Attached files
file | filename |
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EX-32.1 - EXHIBIT 32.1 - WebXU, Inc. | whistlepig10q93009x32_111709.htm |
EX-31.1 - EXHIBIT 31.1 - WebXU, Inc. | whistlepig10q93009x31_111709.htm |
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
[]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Commission
File No. 000-53095
WHISTLEPIG ENTERPRISES,
INC.
(Exact
Name of Registrant as specified in its charter)
Colorado
|
26-0460511
|
(State
or other jurisdiction
|
(IRS
Employer File Number)
|
of
incorporation)
|
7060 B. South Tucson Way
|
|
Centennial, Colorado
|
80112
|
(Address
of principal executive offices)
|
(zip
code)
|
303-617-8919
(Registrant's
telephone number, including area code)
Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days. Yes
[X] No [ ]
Indicate
by check mark whether the registrant 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(Section 232.405 of
this chapter) during the preceding 12 months(or 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, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “small reporting company” in Rule
12b-2 of the Exchange Act.
Large
accelerated filer []
|
Accelerated
filer []
|
Non-accelerated
filer [] (Do not check if a smaller reporting company)
|
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 [ ] No
[X]
The
number of shares outstanding of the Registrant's common stock, as of the latest
practicable date, November 6, 2009, was 9,696,000.
FORM
10-Q
WhistlePig
Enterprises, Inc.
TABLE OF
CONTENTS
Page
|
|
PART
I FINANCIAL INFORMATION
|
|
Item
1. Financial Statements for the period ended September 30,
2009
|
3
|
Consolidated Balance Sheet
(Unaudited)
|
4
|
Consolidated Statements of
Operations (Unaudited)
|
5
|
Consolidated Statements of Cash
Flows (Unaudited)
|
6
|
Notes to Consolidated Financial
Statements
|
8
|
Item
2. Management’s Discussion and Analysis and Plan of
Operation
|
11
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
15 |
Item
4 Controls and Procedures
|
15
|
Item
4T. Controls and Procedures
|
15
|
PART
II OTHER INFORMATION
|
|
Item
1. Legal Proceedings
|
16
|
Item
1A. Risk Factors
|
16
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 26 |
Item
3. Defaults Upon Senior Securities
|
26
|
Item
4. Submission of Matters to a Vote of Security Holders
|
26
|
Item
5. Other Information
|
26
|
Item
6. Exhibits
|
26
|
Signatures
|
27
|
-
2 -
PART
I FINANCIAL INFORMATION
References
in this document to "us," "we," or "Company" refer to WhistlePig Enterprises,
Inc. and our wholly-owned subsidiary, CST Oil & Gas
Corporation.
ITEM
1. FINANCIAL STATEMENTS
WHISTLEPIG
ENTERPRISES, INC.
CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
Quarter
Ended September30, 2009
TABLE
OF CONTENTS
Page
|
|
CONSOLIDATED
FINANCIAL STATEMENTS
|
|
Consolidated balance
sheets
|
4
|
Consolidated statements of
operations
|
5
|
Consolidated statements of cash
flows
|
6
|
Notes to consolidated financial
statements
|
8
|
-
3 -
WHISLTEPIG
ENTERPRISES, INC.
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
Spet.
30, 2009
|
||||||||
Dec.
31, 2008
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 63,150 | $ | 28,142 | ||||
Accounts
receivable
|
- | 37,717 | ||||||
Prepaid
expenses
|
2,197 | |||||||
Total current
assets
|
65,347 | 65,859 | ||||||
Fixed
assets
|
24,442 | |||||||
Accumulated
depreciation
|
(1,879 | ) | ||||||
|
- | 22,563 | ||||||
Total
Assets
|
$ | 65,347 | $ | 88,422 | ||||
LIABILITIES
& STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | - | $ | 33,109 | ||||
Related
party payable
|
40,000 | 40,000 | ||||||
Total current
liabilties
|
40,000 | 73,109 | ||||||
Total
Liabilities
|
40,000 | 73,109 | ||||||
Stockholders'
Equity
|
||||||||
Common
stock, $.001 par value;
|
||||||||
50,000,000
shares authorized;
|
||||||||
8,000,000
(2008) and 9,696,000 (2009)
|
||||||||
shares
issued and outstanding
|
8,000 | 9,696 | ||||||
Additional
paid in capital
|
92,141 | 90,489 | ||||||
Accumulated
deficit
|
(74,794 | ) | (84,872 | ) | ||||
Total
Stockholders' Equity
|
25,347 | 15,313 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 65,347 | $ | 88,422 |
The
accompanying notes are an integral part of the financial
statements.
-
4 -
WHISLTEPIG
ENTERPRISES, INC.
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
Sept.
30, 2008
|
Sept.
30, 2009
|
Sept.
30, 2008
|
Sept.
30, 2009
|
|||||||||||||
Sales
(net of returns) - related party
|
$ | 600 | $ | 119,396 | $ | 600 | $ | 321,158 | ||||||||
Cost
of goods sold
|
- | 30,000 | 56,123 | |||||||||||||
Gross
profit
|
600 | 89,396 | 600 | 265,035 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Depreciation
|
- | 1,222 | 1,879 | |||||||||||||
General
and administrative
|
22,732 | 98,475 | 22,742 | 223,234 | ||||||||||||
22,732 | 99,697 | 22,742 | 225,113 | |||||||||||||
Income
(loss) from operations
|
(22,132 | ) | (10,301 | ) | (22,142 | ) | 39,922 | |||||||||
Other
income (expense):
|
||||||||||||||||
- | - | - | - | |||||||||||||
Income
(loss) before
|
||||||||||||||||
provision
for income taxes
|
(22,132 | ) | (10,301 | ) | (22,142 | ) | 39,922 | |||||||||
Provision
for income tax
|
- | - | - | - | ||||||||||||
Net
income (loss)
|
$ | (22,132 | ) | $ | (10,301 | ) | $ | (22,142 | ) | $ | 39,922 | |||||
Net
income (loss) per share
|
||||||||||||||||
(Basic
and fully diluted)
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | |||||
Weighted
average number of
|
||||||||||||||||
common
shares outstanding
|
8,000,000 | 8,000,000 | 8,000,000 | 8,000,000 |
The
accompanying notes are an integral part of the financial
statements.
-
5 -
WHISTLEPIG
ENTERPRISES, INC.
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
Sept.
30, 2008
|
Sept.
30, 2009
|
Sept.
30, 2008
|
Sept.
30, 2009
|
|||||||||||||
Cash
Flows From Operating Activities:
|
||||||||||||||||
Net
income (loss)
|
$ | (22,132 | ) | $ | (10,301 | ) | $ | (22,142 | ) | $ | 39,922 | |||||
Adjustments
to reconcile net loss to
|
||||||||||||||||
net
cash provided by (used for)
|
||||||||||||||||
operating
activities:
|
||||||||||||||||
Depreciation
|
- | 1,222 | - | 1,879 | ||||||||||||
Accounts
receivable
|
(37,717 | ) | (37,717 | ) | ||||||||||||
Prepaid
expenses
|
- | 2,197 | ||||||||||||||
Accrued
payables
|
(10 | ) | 33,109 | 33,109 | ||||||||||||
Net cash provided by (used
for)
|
||||||||||||||||
operating
activities
|
(22,142 | ) | (13,687 | ) | (22,142 | ) | 39,390 | |||||||||
Cash
Flows From Investing Activities:
|
||||||||||||||||
Fixed
assets
|
- | - | - | (24,442 | ) | |||||||||||
Net
cash provided by (used for)
|
||||||||||||||||
investing
activities
|
- | - | - | (24,442 | ) | |||||||||||
(Continued
On Following Page)
|
The
accompanying notes are an integral part of the financial
statements.
-
6 -
WHISTLEPIG
ENTERPRISES, INC.
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(Continued
From Previous Page)
|
||||||||||||||||
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
Sept.
30, 2008
|
Sept.
30, 2009
|
Sept.
30, 2008
|
Sept.
30, 2009
|
|||||||||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||
Related
party payable - borrowings
|
40,000 | (30,000 | ) | 40,000 | ||||||||||||
Paid
in capital
|
||||||||||||||||
Common
stock issuances
|
44 | 44 | ||||||||||||||
Distributions
|
- | (50,000 | ) | |||||||||||||
Net cash provided by (used
for)
|
||||||||||||||||
financing
activities
|
40,000 | (29,956 | ) | 40,000 | (49,956 | ) | ||||||||||
Net
Increase (Decrease) In Cash
|
17,858 | (43,643 | ) | 17,858 | (35,008 | ) | ||||||||||
Cash
At The Beginning Of The Period
|
- | 71,785 | - | 63,150 | ||||||||||||
Cash
At The End Of The Period
|
$ | 17,858 | $ | 28,142 | $ | 17,858 | $ | 28,142 | ||||||||
Schedule Of Non-Cash Investing And Financing Activities | ||||||||||||||||
None
|
||||||||||||||||
Supplemental Disclosure | ||||||||||||||||
Cash
paid for interest
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Cash
paid for income taxes
|
$ | - | $ | - | $ | - | $ | - |
The
accompanying notes are an integral part of the financial
statements.
-
7 -
WHISTLEPIG
ENTERPRISES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Whistlepig
Enterprises, Inc. (the “Company”), was incorporated in the State of Colorado on
May 30, 2007. The Company was formed to provide equestrian consulting and
advisory services to individuals, businesses and other organizations. The
Company is currently considered to be in the development stage, having generated
no revenues and conducted only limited activities.
On
September 30, 2009 Whistlepig Enterprises, Inc. entered into a share exchange
agreement (the "Agreement") with CST Oil and Gas Corporation, exchanging
8,000,000 shares of its common stock with no readily available market price for
100% of the outstanding common stock of CST Oil and Gas Corporation. The
transaction was accounted for as a reverse acquisition as the shareholders of
CST Oil and Gas Corporation retained the majority of the outstanding common
stock of Whistlepig Enterprises, Inc. after the share exchange. Effective with
the Agreement, the Company's stockholders' equity was retroactively
recapitalized as that of CST Oil and Gas Corporation, while 100% of the assets
and liabilities of Whistlepig Enterprises, Inc. valued at $44 were recorded as
being acquired in the reverse merger for its 1,696,000 outstanding common shares
on the merger date. The accompanying financial statements exclude the financial
position, results of operations and cash flows of Whistlepig Enterprises, Inc.
prior to the September 30, 2009 reverse acquisition. The activity of the two
companies subsequent to September 30, 2009 will be consolidated.
Principles of
consolidation
The
accompanying consolidated financial statements include the accounts of
Whistlepig Enterprises, Inc. and its wholly owned subsidiary. All intercompany
accounts and transactions have been eliminated in consolidation.
Basis of
Presentation
The
accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
disclosures required by generally accepted accounting principles for complete
financial statements. All adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations for the interim
periods have been made and are of a recurring nature unless otherwise disclosed
herein. The results of operations for such interim periods are not necessarily
indicative of operations for a full year.
Cash and cash
equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
-
8 -
WHISTLEPIG
ENTERPRISES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Accounts
receivable
The
Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary.
Property and
equipment
Property
and equipment are recorded at cost and depreciated under accelerated methods
over each item's estimated useful life.
Revenue
recognition
Revenue
is recognized on an accrual basis after services have been performed under
contract terms, the event price to the client is fixed or determinable, and
collectibility is reasonably assured.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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.
Income
tax
The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
-
9 -
WHISTLEPIG
ENTERPRISES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Net income (loss) per
share
The net
income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
Financial
Instruments
The
carrying value of the Company’s financial instruments, including cash and cash
equivalents and accrued payables, as reported in the accompanying balance sheet,
approximates fair value.
-
10 -
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND
PLAN OF OPERATION
The
following discussion of our financial condition and results of operations should
be read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements and notes thereto included in, Item 1 in this
Quarterly Report on Form 10-Q. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from
those indicated in such forward-looking statements.
Forward-Looking
Statements
Overview
and History
Our
original business was to act as a consultant in the development of equestrian
facilities throughout the United States, but particularly in the West. We were
incorporated as a Colorado corporation on May 30, 2007. On June 22,
2007, we issued 1,500,000 restricted common shares to various investors in a
private placement. On September 30, 2007, we issued 4,000,000 common shares each
to Jeanie Clifford and Timothy Clifford, for a total of 8,000,000
shares.
In
September, 2007, we completed a private placement offering of our common shares
under the provisions of Rule 504 and analogous state securities laws. We raised
a total of $24,000 in this private placement offering and sold a total of 96,000
shares.
Effective
October 14, 2008, Mr. Timothy Clifford resigned from all offices at our Company,
including his position as a director. Mrs. Jeanie Clifford was elected our
Secretary-Treasurer and Chief Financial Officer in addition to her other duties
as the President and Chief Executive Officer.
-
11 -
On
September 30, 2009, WhistlePig Enterprises, Inc., a Colorado corporation
(“WHISTLEPIG”) and CST Oil & Gas Corporation, a Colorado corporation,
(“CST”) entered into a Share Exchange agreement (the “Share Exchange Agreement”)
whereby the shareholders of CST exchanged all of their common stock
for common shares of WHISTLEPIG(the “Share Exchange”). In connection
with the Share Exchange, the stockholders of CST exchanged all of their CST
stock for a total of 8,000,000 shares of common stock of
WHISTLEPIG. Immediately prior to the Share Exchange, certain existing
shareholders of WHISTLEPIG tendered a total of 8,000,000 shares of WHISTLEPIG’s
common stock to the company for cancellation, leaving 1,696,000 issued and
outstanding WHISTLEPIG common shares. As a result, following the
Share Exchange WHISTLEPIG had 9,696,000 shares of its common stock issued and
outstanding, of which approximately 84.6% were held by the former
shareholders of CST. Following the closing of the Share Exchange, WHISTLEPIG’s
name will be changed to CST Holding Corp, or some derivation
thereof.
We have
not been subject to any bankruptcy, receivership or similar
proceeding.
Our
address is 7060 B. South Tucson Way, Centennial, CO 80112. Our
telephone number is 303-617-8919.
Results
of Operations
The
following discussion involves our results of operations for the three and nine
months ending September 30, 2009 and for the fiscal year ending December 31,
2008. This compares to the three and nine months ending September 30,
2008.
Comparing
our operations, we had sales (net of returns)-related party of $119,396 for the
three months ended September 30, 2009 and $600 for the three months
ending September 30, 2008. Comparing our operations, we had sales (net of
returns)-related party of $321,158 for the nine months ended September 30, 2009
and $600 for the nine months ending September 30, 2008.
Cost of
goods sold for the three months ending September 30, 2009 was $30,000, compared
to $-0- for the three months ending September 30, 2008. Cost of goods sold for
the nine months ending September 30, 2009 was $56,123, compared to $-0- for the
nine months ending September 30, 2008.
Operating
expenses, which include depreciation and general and administrative expenses for
the three months ended September 30, 2009 were $99,697, compared to $22,732 for
the three months ending September 30, 2008. Operating expenses, which include
depreciation and general and administrative expenses for the nine months ended
September 30, 2009 were $225,113, compared to $22,742 for the nine months ending
September 30, 2008.
The major
components of operating expenses include general and administrative,
professional fees, and telephone expenses.
We
believe that operating expenses in current operations should remain fairly
constant as our revenues develop. Each additional sale or service and
correspondingly the gross profit of such sale have minimal offsetting operating
expenses. Thus, additional sales could become profit at a higher return on sales
rate as a result of not needing to expand operating expenses at the same
pace.
-
12 -
We had a
net loss of $10,301 for the three months ended September 30, 2009, compared to a
net loss of $22,132 for the three months ending September 30, 2008. We had a net
profit of $39,922 for the nine months ended September 30, 2009, compared to a
net loss of $22,142 for the nine months ending September 30, 2008.
Our
principal source of liquidity is our revenues. We expect variation in revenues
to account for the difference between a profit and a loss. Also business
activity is closely tied to the U.S. petroleum business. Our ability to achieve
and maintain profitability and positive cash flow is dependent upon our ability
to successfully develop our business and our ability to generate
revenues.
In any
case, we try to operate with minimal overhead. Our primary activity will be to
seek to develop clients for our services and, consequently, our sales. If we
succeed in developing clients for our services and generating sufficient sales,
we will become profitable. We cannot guarantee that this will ever occur. Our
plan is to build our company in any manner which will be
successful.
Liquidity
and Capital Resources
As of
September 30, 2009, we had cash or cash equivalents of $28,142 compared to cash
or cash equivalents of $17,858 at September 30, 2009.
Net cash
provided by operating activities was $39,390 for the nine months ended September
30, 2009, compared to cash used for operating activities of
$22,142 for the nine months ended September 30, 2008. We anticipate
that overhead costs in current operations will remain fairly constant as
revenues develop.
Cash
flows used for investing activities was $ 24,442 for the nine months ended
September 30, 2009 and $-0- for all other relevant periods.
Cash
flows used for financing activities was $49,956 for the period ended September
30, 2009, compared to cash provided by financing activities of $40,000 for the
nine months ended September 30, 2008.
Over the
next twelve months we do not expect any material capital costs to develop
operations. We believe that we have sufficient capital in the short term for our
current level of operations. This is because we believe that we can attract
sufficient sales within our present organizational structure and resources to
become profitable in our operations. We do not anticipate needing to raise
additional capital resources in the next twelve months
Our
principal source of liquidity will be our operations. We expect variation in
revenues to account for the difference between a profit and a loss. Also
business activity is closely tied to the U.S. economy. Our ability to achieve
and maintain profitability and positive cash flow is dependent upon our ability
to successfully develop a consulting practice and our ability to generate
revenues.
In any
case, we try to operate with minimal overhead. Our primary activity will be to
seek to develop clients for our services and, consequently, our sales. If we
succeed in developing clients for our services and generating sufficient sales,
we will become profitable. We cannot guarantee that this will ever occur. Our
plan is to build our company in any manner which will be
successful.
-
13 -
Critical
Accounting Policies
Our
discussion and analysis of results of operations and financial condition are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. 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. We evaluate our estimates on an ongoing basis, including those
related to provisions for uncollectible accounts receivable, inventories,
valuation of intangible assets and contingencies and litigation. We base our
estimates 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.
The
accounting policies that we follow are set forth in Note 2 to our financial
statements as included in this prospectus. These accounting policies conform to
accounting principles generally accepted in the United States, and have been
consistently applied in the preparation of the financial
statements.
Recently
Issued Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123R "Share Based Payment." This
statement is a revision of SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS No. 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS No. 123R, SBP awards result in a cost that will
be measured at fair value on the awards' grant date, based on the estimated
number of awards that are expected to vest. This statement is effective for
public entities that file as Registrants, as of the beginning of the first
interim or annual reporting period that begins after December 15, 2005. We
adopted this pronouncement during the first quarter of 2005.
In
December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets -
An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for non-monetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of non-monetary
assets that do not have "commercial substance." SFAS No. 153 is effective for
non-monetary asset exchanges occurring in fiscal periods beginning after June
15, 2005. The adoption of SFAS No. 153 on its effective date did not have a
material effect on our consolidated financial statements.
In March
2005, the FASB issued Financial Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations - an Interpretation of FASB Statement
No. 143", which specifies the accounting treatment for obligations associated
with the sale or disposal of an asset when there are legal requirements
attendant to such a disposition. We adopted this pronouncement in 2005, as
required, but there was no impact as there are no legal obligations associated
with the future sale or disposal of any assets.
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14 -
In May
2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections —
A Replacement of APB Opinion No. 20 and SFAS Statement No. 3". SFAS No. 154
changes the requirements for the accounting and reporting of a change in
accounting principle by requiring retrospective application to prior periods'
financial statements of the change in accounting principle, unless it is
impracticable to do so. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005. We
do not expect the adoption of SFAS No. 154 to have any impact on our
consolidated financial statements.
Seasonality
We do not
expect our sales to be impacted by seasonal demands for our products and
services.
Trends
There are
no known trends, events or uncertainties that have had or that are reasonably
expected to have a material impact on the net sales or revenues or income from
our operations. Our management has not made any commitments, which will require
any material financial resources.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
None.
ITEM
4. CONTROLS AND PROCEDURES
Not applicable
ITEM
4T. CONTROLS AND PROCEDURES
As of the
end of the period covered by this report, based on an evaluation of our
disclosure controls and procedures (as defined in Rules 13a -15(e) and
15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief
Financial Officer has concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in our
Exchange Act reports is recorded, processed, summarized, and reported within the
applicable time periods specified by the SEC’s rules and forms.
There
were no changes in our internal controls over financial reporting that occurred
during our most recent fiscal three months that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
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15 -
PART
II. OTHER INFORMATION
There are
no legal proceedings, to which we are a party, which could have a material
adverse effect on our business, financial condition or operating
results.
ITEM
1A. RISK FACTORS
You
should carefully consider the risks and uncertainties described below and the
other information in this document before deciding to invest in shares of our
common stock.
The
occurrence of any of the following risks could materially and adversely affect
our business, financial condition and operating result. In this case, the
trading price of our common stock could decline and you might lose all or part
of your investment.
Risks
Relating to the Oil and Natural Gas Industry
We
derive all our revenues from the oil and natural gas exploration and production
industry, a historically cyclical industry with levels of activity that are
significantly affected by the levels and volatility of oil and natural gas
prices.
Worldwide
political, economic and military events have contributed to oil and natural gas
price volatility and are likely to continue to do so in the future. Depending on
the market prices of oil and natural gas, oil and natural gas exploration and
production companies may cancel or curtail their drilling programs, thereby
reducing demand for our services. Oil and natural gas prices have been volatile
historically and, we believe, will continue to be so in the future. Many factors
beyond our control affect oil and natural gas prices, including:
•
|
the
cost of exploring for, producing and delivering oil and natural
gas;
|
|
•
|
the
discovery rate of new oil and natural gas reserves;
|
|
|
•
|
the
rate of decline of existing and new oil and natural gas
reserves;
|
|
•
|
available
pipeline and other oil and natural gas transportation
capacity;
|
|
•
|
the
ability of oil and natural gas companies to raise
capital;
|
|
•
|
actions
by OPEC, the Organization of Petroleum Exporting
Countries;
|
|
•
|
political
instability in the Middle East and other major oil and natural gas
producing regions;
|
|
•
|
economic
conditions in the United States and elsewhere;
|
|
•
|
governmental
regulations, both domestic and
foreign;
|
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16 -
|
•
|
domestic
and foreign tax policy;
|
•
|
weather
conditions in the United States and elsewhere;
|
|
|
•
|
the
pace adopted by foreign governments for the exploration, development and
production of their national reserves;
|
|
•
|
the
price of foreign imports of oil and natural gas; and
|
|
•
|
the
overall supply and demand for oil and natural
gas.
|
Any
prolonged reduction in the overall level of exploration and development
activities, whether resulting from changes in oil and natural gas prices or
otherwise, can adversely impact us in many ways by negatively
affecting:
•
|
our
revenues, cash flows and profitability;
|
|
|
•
|
our
ability to maintain or increase our borrowing capacity;
|
|
•
|
our
ability to obtain additional capital to finance our business and make
acquisitions, and the cost of that capital;
|
|
•
|
our
ability to retain skilled rig personnel whom we would need in the event of
an upturn in the demand for our services; and
|
|
•
|
the
fair market value of our rig fleet.
|
Risks
Relating to Our Business
Increases
in the supply of workover rigs could decrease dayrates and utilization
rates.
An increase
in the supply of workover rigs, whether through new construction or
refurbishment, could decrease dayrates and utilization rates, which would
adversely affect our revenues and profitability. In addition, such adverse
affect on our revenue and profitability caused by such increased competition and
lower dayrates and utilization rates could be further aggravated by any downturn
in oil and natural gas prices. There has been a substantial increase in the
supply of workover rigs in the United States over the past two years which has
led to a broad decline in dayrates and utilization industry wide.
A
material reduction in the levels of exploration and development activities in
Kansas or an increase in the number of rigs mobilized to Kansas could
negatively impact our dayrates and utilization rates.
We
currently conduct all of our operations in Kansas. A material reduction in the
levels of exploration and development activities in Kansas due to a variety of
oil and natural gas industry risks described above or an increase in the number
of rigs mobilized to Kansas could negatively impact our dayrates and utilization
rates, which could adversely affect our revenues and profitability.
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17 -
We
operate in a highly competitive, fragmented industry in which price competition
could reduce our profitability.
The fact
that workover rigs are mobile and can be moved from one market to another in
response to market conditions heightens the competition in the
industry.
The well
service contracts we compete for are usually awarded on the basis of competitive
bids or direct negotiations with customers. We believe pricing and quality of
equipment are the primary factors our potential customers consider in
determining which contractor to select. In addition, we believe the following
factors are also important:
•
|
the
type and condition of each of the competing workover
rigs;
|
|
|
•
|
the
mobility and efficiency of the rigs;
|
|
•
|
the
quality of service and experience of the rig crews;
|
|
•
|
the
offering of ancillary services; and
|
|
•
|
the
ability to provide equipment adaptable to, and personnel familiar with,
new technologies and techniques.
|
While we must
be competitive in our pricing, our competitive strategy generally emphasizes the
quality of our equipment and experience of our rig crews to differentiate us
from our competitors. This strategy is less effective as lower demand for
drilling services or an oversupply of rigs usually results in increased price
competition and makes it more difficult for us to compete on the basis of
factors other than price. In all of the markets in which we compete, an
oversupply of rigs can cause greater price competition which can, in turn,
reduce our profitability.
Contract
well service companies compete primarily on a regional basis, and the intensity
of competition may vary significantly from region to region at any particular
time. If demand for drilling services improves in a region where we operate, our
competitors might respond by moving in suitable rigs from other regions. An
influx of rigs from other regions could rapidly intensify competition and reduce
profitability.
We
face competition from competitors with greater resources that may make it more
difficult for us to compete, which can reduce our dayrates and utilization
rates.
Some of
our competitors have greater financial, technical and other resources than we do
that may make it more difficult for us to compete, which can reduce our dayrates
and utilization rates. Their greater capabilities in these areas may enable them
to:
•
|
better
withstand industry downturns;
|
|
|
•
|
compete
more effectively on the basis of price and technology;
|
|
•
|
retain
skilled rig personnel; and
|
|
•
|
build
new rigs or acquire and refurbish existing rigs so as to be able to place
rigs into service more quickly than us in periods of high drilling
demand.
|
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18 -
Our
operations involve operating hazards, which if not insured or indemnified
against, could adversely affect our results of operations and financial
condition.
Our
operations are subject to the many hazards inherent in the contract well
servicing business, including the risks of:
•
|
blowouts;
|
|
|
•
|
fires
and explosions;
|
|
•
|
loss
of well control;
|
|
•
|
collapse
of the borehole;
|
|
•
|
lost
or stuck drill strings; and
|
|
•
|
damage
or loss from natural disasters.
|
Any of
these hazards can result in substantial liabilities or losses to us from, among
other things:
•
|
suspension
of service operations;
|
|
•
|
damage
to, or destruction of, our property and equipment and that of
others;
|
|
|
•
|
personal
injury and loss of life;
|
|
•
|
damage
to producing or potentially productive oil and natural gas formations
through which we service; and
|
•
|
environmental
damage.
|
We seek
to protect ourselves from some but not all operating hazards through insurance
coverage. However, some risks are either not insurable or insurance is available
only at rates that we consider uneconomical. Depending on competitive conditions
and other factors, we attempt to obtain contractual protection against uninsured
operating risks from our customers. However, customers who provide contractual
indemnification protection may not in all cases maintain adequate insurance to
support their indemnification obligations. Our insurance or indemnification
arrangements may not adequately protect us against liability or loss from all
the hazards of our operations. The occurrence of a significant event that we
have not fully insured or indemnified against or the failure of a customer to
meet its indemnification obligations to us could materially and adversely affect
our results of operations and financial condition. Furthermore, we may be unable
to maintain adequate insurance in the future at rates we consider
reasonable.
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19 -
We
face increased exposure to operating difficulties because we have a
substantial focus on drilling for natural gas.
A
substantial number of our well service contracts are with exploration and
production companies in search of natural gas, particularly in coal bed methane.
Drilling on land for natural gas generally occurs at deeper drilling depths than
drilling for oil. Although deep-depth drilling exposes us to risks similar to
risks encountered in shallow-depth drilling, the magnitude of the risk for
deep-depth drilling is greater because of the higher costs and greater
complexities involved in drilling deep wells. We generally enter into
International Association of Drilling Contractors contracts that contain
“daywork” indemnification language that transfers responsibility for down hole
exposures such as blowout and fire to the operator, leaving us responsible only
for damage to our rig and our personnel. If we do not adequately insure the risk
from blowouts or if our contractual indemnification rights are insufficient or
unfulfilled, our profitability and other results of operation and our financial
condition could be adversely affected in the event we encounter blowouts or
other significant operating difficulties while drilling at deeper
depths.
Our
operations are subject to various laws and governmental regulations that could
restrict our future operations and increase our operating costs.
Many
aspects of our operations are subject to various federal, state and local laws
and governmental regulations, including laws and regulations
governing:
•
|
environmental
quality;
|
•
|
pollution
control;
|
•
|
remediation
of contamination;
|
•
|
preservation
of natural resources; and
|
•
|
worker
safety.
|
Our
operations are subject to stringent federal, state and local laws and
regulations governing the protection of the environment and human health and
safety. Several such laws and regulations relate to the disposal of hazardous
oilfield waste and restrict the types, quantities and concentrations of such
regulated substances that can be released into the environment. Several such
laws also require removal and remedial action and other cleanup under certain
circumstances, commonly regardless of fault. Planning, implementation and
maintenance of protective measures are required to prevent accidental
discharges. Spills of oil, natural gas liquids, drilling fluids and other
substances may subject us to penalties and cleanup requirements. Handling,
storage and disposal of both hazardous and non-hazardous wastes are also subject
to these regulatory requirements. In addition, our operations are often
conducted in or near ecologically sensitive areas, which are subject to special
protective measures and that may expose us to additional operating costs and
liabilities for accidental discharges of oil, natural gas, drilling fluids,
contaminated water or other substances or for noncompliance with other aspects
of applicable laws and regulations. Historically, we have not been required to
obtain environmental or other permits prior to drilling a well. Instead, the
operator of the oil and gas property has been obligated to obtain the necessary
permits at its own expense.
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20 -
The
federal Clean Water Act, as amended by the Oil Pollution Act, the federal Clean
Air Act, the federal Resource Conservation and Recovery Act, the federal
Comprehensive Environmental Response, Compensation, and Liability Act, or
CERCLA, the Safe Drinking Water Act, the Occupational Safety and Health Act, or
OSHA, and their state counterparts and similar statutes are the primary vehicles
for imposition of such requirements and for civil, criminal and administrative
penalties and other sanctions for violation of their requirements. The OSHA
hazard communication standard, the Environmental Protection Agency “community
right-to-know” regulations under Title III of the federal Superfund Amendment
and Reauthorization Act and comparable state statutes require us to organize and
report information about the hazardous materials we use in our operations to
employees, state and local government authorities and local citizens. In
addition, CERCLA, also known as the “Superfund” law, and similar state statutes
impose strict liability, without regard to fault or the legality of the original
conduct, on certain classes of persons who are considered responsible for the
release or threatened release of hazardous substances into the environment.
These persons include the current owner or operator of a facility where a
release has occurred, the owner or operator of a facility at the time a release
occurred, and companies that disposed of or arranged for the disposal of
hazardous substances found at a particular site. This liability may be joint and
several. Such liability, which may be imposed for the conduct of others and for
conditions others have caused, includes the cost of removal and remedial action
as well as damages to natural resources. Few defenses exist to the liability
imposed by environmental laws and regulations. It is also not uncommon for third
parties to file claims for personal injury and property damage caused by
substances released into the environment.
Environmental
laws and regulations are complex and subject to frequent changes. Failure to
comply with governmental requirements or inadequate cooperation with
governmental authorities could subject a responsible party to administrative,
civil or criminal action. We may also be exposed to environmental or other
liabilities originating from businesses and assets that we acquired from others.
We are in substantial compliance with applicable environmental laws and
regulations and, to date, such compliance has not materially affected our
capital expenditures, earnings or competitive position. We do not expect to
incur material capital expenditures in our next fiscal year in order to comply
with current or reasonably anticipated environment control requirements.
However, our compliance with amended, new or more stringent requirements,
stricter interpretations of existing requirements or the future discovery of
regulatory noncompliance or contamination may require us to make material
expenditures or subject us to liabilities that we currently do not
anticipate.
In
addition, our business depends on the demand for land drilling services from the
oil and natural gas industry and, therefore, is affected by tax, environmental
and other laws relating to the oil and natural gas industry generally, by
changes in those laws and by changes in related administrative regulations. It
is possible that these laws and regulations may in the future add significantly
to our operating costs or those of our customers or otherwise directly or
indirectly affect our operations.
We
rely on a few key employees whose absence or loss could disrupt our operations
resulting in a loss of revenues.
Many
key responsibilities within our business have been assigned to a small number of
employees. The loss of their services, particularly the loss of Christine
Tedesco, our Chief Executive and Financial Officer, could disrupt our operations
resulting in a loss of revenues. We have no employment agreements our
employees. In addition, we do not maintain “key person” life
insurance policies on any of our employees. As a result, we are not insured
against any losses resulting from the death of our key employees.
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21 -
We
may be unable to attract and retain qualified, skilled employees necessary to
operate our business.
Our
success depends in large part on our ability to attract and retain skilled and
qualified personnel. Our inability to hire, train and retain a sufficient number
of qualified employees could impair our ability to manage and maintain our
business. We require skilled employees who can perform physically demanding
work. Shortages of qualified personnel are occurring in our industry. As a
result of the volatility of the oil and natural gas industry and the demanding
nature of the work, potential employees may choose to pursue employment in
fields that offer a more desirable work environment at wage rates that are
competitive with ours. If we should suffer any material loss of personnel to
competitors or be unable to employ additional or replacement personnel with the
requisite level of training and experience to adequately operate our equipment,
our operations could be materially and adversely affected. With a reduced pool
of workers, it is possible that we will have to raise wage rates to attract
workers from other fields and to retain our current employees. If we are not
able to increase our service rates to our customers to compensate for wage-rate
increases, our profitability and other results of operations may be adversely
affected.
Shortages
in equipment and supplies could limit our operations and jeopardize our
relations with customers.
The materials and supplies we use in
our operations include fuels to operate
our equipment, pipe, and collars. Shortages
in equipment and supplies could limit our workover
operations and jeopardize our relations with customers. We do not rely on a
single source of supply for any of these items. From time to time there have
been shortages of equipment and supplies during periods of high demand which we
believe could reoccur. Shortages could result in increased prices
for equipment or supplies that we may be unable to pass on to
customers. In addition, during periods of shortages, the delivery times for
equipment and supplies can be substantially longer. Any significant delays in
our obtaining equipment or supplies could limit our operations and
jeopardize our relations with customers. In addition, shortages
of equipment or supplies could delay and adversely affect our ability
to obtain new contracts for our workover rigs, which could negatively
impact our revenues and profitability.
Risks
Related to Ownership of Our Common Stock
We
have incurred and will continue to incur increased costs as a result of being a
public company.
As a
result of becoming a public company, we have incurred and will continue to incur
significant legal, accounting and other expenses that we did not incur as a
private company. We have incurred and will continue to incur costs associated
with our public company reporting requirements and costs associated with
recently adopted corporate governance requirements, including requirements under
the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and
the NASD. These rules and regulations could increase our legal and
financial compliance costs and could make some activities more time-consuming
and costly. These new rules and regulations could make it more difficult and
more expensive for us to obtain director and officer liability insurance and we
may be required to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. As a result,
it may be more difficult for us to attract and retain qualified individuals to
serve on our board of directors or as executive officers.
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22 -
The
price of our common stock may be extremely volatile.
In
some future periods, our results of operations may be below the expectations of
public market investors, which could negatively affect the market price of our
common stock. Furthermore, the stock market in general has experienced extreme
price and volume fluctuations in recent years. We believe that, in the future,
the market price of our common stock could fluctuate widely due to variations in
our performance and operating results or because of any of the following
factors:
•
|
announcements
of new services, products, technological innovations, acquisitions or
strategic relationships by us or our competitors;
|
•
|
trends
or conditions in the software, business process outsourcing and Internet
markets;
|
•
|
changes
in market valuations of our competitors; and
|
•
|
general
political, economic and market
conditions.
|
In
addition, the market prices of securities of well service companies, including
our own, have been volatile and have experienced fluctuations that have often
been unrelated or disproportionate to a specific company's operating
performance. As a result, investors may not be able to sell shares of our common
stock at or above the price at which an investor purchase paid. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against that
company. If any securities litigation is initiated against us, we could incur
substantial costs and our management's attention could be diverted from our
business.
Quarterly
and annual operating results may fluctuate, which could cause our stock price to
be volatile.
Our
quarterly and annual operating results may fluctuate significantly in the future
due to a variety of factors that could affect our revenues or our expenses in
any particular period. You should not rely on our results of operations during
any particular period as an indication of our results for any other period.
Factors that may adversely affect our periodic results may include the loss of a
significant account or accounts.
Our
operating expenses are based in part on our expectations of our future revenues
and are partially fixed in the short term. We may be unable to adjust spending
quickly enough to offset any unexpected revenue shortfall.
The
significant concentration of ownership of our common stock will limit an
investor's ability to influence corporate actions.
The
concentration of ownership of our common stock may limit an investor's ability
to influence our corporate actions and have the effect of delaying or deterring
a change in control of our company, could deprive our stockholders of an
opportunity to receive a premium for their common stock as part of a sale of our
company, and may affect the market price of our common stock. Certain major
stockholders, if they act together, are able to substantially influence all
matters requiring stockholder approval, including the election of all directors
and approval of significant corporate transactions and amendments to our
articles of incorporation. These stockholders may use their ownership position
to approve or take actions that are adverse to interests of other investors or
prevent the taking of actions that are inconsistent with their respective
interests.
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23 -
We
are subject to compliance with securities law, which exposes us to potential
liabilities, including potential rescission rights.
We have
offered and sold our common stock to investors pursuant to certain exemptions
from the registration requirements of the Securities Act of 1933, as well as
those of various state securities laws. The basis for relying on such exemptions
is factual; that is, the applicability of such exemptions depends upon our
conduct and that of those persons contacting prospective investors and making
the offering. We have not received a legal opinion to the effect that any of our
prior offerings were exempt from registration under any federal or state law.
Instead, we have relied upon the operative facts as the basis for such
exemptions, including information provided by investors themselves.
If any
prior offering did not qualify for such exemption, an investor would have the
right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A
similar situation prevails under state law in those states where the securities
may be offered without registration in reliance on the partial preemption from
the registration or qualification provisions of such state statutes under the
National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that
could adversely affect our business and operations. Additionally, if we did not
in fact qualify for the exemptions upon which it has relied, we may become
subject to significant fines and penalties imposed by the SEC and state
securities agencies.
The
availability of a large number of authorized but unissued shares of common stock
may, upon their issuance, lead to dilution of existing
stockholders.
We are
authorized to issue 50,000,000 shares of common stock, $0.001 par value per
share, of which, as of September 30, 2009, 9,696,000 shares of common stock were
issued and outstanding. These shares may be issued by our board of directors
without further stockholder approval. The issuance of large numbers of shares,
possibly at below market prices, is likely to result in substantial dilution to
the interests of other stockholders. In addition, issuances of large numbers of
shares may adversely affect the market price of our common stock.
Further,
our Articles of Incorporation authorizes 1,000,000 shares of
preferred stock, $0.01 par value per share. The board of directors is authorized
to provide for the issuance of these unissued shares of preferred stock in one
or more series, and to fix the number of shares and to determine the rights,
preferences and privileges thereof. Accordingly, the board of directors may
issue preferred stock which convert into large numbers of shares of common stock
and consequently lead to further dilution of other shareholders.
We
do not intend to pay cash dividends in the foreseeable future
We
currently intend to retain all future earnings for use in the operation and
expansion of our business. We do not intend to pay any cash dividends in the
foreseeable future but will review this policy as circumstances
dictate.
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24 -
There
is currently no trading market for our securities and there can be no assurance
that any liquid market will ever develop.
There is
currently no trading market for our common. There can be no assurance as to
whether an orderly market will develop, (if ever) in our common
stock. As a result, we expect that the price at which our stock
trades is likely to fluctuate significantly. Prices for our common stock will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for shares of our common stock,
developments affecting our business, including the impact of the factors
referred to elsewhere in these Risk Factors, investor perception of us and
general economic and market conditions. No assurances can be given that an
orderly or liquid market will ever develop for the shares of our common stock.
Owing to the anticipated low price of the securities, many brokerage firms may
not be willing to effect transactions in the securities. See “Broker-dealers may
be discouraged from effecting transactions in our common stock because they are
considered a penny stock and are subject to the penny stock rules.”
Our
common stock is subject to the Penny Stock Regulations
Our
common stock and will likely be subject to the SEC's “penny stock” rules to the
extent that the price remains less than $5.00. Those rules, which require
delivery of a schedule explaining the penny stock market and the associated
risks before any sale, may further limit your ability to sell your
shares.
The SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share. Our common stock,
when and if a trading market develops, may fall within the definition of penny
stock and subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000, or annual incomes exceeding $200,000 or $300,000, together with
their spouse).
For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's prior written consent to the transaction. Additionally, for any
transaction, other than exempt transactions, involving a penny stock, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the `penny stock` rules may restrict the ability of broker-dealers
to sell our common stock and may affect the ability of investors to sell their
common stock in the secondary market.
Our
common stock is illiquid and subject to price volatility unrelated to our
operations
The
market price of our common stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry,
trading volume in our common stock, changes in general conditions in the economy
and the financial markets or other developments affecting our competitors or us.
In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market price
of securities issued by many companies for reasons unrelated to their operating
performance and could have the same effect on our common stock.
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Sales of
substantial amounts of common stock, or the perception that such sales could
occur, and the existence of convertible securities to purchase shares of common
stock at prices that may be below the then current market price of the common
stock, could adversely affect the market price of our common stock and could
impair our ability to raise capital through the sale of our equity
securities.
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
|
DESCRIPTION
|
|
2.1
**
|
Share
Exchange Agreement dated September 30, 2009
|
|
3.1
*
|
Articles
of Incorporation
|
|
3.2
*
|
Bylaws
|
|
10.1**
|
Drilling
Rig Contract
|
|
31.1
|
Certification
of CEO/CFO pursuant to Section 302
|
|
32.1
|
Certification
of CEO/CFO pursuant to Section 906
|
*
Previously filed with Form SB-2 Registration Statement, January 24,
2008.
**
Previously filed with Form 8-K on September 30, 2009
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26 -
Reports on Form
8-K
We filed
one Form 8K for the fiscal quarter ended September 30, 2009, on September 30,
2009, relating to our acquisition of CST Oil & Gas Corporation.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized on November 18, 2009.
WHISTLEPIG
ENTERPRISES, INC.
|
||
By:
|
/s/
Christine Tedesco
|
|
Christine
Tedesco
|
||
Chief
Executive and Financial and Accounting officer Officer and
President
|
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27 -