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| MENV.OB > SEC Filings for MENV.OB > Form 10-Q on 14-Aug-2008 | All Recent SEC Filings |
14-Aug-2008
Quarterly Report
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of June 30, 2008, we had current assets of $19,803 and current liabilities of $143,489 as compared to current assets of $11,355 and current liabilities of $499,966 as of December 31, 2007. As such, as of June 30, 2008, we had working capital deficit of $123,686 as compared to a working capital deficit of $488,611 as of December 31, 2007. Current liabilities at June 30, 2008, primarily consisted of accounts payable. Current liabilities at December 31, 2007, primarily consisted of accounts payable and related party payables. Our total assets increased from $269,741 at December 31, 2007 to $323,931 at June 30, 2008, mainly due to an increase in other assets. Our current liabilities decreased by $356,477 from December 31, 2007 to June 30, 2008, due mainly to a decrease in accounts payable and a decrease in related party payables. These decreases were due to a forgiveness of debt from a former related party and from a debt settlement with one current related party, one former related party and from a consultant.
During the six months ended June 30, 2008, our operating activities used cash of $145,106, the majority of which consisted of our net loss of $159,672 and a decrease in accounts payable of $17,385, partially offset by a decrease in related party payables of $11,957 and an increase in stock options granted for consulting fees of $18,625, as well as other items. During the six months ended June 30, 2007, our operating activities used cash of $273,440, the majority of which consisted of our net loss of $579,730 and a decrease in related party payables of $66,853, partially offset by stock and stock options granted for consulting fees of $227,636 and an increase in accounts payables of $142,359, as well as other items.
During the six months ended June 30, 2008, our investing activities used cash of
$45,923, as opposed to $119,114 in the six months ended June 30, 2007. The use
of cash in the six months ended June 30, 2008 was mainly attributable to coal
property bids and the purchase of working interests in oil and gas properties.
The use of cash in the six months ended June 30, 2007, was only attributable to
the purchase of working interests in oil and gas properties.
During the six months ended June 30, 2008, our financing activities provided us $200,665, which consisted of proceeds from sale of common stock of $200,000, partially offset by payment of a short term note payable of $17,165 and advances from related parties of $17,830. During the six months ended June 30, 2007, our financing activities provided us $318,965, which was paid to us from subscriptions receivable of $122,665 and from proceeds on sale of common stock of $196,300.
We expect total cash commitments for the remainder of the fiscal year to be approximately $133,000. The majority of the $133,000 cash commitments for the year are what we estimate our general and administrative expenses to be, which would include approximately $20,000 for legal fees, $33,000 for accounting fees, $30,000 for management fees, $40,000 for consulting fees and the remainder in general working capital.
We do not have sufficient resources at the present time to fund such cash commitments and we will require further funding in order to pay these cash commitments for 2008.
We own 104,071 limited partnership units in the Patch Oilsands Limited Partnership ("POLP"). The POLP acquired three oil sands leases in the Muskwa area ("Muskwa Leases") of Alberta from the Alberta Crown, which is the Alberta government. Each lease is 15-years, with annual rental payable to Alberta
Crown of CAD $3.50 per hectare and there are also royalties due to the Alberta Crown if the properties go into production. We must pay our proportionate share of 5% of the POLP's costs on the Muskwa Leases. We did receive a cash call for our portion of the April 2008 annual rental payments to the Alberta Crown of approximately $167 for the Muskwa leases, which we have paid. It is up to the general partner to become involved with future acquisitions and they have informed us that they do not intend to do so. We do not expect to be involved in any future acquisitions made within the POLP as the general partner is in the process of dissolving the POLP. As of the date of this Quarterly Report the POLP had not been dissolved. When the POLP dissolves, we will retain all of our interests in the various POLP properties, however we will hold our interest outside of the POLP.
We also own interests in eleven leases in the Alberta Oil Sands in Alberta, Canada. For the remainder of fiscal 2008, we do not have any annual rental payments due to the Alberta Crown for our Alberta Oil Sands leases. As of the date of this Quarterly Report, we had incurred $11,917 in annual rental payments to the Alberta Crown for eleven Alberta Oil Sands leases.
We may have further cash commitments on our Alberta Oil Sands lease interests in addition to those described above. We plan to pay our expenses with the cash reserves that we currently have and from private placements of our common stock, however such funds may, and likely will, be insufficient to pay all of our expenses.
During the remainder of the fiscal year ending December 31, 2008, we may have cash commitments in connection with the following projects:
·
In February 2006, we entered into a participation agreement with Premium Petroleum Inc., whereby we received a 5% working interest before and a 3% working interest after payout in the Boyne Lake Project, located in Boyne Lake, Alberta, Canada. Premium Petroleum Inc. has invoiced us for $19,258 for what they claim to be overage of drilling costs and completion costs which are currently due, however we are contesting this amount as Premium Petroleum Inc. refuses to provide us with a full and proper accounting of the costs associated with the Boyne Lake Project.
We plan to raise additional funds in order to drill or participate in the
drilling of our oil sands leases, make annual payments to the Alberta Crown for
our various leases, and to generally meet our future corporate obligations. We
plan to raise funds through the sale of our common stock or through loans.
There is no guarantee that we will be successful in arranging the required
financing. Unless we raise funds through the sale of our common stock or
through loans, we cannot drill further wells that have not yet been paid for, or
acquire new properties. There is no assurance that we will be able to raise
adequate capital.
Our future success will be materially dependent upon our ability to satisfy additional financing requirements. We are reviewing our options to raise equity capital. In order to satisfy our requisite budget, we have held and will continue to conduct negotiations with various investors. We cannot predict whether these negotiations will result in additional investment income for us.
Funding for our operations may not be available under favorable terms, if at all. If adequate funds are not available, we may be required to further curtail operations significantly or to obtain funds by entering into arrangements with collaborative partners or others that may require us to relinquish rights that we would not otherwise relinquish.
Results of Operations.
Our Statement of Operations for the three and six months ended June 30, 2008 indicated a net loss of $59,658 (nil per common share) and $159,672 (nil per common share), compared to a net loss of $129,269 (nil per common share) and $579,730 (nil per common share), for the three and six months ended June 30, 2007. Revenue from operations for the three and six months ended June 30, 2008, were $Nil and $Nil, compared to $1,519 and $4,086 for the three and six months ended June 30, 2007, because of the sale of our revenue producing non-oil sand properties in November 2007.
For the three and six months ended June 30, 2008, we had loss from operations of $63,525 and $165,363, compared to $129,269 and $579,730 for the three and six months ended June 30, 2008. The decrease of total expenses of $101,838 from the three months ended June 30, 2007 to the three months ended June 30, 2008, resulted primarily from a decrease in stock options granted for consulting and consulting fees incurred of $66,416. The decrease of total expenses of $416,332 from the six months ended June 30, 2007 to the six months ended June 30, 2008, resulted primarily from a decrease in stock options granted for consulting and consulting fees incurred of $340,296 and from a decrease in general and administrative expenses of $108,313.
General and administrative expenses for the three and six months ended June 30, 2008, were $10,892 and $16,664, compared to $15,099 and $124,977 for the three and six months ended June 30, 2007.
Risks Associated with Operations and Expansion
There are certain risks associated with the oil and gas business, including, but not limited to, severe fluctuations in oil and gas prices, strict regulatory requirements, uncertainty of oil and gas reserves and severe market fluctuations. There can be no assurance that such risks will not have a material adverse effect on our business, results of operations and financial condition.
We do not anticipate any significant research and development within the next 12 months, nor do we anticipate that we will lease or purchase any significant equipment within the next 12 months. We do not anticipate a significant change in the number of our employees within the next 12 months.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital reserves.
Certain matters discussed or referenced in this report specifies forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology such as "may", "will", "could", "expect", "estimate", "anticipate", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. Actual results may differ materially from those contemplated by the forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
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