635,122 | 216,340 | ||||||
Accumulated
deficit during the development stage
|
(289,179 | ) | (217,551 | ) | ||||
Total
stockholders' deficit
|
3,346,871 | (501 | ) | |||||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 3,439,029 | $ | 1,049 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements
1
RECOVERY
ENERGY, INC.
|
||||||||||||||||||||
f/k/a
UNIVERSAL HOLDINGS, INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||||||
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
AND
|
||||||||||||||||||||
FOR
THE PERIOD AUGUST 31, 2007 (INCEPTION) THROUGH SEPTEMBER 30,
2009
|
||||||||||||||||||||
(UNAUDITED)
|
||||||||||||||||||||
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
August
31, 2007
|
||||||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
(Inception)
through
|
||||||||||||||||
September
30, 2009
|
September
30, 2008
|
September
30, 2009
|
September
30, 2008
|
September
30, 2009
|
||||||||||||||||
Revenue
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
||||||||||||||||||||
Costs
of revenue
|
- | - | 30,000 | - | 30,000 | |||||||||||||||
Gross
profit
|
- | - | (30,000 | ) | - | (30,000 | ) | |||||||||||||
Operating
expense
|
58,123 | 41,195 | 82,863 | 77,991 | 203,348 | |||||||||||||||
Impairment charge | - | - | 55,831 | - | 55,831 | |||||||||||||||
Loss
from operations before interest income and
|
||||||||||||||||||||
provision
for (benefit from) income tax
|
(58,123 | ) | (41,195 | ) | (168,694 | ) | (77,991 | ) | (289,179 | ) | ||||||||||
Other
income
|
- | - | - | - | - | |||||||||||||||
Interest
income
|
- | - | - | - | - | |||||||||||||||
Income
tax expense
|
- | - | - | - | - | |||||||||||||||
- | - | - | - | - | ||||||||||||||||
Net
loss
|
(58,123 | ) | (41,195 | ) | (168,694 | ) | (77,991 | ) | (289,179 | ) | ||||||||||
Net
loss per common share - basic and diluted
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | |||||
Weighted
average number of common shares outstanding
|
||||||||||||||||||||
during
the period - basic and diluted
|
7,318,000 | 7,099,000 | 7,172,000 | 7,099,000 | 9,284,000 | |||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements
2
RECOVERY
ENERGY, INC.
|
||||||||||||
f/k/a
UNIVERSAL HOLDINGS, INC.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 AND
|
||||||||||||
FOR
THE PERIOD AUGUST 31, 2007 (INCEPTION) THROUGH SEPTEMBER 30,
2009
|
||||||||||||
(UNAUDITED)
|
||||||||||||
Nine
Months
|
Nine
Months
|
August
31, 2007
|
||||||||||
Ended
|
Ended
|
(Inception)
through
|
||||||||||
September
30, 2009
|
September
30, 2008
|
September
30, 2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (168,694 | ) | $ | (77,991 | ) | $ | (289,179 | ) | |||
Adjustments
to reconcile net loss to net cash
|
||||||||||||
used
in operating activities:
|
||||||||||||
Amortization
|
912 | 2,322 | ||||||||||
Impairment
charge
|
55,831 | |||||||||||
Changes
in assets and liabilities:
|
||||||||||||
Increase
in prepaid expenses
|
(188,889 | ) | - | (188,889 | ) | |||||||
Increase
(decrease) in inventory
|
30,000 | (30,000 | ) | |||||||||
Increase
(decrease) in accounts payable
|
81,725 | (9,630 | ) | 82,575 | ||||||||
Increase
in accrued payroll
|
9,583 | 9,583 | ||||||||||
Net
cash used in operating activities
|
(179,532 | ) | (115,299 | ) | (385,910 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of Property, Plant and Equipment
|
(3,250,000 | ) | - | (3,250,000 | ) | |||||||
Net
cash used in investing activities
|
(3,250,000 | ) | - | (3,250,000 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from the sale of common stock
|
3,420,500 | 10,550 | 3,636,050 | |||||||||
Net
cash provided by financing activities
|
3,420,500 | 10,550 | 3,636,050 | |||||||||
INCREASE
(DECREASE) IN CASH
|
(9,032 | ) | (104,749 | ) | 140 | |||||||
CASH,
BEGINNING OF YEAR
|
9,172 | 139,838 | - | |||||||||
CASH,
END OF PERIOD
|
$ | 140 | $ | 35,089 | $ | 140 | ||||||
Supplemental
Disclosures
|
||||||||||||
Cash
paid during the year for interest
|
$ | - | $ | - | $ | - | ||||||
Cash
paid during the year for taxes
|
$ | - | $ | - | $ | - | ||||||
The accompanying notes are an integral part of these consolidated
financial statements
3
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
NOTE 1
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
|
Basis of
Presentation
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules and regulations of the Securities and
Exchange Commission for interim financial information. Accordingly,
they do not include all the information necessary for a comprehensive
presentation of financial position and results of operations.
It is
management's opinion, however that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period
are not necessarily indicative of the results to be expected for the
year.
Activities
during the development stage include developing the business plan and raising
capital.
Recovery
Energy, Inc. f/k/a Universal Holdings, Inc. (a development stage company) (the
"Company") was incorporated under the laws of the State of Nevada on August 31,
2007. The Company was planning to manufacture, import, market and
distribute a patented automotive maintenance and repair mechanism known as the
Turn-Key Tool TM.
As
previously filed on Form 8-K, on September 21, 2009, the
Company purchased 100% of the outstanding membership units of
Coronado Acquisition, LLC from its sole member and unitholder, Michael Hlavsa
(the “Unit Purchase Agreement”). In connection with the Unit
Purchase Agreement, the Company also agreed to convert a note that was issued by
Coronado to certain noteholders on May 31, 2009 in the principal amount of
$3,250,000 (the “Coronado Note”). The Coronado Note was issued by
Coronado to Matthew Jennings as agent for Capital Asset Lending, Inc., a
California corporation, Westmoore Lending, LLC, a California limited liability
company, and Westmoore Lending Opportunities, LLC, a California limited
liability company (collectively, the “Coronado
Noteholders”). Pursuant to the terms of the Coronado Note, Coronado,
at its option, may pay the principal amount of $3,250,000 in shares of a
publicly listed company at the rate of one dollar and fifty five cents per share
provided the publicly traded company is in current status with its SEC filing
requirements and at the time of tender is quoted on the
OTCBB. Accordingly, under the terms of the Coronado Note, the Company
has agreed to issue an aggregate of 2,100,000 shares of its common stock, par
value $0.0001 per share, to the Coronado Noteholders in full satisfaction of the
Coronado Note
Since the
Company is still in the development stage of its operations, there have been no
revenue or earnings of the Company since the date of acquisition of Coronado for
this reporting period.
Principles of
Consolidation
The
accompanying 2009 condensed consolidated financial statements include the
accounts of Recovery Energy, Inc. from August 31, 2007 (inception) and its 100%
owned subsidiaries Universal Product Marketing, Inc. and Coronado
Acquisitions, LLC. All inter-company accounts have been eliminated in the
consolidation (See Note 4(C)).
Use of
Estimates
In
preparing financial statements in conformity with generally accepted accounting
principles, management is required 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 revenues and
expenses during the reported period. Actual results could differ from
those estimates.
4
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
Cash and Cash
Equivalents
The
Company considers all highly liquid temporary cash investments with an original
maturity of three months or less to be cash equivalents. At September, 2009 and
April 30, 2009, the Company had no cash equivalents.
Inventory
Inventories
are valued at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method. As of September 30, 2009 and April 30,
2009, the Company had nofinished goods inventory. Provision for
potentially obsolete or slow moving inventory is made based on management's
analysis of inventory levels and future sales forecasts. For the year
ended April 30, 2009, the Company recorded an inventory impairment of
$30,000.
Long Lived
Assets
Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If such
assets are considered impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets.
In
accordance with FASB new codification of, “Accounting for Impairment or Disposal of Long-Lived
Assets”, the Company carries long-lived assets at the lower of the
carrying amount or fair value. Impairment is evaluated by estimating future
undiscounted cash flows expected to result from the use of the asset and its
eventual disposition. If the sum of the expected undiscounted future cash flow
is less than the carrying amount of the assets, an impairment loss is
recognized. Fair value, for purposes of calculating impairment, is measured
based on estimated future cash flows, discounted at a market rate of
interest.
There
were no impairment losses recorded during the period ended September 30,
2009.
Intangible
Assets
In
accordance with FASB new codification of, Goodwill and Other Intangible
Assets, requires that intangible assets with a finite life are amortized
over its life and requires that goodwill and intangible assets be reviewed for
impairment annually, or more frequently if impairment indicators
arise. During the year ended April 30, 2009, the Company recognized
an impairment loss of $55,831. This impairment loss was included as a component
of operating expenses. There were no impairment charges taken during the period
ended September 30, 2009.
5
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
Loss Per
Share
Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by FASB new codification of, “Earnings Per
Share.” As of September 30, 2009 and April 30, 2009 there were no common share
equivalents outstanding.
Income
Taxes
The
Company accounts for income taxes under the FASB new codification of, “Accounting for Income Taxes”,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. 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. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
Business
Segments
The
Company operates in one segment and therefore segment information is not
presented.
Revenue
Recognition
The
Company will recognize revenue on arrangements in accordance with Securities and
Exchange Commission FASB new codification of, “Revenue Recognition in Financial
Statements” and “Revenue Recognition”. In all cases, revenue is
recognized only when the price is fixed and determinable, persuasive evidence of
an arrangement exists, the product is delivered and collectability of the
resulting receivable is reasonably assured.
Accounting Standards
Updates
In June
2009, the Financial Accounting Standards Board (FASB) issued its final Statement
of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a Replacement of FASB Statement No. 162”.
SFAS No. 168 made the FASB Accounting Standards Codification (the
Codification) the single source of U.S. GAAP used by nongovernmental
entities in the preparation of financial statements, except for rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws, which are sources of authoritative
accounting guidance for SEC registrants. The Codification is meant to simplify
user access to all authoritative accounting guidance by reorganizing
U.S. GAAP pronouncements into roughly 90 accounting topics within a
consistent structure; its purpose is not to create new accounting and reporting
guidance. The Codification supersedes all existing non-SEC accounting and
reporting standards and was effective for the Company beginning July 1,
2009. Following SFAS No. 168, the Board will not issue new standards
in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force
Abstracts; instead, it will issue Accounting Standards Updates (ASU). The FASB
will not consider ASUs as authoritative in their own right; these updates will
serve only to update the Codification, provide background information about the
guidance, and provide the bases for conclusions on the change(s) in the
Codification.
6
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after issuance. The adoption of
this standard did not have a material impact on the Company’s consolidated
financial position and results of operations as of September 30, 2009 as the
Company’s material investment was made effective September 29, 2009 just one day
prior to the end of the quarter. This standard may have a material
impact in future reporting periods.
In
September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740),
”Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities”, which provides implementation
guidance on accounting for uncertainty in income taxes, as well as eliminates
certain disclosure requirements for nonpublic entities. For entities
that are currently applying the standards for accounting for uncertainty in
income taxes, this update shall be effective for interim and annual periods
ending after September 15, 2009. For those entities that have deferred the
application of accounting for uncertainty in income taxes in accordance with
paragraph 740-10-65-1(e), this update shall be
effective upon adoption of those standards. The adoption of this standard is not
expected to have an impact on the Company’s consolidated financial position and
results of operations since this accounting standard update provides only
implementation and disclosure amendments.
In
September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements
and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10,
“Fair Value Measurements and Disclosures – Overall”, to permit a reporting
entity to measure the fair value of certain investments on the basis of the net
asset value per share of the investment (or its equivalent). This ASU also
requires new disclosures, by major category of investments including the
attributes of investments within the scope of this amendment to the
Codification. The guidance in this Update is effective for interim and annual
periods ending after December 15, 2009. Early application is permitted. The adoption of this
standard is not expected to have a material impact on the Company’s consolidated
financial position and results of operations.
In
October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements”, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have any impact on the
Company’s consolidated financial position and results of
operations.
In
October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements” and changes the accounting
model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components
and nonsoftware components that function together to deliver the tangible
product's essential functionality are excluded from the software revenue
guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition,
hardware components of a tangible product containing software components are
always excluded from the software revenue guidance. The guidance in
this ASU is effective prospectively for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted. The adoption of this standard is not expected
to have any impact on the Company’s consolidated financial position and results
of operations.
Other
ASUs not effective until after September 30, 2009, are not expected to have
a significant effect on the Company’s consolidated financial position or results
of operations.
7
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
NOTE 2
|
GOING
CONCERN
|
As
reflected in the accompanying financial statements, the Company is in the
development stage with no operations and has a net loss since inception of
$289,179 and used cash in operations of $385,910 for the period from August 31,
2007 (inception) to September 30, 2009. The ability of the
Company to continue as a going concern is dependent on the Company’s ability to
raise additional capital and implement its business plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
NOTE 3
|
INTANGIBLE
ASSETS
|
Intangible
assets consist of a patent for the turn key tools:
September
30, 2009
|
April
30, 2009
|
|||||||
Patent
|
$
|
60,000
|
$
|
60,000
|
||||
Less
accumulated amortization
|
(4,169
|
)
|
(4,169
|
)
|
||||
Less
impairment loss
|
(55,831
|
)
|
(55,831
|
)
|
||||
Net
|
$
|
-
|
$
|
-
|
The
patent was acquired on March 17, 2008 at which point the patent had a remaining
life of approximately 16 years. Amortization expense of $912 and
$2,322 was recorded for the nine month period ended September 30, 2009 and 2008,
respectively.
NOTE 4
|
STOCKHOLDERS’
EQUITY
|
Common Stock Issued for
Cash
For the
year ended April 30, 2009, the Company issued 100,000 shares of common stock for
$10,000 ($0.10/share) and paid offering costs of $2,050 for total net proceeds
of $7,950.
8
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
For the
period from August 31, 2007 (inception) through April 30, 2008, the Company
issued 1,999,000 shares of common stock for $199,900 ($0.10/share).
On
September 14, 2007, the Company issued 1,000,000 founder shares of common stock
for $100 ($0.0001/share) (See Note 5).
In-Kind Contribution of
Services
For the
period ended July 31, 2009, the shareholder of the Company contributed services
having a fair value of $1,300 (See Note 5).
For the
year ended April 30, 2009, the shareholder of the Company contributed services
having a fair value of $5,200 (See Note 5).
For the
year ended April 30, 2008, the shareholder of the Company contributed services
having a fair value of $3,500. (See Note 5)
For the
period ending September 30, 2009, the Company issued 85,000 shares of common
stock related to an agreement with Tryon Capital Partners as part of
compensation for that entity.
Acquisition
Agreement
On
September 13, 2007, Universal Holdings, Inc. consummated an agreement with
Universal Product Marketing, Inc., pursuant to which Universal Product
Marketing, Inc. exchanged all of its members’ interest for 4,000,000 shares or
approximately 100% of the common stock of Universal Holdings,
Inc. The Company has accounted for the transaction as a combination
of entities under common control and accordingly, recorded the merger at
historical cost.
Common Stock Issued for
Notes
In
connection with the acquisition of Coronado Acquisitions, LLC, the company
issued 2,100,000 shares of common stock valued at $3,250,000 to the
Coronado Noteholders in full satisfaction of the Coronado Notes that existed at
the time of the acquisition.
NOTE 5
|
RELATED PARTY
TRANSACTIONS
|
For the
period ended July 31, 2009, the shareholder of the Company contributed services
having a fair value of $1,300 (See Note 4).
For the
year ended April 30, 2009 the shareholder of the Company contributed services
having a fair value of $5,200 (See Note 4).
For the
year ended April 30, 2008 the shareholder of the Company contributed services
having a fair value of $3,500 (See Note 4).
On
September 14, 2007, the Company issued 1,000,000 founder shares of common stock
for $100 ($0.0001/share) (See Note 4).
9
RECOVERY
ENERGY, INC.
f/k/a
UNIVERSAL HOLDINGS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,
2009
(UNAUDITED)
NOTE 6
|
SUBSEQUENT
EVENTS
|
On
November 6, 2009 Recovery Energy, Inc. acquired 100% ownership of three
producing wells on a 160-acre lease in Rush Willadel Field in Washington County,
Colorado. The purchase price paid at closing consisted of $750,000 in
cash and 250,000 shares of common stock. The seller has the option to
cause Recovery to purchase the 250,000 shares for $750,000 in cash on December
15, 2009. Simultaneously, Recovery sold a 50% to an unrelated third
party for $750,000 in cash. Under the terms of that transaction,
Recovery has an option to purchase the 50% ownership interest in the three wells
back from the third party for $825,000 in cash by notice no later than January
6, 2010. The purchaser of the 50% interest also has the right to
require Recovery to repurchase the interest for $825,000 by notice no later than
January 6, 2010. The two agreements contain other provisions that are
customary for agreements of this nature, such as representations and
warranties.
10
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The
information contained in Item 2 contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results may
materially differ from those projected in the forward-looking statements as a
result of certain risks and uncertainties set forth in this report. Although
management believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual results
will not be different from expectations expressed in this report.
Overview
of Our Business
General
We are a
Denver based development stage independent energy company engaged in the
services sector of the oil and gas industry through our ownership and operation
of medium depth oil drilling rigs. In connection with our change in business
direction, we principally intend to engage in the development, production, and
marketing of oil & gas in North America through the application of
engineering expertise, to enhance recovery and achieve the most effective
results possible. Specifically, we intend to specialize in using modern
secondary and tertiary recovery techniques on older, historically productive
fields. Higher oil & gas prices, and advances in technology such as 3-D
seismic acquisition and evaluation and carbon dioxide (CO2)
injection, should enable us to capitalize on attractive sources of potential
recoverable oil & gas.
We
currently own two drilling rigs consisting of a Spencer Harris 5000 Rig and a
Cardwell Rig, both capable of medium depth drilling to approximately 6,500 feet.
Subject to certain equipment upgrades being completed, our current business is
to continuously deploy our rigs in the field to generate daily lease revenue
from third parties. We intend to focus our efforts on acquiring and developing
producing properties in established mature basins within the United States, as
such, the drilling component of the business will become less material as time
progresses.
Recovery
Energy will employ a business strategy that focuses on a balanced program of
opportunistic acquisitions of existing producing properties that possess
incremental value opportunities through low risk development. We
intend to efficiently deploy capital as a low cost operator and
acquirer. We intend to grow our assets base by acquiring neglected
and underperforming or distressed oil centric assets which Recovery can
operate. As an operator, Recovery will be able to enhance the value
of its acquisitions by focusing the appropriate resources to drive production
growth.
Over the
past several years there has been a renewed focus on domestic exploration and
production within the United States. Buoyed by growing international
demand and coupled with continued political stress in major oil producing
nations, the value of domestic hydrocarbon reserves has increased and should
continue to command a premium for the foreseeable future. When
evaluating the outlook for natural gas as compared to oil, we believe the
pricing curve favors oil and, thus, through our focus on on-shore domestic oil
production we believe we are positioned to generate above average investment
returns in the future.
We will
focus on applying technology and services to increase the incremental recovery
factor of certain mature oil basins within the United States. Over
the past fifteen years the energy industry has been focused on innovation, with
new techonological breakthroughs enabling the industry to pursue hydrocarbon
reserves in previously inaccessible formations or areas. The impact of
technology has not only improved the economics of drilling but it has
dramatically impacted the recovery factor of existing oil in
place. For decades certain basins have been water-flooded, steam
flooded, or CO2 flooded. All of these efforts have been focused on
increasing the recovery factor of known oil reserves that could not be produced
or produced economically prior to the evolution of varying
technologies.
For the
majority of domestic U.S. oil basins the easily attainable oil has been found,
suggesting in our opinion that new found oil production will be discovered
through deeper, more complex conventional drilling activities, and through
un-conventional shale-type opportunities, however, we believe significant
opportunities exist in neglected and over looked conventional
formations.
The
decline in oil prices in the 1980’s created a trend of the major oil companies
to underemphasize and under-invest in the United States oil properties into more
lucrative international oil development opportunities. We plan to
utilize our know-how, to identify, acquire and enhance properties that provide
either down-hole improvements, additional behind-pipe zones or down spacing
opportunities. Furthermore, re-completion, modern frac technology and
enhanced recovery will all be taken into consideration for both the acquisition
and exploitation of various properties. Furthermore, the significant
volatility in commodity prices over the last twelve months has created
opportunities to acquire reserves from financial constrained competitors who
acquired assets at or near the top of the market.
11
Plan
of Operation
We are a
development stage independent energy company engaged in the services sector of
the oil and gas industry through our ownership and operation of medium depth oil
drilling rigs. In connection with our change in business direction, we
principally intend to engage in the development, production, and marketing of
oil & gas in North America through the application of engineering expertise,
to enhance recovery and achieve the most effective results possible.
Specifically, we intend to specialize in using modern secondary and tertiary
recovery techniques on older, historically productive fields. Higher oil &
gas prices, and advances in technology such as 3-D seismic acquisition and
evaluation and carbon dioxide (CO2)
injection, should enable us to capitalize on attractive sources of potential
recoverable oil & gas.
We
currently own two drilling rigs consisting of a Spencer Harris 5000 Rig and a
Cardwell Rig, both capable of medium depth drilling to approximately 6,500 feet.
Subject to certain equipment upgrades being completed, our current business is
to continuously deploy our rigs in the field to generate daily lease revenue
from third parties. We intend to focus our efforts on acquiring and developing
producing properties in established mature basins within the United States, as
such, the drilling component of the business will become less material as time
progresses.
Recovery
Energy will employ a business strategy that focuses on a balanced program of
opportunistic acquisitions of existing producing properties that possess
incremental value opportunities through low risk development. We
intend to efficiently deploy capital as a low cost operator and
acquirer. We intend to grow our assets base by acquiring neglected
and underperforming or distressed oil centric assets which Recovery can
operate. As an operator, Recovery will be able to enhance the value
of its acquisitions by focusing the appropriate resources to drive production
growth.
Liquidity
and Capital Resources
As of
September 30, 2009 we had $140 in cash. The only fixed asset we have
is the Equipment Purchase Agreement which was entered into on May 31, 2009 and
acquired through the Coronado purchase. It is valued at
$3,250,000.
While we
are attempting to commence operations and produce revenues, our cash position
may not be significant enough to support our daily operations. Management
intends to raise additional funds by way of a public or private
offering. Management believes that the actions presently being taken
to further implement its business plan and generate revenues provide the
opportunity for the Company to continue as a going concern. While we believe in
the viability of this strategy to generate revenues and in our ability to raise
additional funds, there can be no assurances to that effect. The ability of the
Company to continue as a going concern is dependent upon the Company’s ability
to further implement its business plan and generate revenues.
We
anticipate that depending on market conditions and our plan of operations, we
may incur operating losses in the foreseeable future. Therefore, our auditors
have raised substantial doubt about our ability to continue as a going
concern.
Revenues
For the
period from inception through September 30, 2009, we had no revenue. Expenses
incurred while under development for the period from inception (August 31, 2007)
through September 30, 2009 were $289,179 resulting in a net loss of
$289,179.
Off-Balance
Sheet Arrangements
There are
no off-balance sheet arrangements between us and any other entity 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.
Critical Accounting
Policies
The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
A summary
of significant accounting policies is included in Note 1 to the audited
consolidated financial statements for the year ended April 30, 2009. Management
believes that the application of these policies on a consistent basis enables us
to provide useful and reliable financial information about our Company's
operating results and financial condition.
12
Accounting Standards
Updates
In June
2009, the Financial Accounting Standards Board (FASB) issued its final Statement
of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a Replacement of FASB Statement No. 162”.
SFAS No. 168 made the FASB Accounting Standards Codification (the
Codification) the single source of U.S. GAAP used by nongovernmental
entities in the preparation of financial statements, except for rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws, which are sources of authoritative
accounting guidance for SEC registrants. The Codification is meant to simplify
user access to all authoritative accounting guidance by reorganizing
U.S. GAAP pronouncements into roughly 90 accounting topics within a
consistent structure; its purpose is not to create new accounting and reporting
guidance. The Codification supersedes all existing non-SEC accounting and
reporting standards and was effective for the Company beginning July 1,
2009. Following SFAS No. 168, the Board will not issue new standards
in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force
Abstracts; instead, it will issue Accounting Standards Updates (ASU). The FASB
will not consider ASUs as authoritative in their own right; these updates will
serve only to update the Codification, provide background information about the
guidance, and provide the bases for conclusions on the change(s) in the
Codification.
In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after issuance. The adoption of
this standard did not have a material impact on the Company’s consolidated
financial position and results of operations as of September 30, 2009 as the
Company’s material investment was made effective September 29, 2009 just one day
prior to the end of the quarter. This standard may have a material
impact in future reporting periods.
In
September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740),
”Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities”, which provides implementation
guidance on accounting for uncertainty in income taxes, as well as eliminates
certain disclosure requirements for nonpublic entities. For entities
that are currently applying the standards for accounting for uncertainty in
income taxes, this update shall be effective for interim and annual periods
ending after September 15, 2009. For those entities that have deferred the
application of accounting for uncertainty in income taxes in accordance with
paragraph 740-10-65-1(e), this update shall be
effective upon adoption of those standards. The adoption of this standard is not
expected to have an impact on the Company’s consolidated financial position and
results of operations since this accounting standard update provides only
implementation and disclosure amendments.
In
September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements
and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10,
“Fair Value Measurements and Disclosures – Overall”, to permit a reporting
entity to measure the fair value of certain investments on the basis of the net
asset value per share of the investment (or its equivalent). This ASU also
requires new disclosures, by major category of investments including the
attributes of investments within the scope of this amendment to the
Codification. The guidance in this Update is effective for interim and annual
periods ending after December 15, 2009. Early application is permitted. The adoption of this
standard is not expected to have a material impact on the Company’s consolidated
financial position and results of operations.
In
October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements”, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have any impact on the
Company’s consolidated financial position and results of
operations.
13
In
October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements” and changes the accounting
model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components
and nonsoftware components that function together to deliver the tangible
product's essential functionality are excluded from the software revenue
guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition,
hardware components of a tangible product containing software components are
always excluded from the software revenue guidance. The guidance in
this ASU is effective prospectively for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted. The adoption of this standard is not expected
to have any impact on the Company’s consolidated financial position and results
of operations.
Other
ASUs not effective until after September 30, 2009, are not expected to have
a significant effect on the Company’s consolidated financial position or results
of operations.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not
required for smaller reporting companies.
Item
4T. Controls and Procedures
(a)
Management of Recovery Energy is responsible for establishing and maintaining
adequate internal control over financial reporting under the supervision of the
President and Chief Executive Officer and the Chief Financial Officer. Internal
control over financial reporting is a process designed 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.
Management
evaluated the design and operation of our internal control over financial
reporting as of September 30, 2009, based on the framework and criteria
established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and has concluded that such
internal control over financial reporting is effective. There are no material
weaknesses that have been identified by management.
An
evaluation was performed, under the supervision of, and with the participation
of, our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-(e) to
the Securities and Exchange Act of 1934). Based on that evaluation, the
Company’s management, including our Chief Executive Officer and Chief Financial
Officer, concluded that the Company’s disclosure controls and procedures were
adequate and effective, as of September 30, 2009, to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934, is recorded, processed, summarized,
and reported within the time periods specified in the Commission’s rules and
forms, and that such information is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.
(b) Changes
in internal control over financial reporting. During the quarter ended September
30, 2009, the Company elected a new CEO/CFO as a result of the change in control
and new business focus. This was not as a result of any control
weaknesses or acts by the incumbent CEO or CFO. Other than these
changes, there were no changes in our internal control over financial reporting
during our most recent fiscal quarter that materially affected, or were
reasonably likely to materially affect, our internal control over financial
reporting.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
INHERENT
LIMITATIONS OF INTERNAL CONTROLS
Our
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the U.S. GAAP.
Our internal control over financial reporting includes those policies and
procedures that:
–
|
pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
–
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with the U.S. GAAP, and
that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors;
and
|
–
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could
have a material effect on the financial
statements.
|
14
Management
does not expect that our internal controls will prevent or detect all errors and
all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of internal controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been
detected. Also, any evaluation of the effectiveness of controls in future
periods are subject to the risk that those internal controls may become
inadequate because of changes in business conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
Currently
we are not aware of any litigation pending or threatened by or against the
Company.
Item
1A. Risk Factors.
Not
applicable for smaller reporting companies.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
On November 6, 2009, we issued 250,000 shares of our Common Stock
to Edward Mike Davis, LLC, a Nevada limited liability company, in
connection with a Purchase and Sale Agreement for the Church Field located
in Washington County, Colorado.
Such
securities were not registered under the Securities Act of 1933. The
issuance of these shares was exempt from registration, pursuant to Section 4(2)
of the Securities Act of 1933. These securities qualified for
exemption under Section 4(2) of the Securities Act of 1933 since the issuance
securities by us did not involve a public offering. The offering was not a
“public offering” as defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner of the offering and
number of securities offered. We did not undertake an offering in which we sold
a high number of securities to a high number of investors. In addition, these
shareholders had the necessary investment intent as required by Section 4(2)
since they agreed to and received share certificates bearing a legend stating
that such securities are restricted pursuant to Rule 144 of the 1933 Securities
Act. This restriction ensures that these securities would not be immediately
redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to
qualify for exemption under Section 4(2) of the Securities Act of 1933 for this
transaction.
On
September 21, 2009, we issued 2,100,000 shares of our Common Stock to Capital
Asset Lending, Inc., a California corporation, Westmoore Lending, LLC, a
California limited liability company, and Westmoore Lending Opportunities, LLC,
a California limited liability company pursuant to the terms of a convertible
note that automatically converted at the time of the reverse merger at a $1.55
per share conversion price.
Such
securities were not registered under the Securities Act of 1933. The
issuance of these shares was exempt from registration, pursuant to Section 4(2)
of the Securities Act of 1933. These securities qualified for
exemption under Section 4(2) of the Securities Act of 1933 since the issuance
securities by us did not involve a public offering. The offering was not a
“public offering” as defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner of the offering and
number of securities offered. We did not undertake an offering in which we sold
a high number of securities to a high number of investors. In addition, these
shareholders had the necessary investment intent as required by Section 4(2)
since they agreed to and received share certificates bearing a legend stating
that such securities are restricted pursuant to Rule 144 of the 1933 Securities
Act. This restriction ensures that these securities would not be immediately
redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to
qualify for exemption under Section 4(2) of the Securities Act of 1933 for this
transaction.
Pursuant
to the Lock-Up Agreement on September 21, 2009, we issued 85,000 shares of our
Common Stock to Tryon under certain conditions.
Such
securities were not registered under the Securities Act of 1933. The
issuance of these shares was exempt from registration, pursuant to Section 4(2)
of the Securities Act of 1933. These securities qualified for
exemption under Section 4(2) of the Securities Act of 1933 since the issuance
securities by us did not involve a public offering. The offering was not a
“public offering” as defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner of the offering and
number of securities offered. We did not undertake an offering in which we sold
a high number of securities to a high number of investors. In addition, these
shareholders had the necessary investment intent as required by Section 4(2)
since they agreed to and received share certificates bearing a legend stating
that such securities are restricted pursuant to Rule 144 of the 1933 Securities
Act. This restriction ensures that these securities would not be immediately
redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to
qualify for exemption under Section 4(2) of the Securities Act of 1933 for this
transaction.
Item
3. Defaults Upon Senior Securities.
None.
15
Item
4. Submission of Matters to a Vote of Security Holders.
On
September 28, 2009, we changed our name to Recovery Energy, Inc. This
name change was effected through an Amendment to the Company’s Articles of
Incorporation which was approved by the Company’s shareholders at a special
meeting held on September 28, 2009. The Amendment became effective
upon its filing with the Secretary of State of Nevada on October 2,
2009.
As of the
opening of trading on October 20, 2009, our Common Stock, which previously
traded on the Over-the-Counter Bulletin Board under the ticker symbol
“UVHO” began trading under the new ticker symbol
“RECV”.
Item
5. Other Information.
None
Item
6. Exhibits and Reports of Form 8-K.
(a) Exhibits
31.1
Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002
32.1
Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002
(b)
Reports of Form 8-K
None.
16
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Universal
Holdings, Inc.
|
||
Date:
November 16, 2009
|
By:
|
/s/
Jeffrey Beunier
|
Jeffrey
Beunier
|
||
Chief
Executive Officer and Principal Accounting Officer
|
||
17