þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Colorado		84-1491159
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company x

 

 

SUN RIVER ENERGY, INC.
TABLE OF CONTENTS
	PART I—FINANCIAL INFORMATION
	Item 1. Financial statements			3
	Item 2. Management’s discussion and analysis of financial condition and results of operations			12
	Item 3. Quantitative and qualitative disclosures about market risk			14
	Item 4. Controls and procedures			14
	PART II—OTHER INFORMATION
	Item 1. Legal proceedings			14
	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. (Removed and reserved)			15
	Item 5. Other information			15
	Item 6. Exhibits			16

		January 31,				April 30,
		2012				2011
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	431			$	1,489
Accounts receivable, net			62				307
Total current assets			493				1,796
Oil and gas properties—net, based on full cost method of accounting:
Property subject to amortization			8,607				7,492
Property not evaluated and not subject to amortization			12,454				11,895
Furniture, fixtures, and equipment, net			86				145
Goodwill			287				287
Deposits			19				15
Total assets		$	21,946			$	21,630
Liabilities and stockholders' equity (deficit)
Current liabilities
Accounts payable and accrued expenses		$	2,849			$	1,050
Accrued expenses – related parties			2,073				2,131
Asset retirement obligations – current			19				19
Notes payable			78				88
Notes payable – related party			4,225				5,000
Total current liabilities			9,244				8,288
Asset retirement obligations, net of current portion			41				39
Total liabilities			9,285				8,327
Commitments and contingencies
Stockholders’ equity
Preferred Stock, 8,750,000 shares authorized, par value $.01 no shares were issued and outstanding at January 31, 2012 and April 30, 2011, respectively			-				-
8% Series A cumulative convertible preferred stock, par value $.01; authorized 1,250,000 shares, 50,000 and 251,000 shares issued and outstanding as of January 31, 2012 and April 30, 2011, respectively			1				3
Common stock — $.0001 par value; authorized 100,000,000
shares; 32,165,880 shares and 27,946,898 shares are issued and outstanding as of January31, 2012and April 30, 2011, respectively			3				3
Additional paid-in-capital			37,383				30,277
Accumulated deficit			(24,726	)			(16,980	)
Total stockholders’ equity			12,661				13,303
Total liabilities and stockholders' equity		$	21,946			$	21,630

 

 

SUN RIVER ENERGY, INC.
Consolidated Statements of Operations
(Unaudited, in thousands, except for per share data)
	For the three months ended,									For the nine months ended,
		January 31,								January 31,
		2012				2011				2012				2011
Revenues		$	44			$	-			$	288			$	-
Operational expenses:
Lease operating expense and taxes			83				11				333				21
Depreciation, depletion and amortization			45				20				177				48
General and administrative			2,029				1,705				6,963				3,643
Total operational expenses			2,157				1,736				7,473				3,712
Loss from operations			(2,113	)			(1,736	)			(7,185	)			(3,712	)
Other income (expense)
Interest expense			(114	)			(56	)			(561	)			(108	)
Gain on settlement of litigation			-				-				-				550
Total other (expense) income			(114	)			(56	)			(561	)			442
Net loss		$	(2,227	)		$	(1,792	)		$	(7,746	)		$	(3,270	)
Less dividends on preferred shares			-				(26)				-				(26)
Net loss applicable to common stockholders			(2,227)				(1,818)				(7,746)				(3,296)
Per share information
Net loss per common share
Basic and diluted		$	(0.07	)		$	(0.08	)		$	(0.25	)		$	(0.15	)
Weighted average number
of common stock outstanding			32,157,184				24,138,397				30,956,460				22,120,108
The accompanying notes are an integral part of these consolidated financial statements.

 

		For the Nine Months Ended
		January 31,
		2012				2011
Cash flows from operating activities:
Net loss		$	(7,746	)		$	(3,270	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion, amortization, and accretion of asset retirement obligation			177				48
Gain on settlement of litigation							(550	)
Equity issued for services			4,062				1,865
Changes in current assets and liabilities:
Decrease (increase) in accounts receivable			245				(140	)
Increase in accounts payable and accrued liabilities			1,928				1,939
Decrease in other assets and other liabilities			(2	)			(15)
Net cash used in operating activities			(1,336	)			(123	)
Cash flows from investing activities:
Investment in oil and gas properties			(1,792	)			(1,723)
Decrease in oil and gas properties			-				-
Net cash provided by (used in) investing activities			(1,792	)			(1,723)
Cash flows from financing activities:
Preferred stock issued for cash			855				2,079
Proceeds from notes payable – related party			225				396
Proceeds from sale of common stock			1,000				-
Payments on notes payable			(10	)			(101	)
Net cash provided by (used in) financing activities			2,070				2,374
Net (decrease) increase in cash			(1,058	)			528
Cash and cash equivalents — beginning of period			1,489				40
Cash and cash equivalents — end of period		$	431			$	568

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest expense		$	3			$	-
Cash paid for income taxes		$	-			$	-
Issuance of common stock for payment of notes payable and accrued interest		$	1,087			$	1,632
Issuance of common stock for payment of accounts payable		$	100			$	-
Issuance of common stock for oil and gas properties		$	-			$	3,046
Issuance of common stock for fixed assets and goodwill		$	-			$	395
Issuance of note payable – related party for oil and gas properties		$	-			$	1,000
Issuance of a note payable for settlement of accounts payable		$	-			$	629
Issuance of common stock for deposit on oil and gas properties		$	-			$	450
Reclassification of notes payable – related party to accounts payable and accrued expenses		$	-			$	51

 

 

 

 

 

	●	The Company will evaluate the possibility of settlement of its $4,000,000 note payable - related party obligation with issuance of additional shares to the creditor; or
	●	Sun River has raised capital in a Preferred Stock offering, and the Company is currently attempting to raise additional equity through the sale of additional preferred or common stock and will utilize any proceeds to pay this debt if not already settled; or
	●	The Company will evaluate the availability of long term financing to refinance the debt, potentially secured with a portion of our $21,061,000 holdings in oil and gas properties; or
	●	The Company may sell a portion of our oil and gas properties to pay this debt, in addition to other selected current liabilities of the Company which may be due.

Recent Accounting Standards

 

 

 

 

The Company currently provides for stock-based compensation in three ways. (1) Stock options are granted to certain employees under the Company’s Incentive Plan. (2) The issuance of restricted stock vested over a period of time. (3) The issuance of warrants to purchase the Company’s common stock, which are primarily granted to certain service providers. Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense on a straight line basis over the requisite service period (vesting period).

Proved Properties		Acquisition Costs				Development Costs				Depletion				Asset Retirement Costs				Total
Balance at April 30, 2011		$	4,551			$	2,944			$	(61	)		$	58			$	7,492
Activity-May 1, 2011 to January 31, 2012			-				1,231				(118	)			2				1,115
Total		$	4,551			$	4,175			$	(179	)		$	60			$	8,607

Unevaluated Properties		Acquisition Costs				Development Costs				Impairment of Properties				Asset Retirement Costs				Total
Balance at April 30, 2011		$	12,794			$	-			$	(899	)		$	-			$	11,895
Activity-May 1, 2011 to January 31, 2012			559				-								-				559
Total		$	13,353			$	-			$	(899	)		$	-			$	12,454

Notes payable
Balance as of April 30, 2011			$	88,000
Payments				(10,000	)
Balance as of January 31, 2012			$	78,000
Notes payable - related parties
Balance as of April 30, 2011			$	5,000,000
Conversion of the FTP note				(1,000,000	)
Proceeds during period				225,000
Balance as of January 31, 2012			$	4,225,000

 

 

 

During the three and nine months ended January 31, 2012, the Company recognized expenses of $1,276,000 and $2,380,000, respectively,associated with the vested options issued in connection with its Incentive Stock Option Plan. The Company issued options to purchase 481,945 shares.

			Number of options				Weighted average exercise price				Weighted average remaining term (in years)				Aggregate fair Value
Outstanding at April 30, 2011				3,335,000			$	1.99				9.7			$	5,355,000
Granted  Granted				481,945				2.05				10.0				253,000
Exercised				-				-				-				-
Forfeited or expired				-				-				-				-
Outstanding at January 31, 2012				3,816,945			$	1.98				9.0			$	5,608,000

 

 

 

 

	(a)		volatility or decline of the Company’s stock price;
	(b)		potential fluctuation in quarterly results;
	(c)		failure of the Company to earn revenues or profits;
	(d)		inadequate capital to continue or expand its business, inability to raise additional capital or financing to implement business plans;
	(e)		failure to commercialize its technology or to make sales;
	(f)		rapid and significant changes in markets;
	(g)		litigation with or legal claims and allegations by outside parties; and
	(h)		insufficient revenues to cover operating costs.

 

 

	●	The Company will evaluate the possibility of settlement of this obligation with issuance of additional shares to the creditor; or
	●	Sun River has raised capital in a Preferred Stock offering, and the Company is currently raising additional equity through the sale of additional common stock or preferred stock and will utilize any proceeds to pay this debt if not already settled; or
	●	The Company will evaluate the availability of long term financing to refinance the debt, potentially secured with a portion of our $21,061,000 holdings in oil and gas properties; or
	●	The Company may sell a portion of our oil and gas properties to pay this debt, in addition to other selected current liabilities of the Company which may be due.

 

 

 

 

 

 

 

DATE OF SALE		TITLE OF SECURITIES		NO. OF SHARES		CONSIDERATION		CLASS OF PURCHASER
February  3, 2012		Common Stock		599,988		Cash and settlement of accounts payable		Stockholder
February 15, 2012		Common Stock		694,667		Cash		Stockholder
February 21, 2012		Common Stock		60,000		Extension fee on note		Stockholder
February 27, 2012		Common Stock		41,834		Settlement of accounts payable		Stockholder

 

 

				Incorporated by Reference
Exhibit No.		Exhibit Description		Form		SEC File		Exhibit		Filing Date		Filed Herewith
3.1(i)		Articles of Incorporation.		10-SB12G		000-27485		3.1(i)		9/29/1999
3.2		Certificate of Designation of 8% Series A Cumulative Convertible Preferred Stock		10-Q		000-27485		3.2		3/11/2011
4.1		Warrants issued to J.H Brech		10-Q		000-27485		4.1		3/11/2011
4.2		Warrant issued to Tom Anderson		10-Q		000-27485		4.2		3/11/2011
4.3		Warrant issued to Redgie Green		10-Q		000-27485		4.3		3/11/2011
4.4		Warrant issued to David Surginer		10-Q		000-27485		4.4		3/11/2011
4.5		Warrant issued to Steven Weathers		10-Q		000-27485		4.5		3/11/2011
4.6		Warrants issued to Cicerone Corporate Development		10-Q		000-27485		4.6		3/11/2011
4.7		Warrant issued to Avalon		10-Q		000-27485		4.7		3/11/2011
4.8		Warrant issued to Aspenwood Capital		10-Q		000-27485		4.8		3/11/2011

10.1		Amended and Restated Consulting Agreement with Cicerone Corporate Development, LLC and incorporated herein by reference.		8-K		000-27485		10		11/29/2010
10.2		Promissory Note dated June 10, 2010 between Sun River Energy, Inc. and J.H. Brech, LLC. and incorporated herein by reference.		10-Q		000-27485		10		12/20/2010
10.3		Promissory Note dated November 1, 2010 between Sun River Energy, Inc. and Cicerone Corporate Development, LLC. and incorporated herein by reference.		10-Q		000-27485		10		12/20/2010
10.4		Employment Agreement dated as of December 22, 2010 with Jay Leaver and incorporated herein by reference.		8-K		000-27485		10		1/18/2011
10.5		Settlement Agreement and Release and Covenant Not to Sue, dated January 10, 2011 and incorporated herein by reference.		8-K		000-27485		10		1/14/2011
10.6		Purchase and sale agreement with Peccary		10-Q		000-27485		10		3/11/2011
10.7		Convertible Promissory Note to JMJ Financial (“JMJ”) in aggregate principal amounts of $1,250,000 dated March 8, 2012										*
21		List of subsidiaries		10-K		000-27485		21		6/22/2011
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.										*
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.										*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.										*
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.										*

	SUN RIVER ENERGY, INC.
Date: March 15, 2012	By:	/s/ JF “Rick” Hoover
		Name:	JF “Rick” Hoover
		Title:	CFO (Principal Accounting Officer)