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EX-32.1 - INVENT Ventures, Inc.scap10qex321093009.htm
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarter Ended:          September 30, 2009
 
 
Commission File Number:          814-00720

SMALL CAP STRATEGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada 

20-5655532

(State or Jurisdiction of 

(IRS Employer ID No)

Incorporation or Organization)


3651 Lindell Road, Suite D #146, Las Vegas, NV 89103

(Address of principal executive office) (zip code) 
 

(702) 943-0330

(Issuer’s telephone number) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No .
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]     Accelerated filer [ ]     Non-accelerated filer [ ]     Smaller reporting company [ X ]    

                                                           (Do not check if a smaller reporting company)

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 registrant’s common stock, par value $0.001 per share, as of November 2, 2009, was 1,224,776 shares.


SMALL CAP STRATEGIES, INC.

INDEX

 

 Page
     No.

Part I     Financial Information        
   
     Item 1:     Condensed Consolidated Financial Statements    
   
          Balance Sheets as of September 30, 2009 and December 31, 2008       3  
          Statements of Operations – For the Three Months Ended September 30, 2009 and 2008       4  
Statements of Operations – For the Nine Months Ended September 30, 2009 and 2008 5
          Statements of Cash Flows – For the Nine Months Ended September 30, 2009 and 2008       6  
          Notes to Financial Statements       7  
     Item 2:     Management’s Discussion and Analysis of Financial Condition and Results of Operations       13  
     Item 3:     Quantitative and Qualitative Disclosure about Market Risk       16  
     Item 4:     Controls and Procedures       16  
 
Part II     Other Information       17  
 
     Item 1:     Legal Proceedings        
     Item 1A:     Risk Factors        
     Item 2:     Unregistered Sales of Equity Securities and Use of Proceeds        
     Item 3:     Defaults Upon Senior Securities        
     Item 4:     Submission of Matters to a Vote of Security Holders        
     Item 5:     Other Information        
     Item 6:     Exhibits        
     Signatures              
     Exhibits    


   

2

 

SMALL CAP STRATEGIES, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets

September 30, 2009 (Unaudited) and December 31, 2008

     

2009

   

2008

 

Assets

   
Current assets:    
  Cash and cash equivalents     $ 127   $ 928  
  Marketable securities       --     4,350  
     Total current assets       127     5,278  
Property and equipment, net       6,620     1,463  
     Total assets     $ 6,747   $ 6,741  
 

Liabilities and Stockholders' Deficit

   
Current liabilities:    
  Accounts payable     $ -   $ -  
  Due to related parties       158,807     61,462  
     Total current liabilities       158,807     61,462  
 
Commitments and contingencies (Note 8)    
 
Stockholders' deficit:    
  Common stock: $.001 par value; authorized 100,000,000    
    shares; 1,224,776 and 787,770 shares issued and outstanding    
    at September 30, 2009 and December 31, 2008, respectively       1,225     788  
  Additional paid-in capital       2,848,726     2,626,290  
  Accumulated deficit       (3,002,011 )   (2,681,799 )
     Total stockholders' deficit       (152,060 )   (54,721 )
          Total liabilities and stockholders' deficit     $ 6,747   $ 6,741  


 See accompanying notes to condensed consolidated financial statements.

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SMALL CAP STRATEGIES, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operation

Three Months Ended September 30, 2009 and 2008

(Unaudited)

     

2009

   

2008

 
Costs and expenses    
  General and administrative expense     $ 35,135   $ 39,440  
  Non-cash compensation       --     --  
     Total costs and expenses       35,135     39,440  
          Net loss from operations       (35,135 )   (39,440 )
Other income (expense):    
     Realized loss on sale of marketable securities       --     (45,092 )
     Unrealized gain on marketable securities       --     44,050  
     Interest income       --     --  
          Other income (expense)       --     (1,042 )
Net loss before income taxes and minority interest       (35,135 )   (40,482 )
     Provision for (refund of) income taxes       --     --  
          Net loss     $ (35,135 ) $ (40,482 )
 
Net loss per share, basic and diluted     $ (.003 ) $ (0.05 )
 
Weighted average shares outstanding,    
  basic and diluted       1,224,776     787,770  
 

See accompanying notes to condensed consolidated financial statements.

4

SMALL CAP STRATEGIES, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operation

Nine Months Ended September 30, 2009 and 2008

(Unaudited)

     

2009

   

2008

 
Costs and expenses    
  General and administrative expense     $ 111,132   $ 123,233  
  Non-cash compensation       222,873     --  
     Total costs and expenses       334,005     123,233  
          Net loss from operations       (334,005 )   (123,233 )
Other income (expense):    
     Realized loss on sale of marketable securities       (8,994 )   (295,926 )
     Unrealized gain on marketable securities       6,900     248,002  
     Dividend and interest income       --     5,614  
          Other income (expense)       (2,094 )   (42,310 )
Net loss before income taxes and minority interest       (336,099 )   (165,543 )
     Provision for (refund of) income taxes       (15,887 )   --  
          Net loss     $ (320,212 ) $ (165,543 )
 
Net loss per share, basic and diluted     $ (0.26 ) $ (02.3 )
 
Weighted average shares outstanding,    
  basic and diluted       1,215,171     721,347  


See accompanying notes to condensed consolidated financial statements.

5

SMALL CAP STRATEGIES, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2009 and 2008

(Unaudited)

 

     

2009

   

2008

 
 
Cash flows from operating activities    
Net loss     $ (320,212 ) $ (165,543 )
     Adjustment to reconcile net loss to net cash provided by (used    
         in) operating activities:    
        Unrealized gain from marketable securities       (6,900 )   (248,002 )
        Loss on sale of marketable securities       8,994     295,926  
       Depreciation and amortization       386     279  
       Common stock issued for services       222,873     --  
       Change in other assets and liabilities:    
         Accounts receivable       --     37,939  
         Accounts payable       --     (4,813 )
          IRS refund paid to related party       (15,887 )   --  
          Advance from one related party paid to another    
               related party       (10,000 )   --  
         Amounts paid by or loaned by related parties       123,232     24,426  
            Net cash provided by (used in) operating activities       2,486     (59,788 )
 
Cash flows from investing activities    
  Proceeds from sale of marketable securities       2,255     59,317  
  Investment in property and equipment       (5,542 )   --  
            Net cash provided by (used in) investing activities       (3,287 )   59,317  
 
Cash flows from financing activities    
            Net cash provided by financing activities       --     --  
 
Net decrease in cash and cash equivalents       (801 )   (471 )
Cash and cash equivalents, beginning of period       928     3,653  
Cash and cash equivalents, end of period     $ 127   $ 3,182  
 
Supplemental cash flow information    
 
Cash paid for interest and income taxes:    
  Interest     $ -   $ -  
  Income taxes       --     --  
Non-cash investing and financing activities:    
  Exchange of one investment for another investment       --     28,880  
  Restricted common stock issued for amount due related party       --     6,000  


See accompanying notes to condensed consolidated financial statements.

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SMALL CAP STRATEGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1:      GENERAL ORGANIZATION AND BUSINESS

The condensed consolidated financial statements include the account of Small Cap Strategies, Inc. ("SMCA") and its wholly owned inactive subsidiary, The Sarasota Group, Inc.

On November 24, 2008, the Company filed Form N-54c with the Securities and Exchange Commission (SEC”) to notify the SEC of the withdrawal of our previous election to be regulated as a Business Development Company (BDC”) under the Investment Company Act of 1940 (the 1940 Act”). With the approval of more than a majority of the voting power of our common stock, we filed Form N-54c and de-elected our BDC status.
 
The Company intends to pursue a business model whereby it will acquire majority ownership in an oil and gas development and production company. Under the new business model, the Company at all times will conduct its activities in such a way that it will not be deemed an "investment company” subject to regulation under the 1940 Act. Thus, the Company will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company will conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40% of its total assets at any one time.

On October 1, 2008, we entered into a letter of intent ("LOI”) with Xtreme Oil & Gas, Inc. ("Xtreme”) to acquire certain oil and gas or mineral interests located in Oklahoma and Texas and the interest in two entities licensed and bonded as operators in Oklahoma and Texas. We agreed to issue 18,000,000 shares of our common stock, shares of newly designated preferred stock in exchange for existing warrants of Xtreme and we agreed to assume the liability for unpaid salaries and fees due to the employees and independent contractors providing services to the Seller and pay these liabilities with 4,000,000 shares of common stock to be registered with an S-8. On November 24, 2008, the Company amended its LOI to extend the closing date until March 30, 2009 and issued 2,500,000 shares of common stock as an extension fee. The total purchase price was to be reduced by the extension fee. On April 6, 2009, the Company and Xtreme agreed to rescind the extension agreement and the 2,500,000 shares were returned to the Company and cancelled. The rescinded LOI expired under its original terms on December 31, 2008.At December 31, 2008, Xtreme owned 50.8% of our outstanding common stock and we were its majority owned subsidiary. In January 2009, with the issue of 437,006 shares from the Company's Stock Option Plan, as discussed in Note 7, Xtreme's ownership declined to 32.7%.
 
Pursuant to Regulation S-X, Rule 6, the Company operated on a non-consolidated basis until November 24, 2008. Operations of the portfolio companies were reported at the portfolio company level and only the appreciation or impairment of these investments was included in the Company’s financial statements. The Company had a change in reporting entity when it de-elected from BDC status, which required retroactive restatement of the Company’s financial statements to conform to the current presentation for all periods presented. Accordingly, subsequent to November 24, 2008, we have ceased operating as a BDC and have prepared consolidated financial statements with our wholly owned subsidiaries, if any.

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Unaudited Condensed Interim Financial Statements Basis of Presentation

Interim financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim periods have been included. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. The interim unaudited financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission.

In preparing the accompanying unaudited condensed consolidated financial statements, the Company has reviewed, as determined necessary by the Company's management, events that have occurred after September 30, 2009, up until the issuance of the financial statements, which occurred on November 10, 2009.

GOING CONCERN

At September 30, 2009 and December 31, 2008, the Company had current assets of $127 and $5,278; current liabilities of $158,807 and $61,462; and negative working capital of $158,680 and $56,184 at September 30, 2009 and December 31, 2008, respectively. The Company incurred a loss of $320,212 during the nine months ended September 30, 2009. The Company’s only source of cash flow has been from sales of investments and loans from the CEO and its principal shareholder, Xtreme.

Until the completion of an acquisition, if any, or some other form of financing, the Company’s only source of funds will be from loans from the CEO or other stockholders. It is unknown how long the CEO or other stockholders will be able to continue to fund the Company and it is unknown how long the Company can continue without other sources of funds.
 
The financial statements do not include any adjustments that may result from the outcome of these uncertainties.

 
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NOTE 2:      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

On August 28, 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05, "Measuring Liabilities at Fair Value" ("ASU 2009-05"). ASU 2009-05 provides additional guidance clarifying the measurement of liabilities at fair value. ASU 2009-05 is effective in the fourth quarter of 2009 for a calendar-year entity. The Company is currently evaluating the impact of ASU 2009-05 on its financial position, results of operations, cash flows, and disclosures.

On September 23, 2009, the FASB ratified Emerging Issues Task Force Issue No. 08-1, "Revenue Arrangements with Multiple Deliverables" ("EITF 08-1"). EITF 08-1 updates the current guidance pertaining to multiple-element revenue arrangements included in ASC Subtopic 605-25, which originated primarily from EITF 00-21, also titled "Revenue Arrangements with Multiple Deliverables." EITF 08-1 will be effective for annual reporting periods beginning January 1, 2011 for calendar-year entities. The Company is currently evaluating the impact of EITF 08-1 on its financial position, results of operations, cash flows, and disclosures.

NOTE 3:     CHANGE IN REPORTING ENTITY

From December 15, 2005 until November 24, 2008, the Company operated as a BDC under the 1940 Act. As such, the Company was subject to different reporting requirements and methods of accounting for its investments. With the change to being an operating company, the Company is no longer subject to the requirements of a BDC and the Company was required to retroactively modify its financial statements as if it were not subject to the requirements of a BDC during all periods presented.

The Company’s only subsidiary with operations was ACL until it was liquidated in 2008. ACL accounted for its investments as trading marketable equity securities, with unrealized gains and losses included in its statements of operations. The Company accounted for its investment in ACL in the same manner and included net unrealized gains and losses in its statements of operations. Accordingly, the Company’s net earnings (loss) did not change when ACL was consolidated since its annual unrealized gain (loss) was equal to the net earnings (loss) of ACL.

NOTE 4:     MARKETABLE EQUITY SECURITIES

The Company’s investment in marketable equity securities consists of the following at September 30, 2009 and December 31, 2008:

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2009

   

2008

 
Cost     $ 393   $ 11,643  
Unrealized loss       (393 )   (7,293 )
     Fair market value     $ --   $ 4,350  


At December 31, 2008, the Company recorded an impairment loss on its investment in Shocker 200 Index LP in the amount of $28,880 due to a high degree of uncertainty about the value of Shocker’s assets.
 
During 2007, all of the assets and corresponding liabilities of ACL were transferred to SMCA for the purpose of implementing an ordinary liquidation of the assets and liquidating ACL. The liquidation of all of the assets and ACL was completed in 2008.
 
At December 31, 2008, SMCA owned 7,500 HealthSport, Inc. shares which were valued at $4,350 in the above table. The Company's investment in Shocker 200 is carried at zero which is its cost less the impairment.

NOTE 5:     STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock

The Company is now authorized to issue 100,000,000 shares of common stock with a par value of $.001 and each share having one voting right. There are 1,224,776 and 787,770 common shares outstanding at September 30, 2009 and December 31, 2008, respectively.

Stock appreciation rights

On May 26, 2006, the Shareholders and the Board of Directors approved a stock appreciation rights contract (SAR”) plan to provide additional compensation to its executive officers. The SAR plan was terminated on November 25, 2008 with no SARs ever awarded.

NOTE 6:      RELATED PARTY TRANSACTIONS

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities as they become available. The officers and directors may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
 
During the second quarter of 2008, the CEO acquired 100,000 shares of the Company’s restricted common stock in exchange for $6,000 owed to the CEO. 

10

On November 24, 2008, the Company amended its LOI dated October 1, 2008, in which the Company agreed to acquire working interests in certain oil and gas properties and two operating companies. The parties agreed to extend the closing date until March 30, 2009, in exchange for issuance of 2,500,000 shares of the Company’s common stock as an extension fee. The total purchase price was to be reduced by the extension fee. The shares were originally valued at $1,275,000, the amount at which the stock was trading on the date of the amendment and the total was initially expensed as an extension fee. On April 6, 2009, the Company and Xtreme agreed to rescind the extension agreement and the 2,500,000 shares were returned to the Company and cancelled. The rescinded LOI expired under its original terms on December 31, 2008, therefore the extension fee is not reflected in the consolidated financial statements.

At September 30, 2009 and December 31, 2008, the Company owes its CEO $133,807 and $61,462, respectively, for loans and accrued compensation, which is included in due to related parties.At September 30, 2009, Xtreme had loaned the Company $25,000, which is also included in due to related parties.

Officer’s compensation and director’s fees related to the services provided by Bryce Knight, President and Director of the Company, are paid directly to Knight Enterprises, Inc., a Nevada corporation 100% owned by Bryce Knight.

General and administrative expense includes $15,000 and $45,000 in accrued compensation due the CEO for the three and nine month periods ended September 30, 2009 and 2008, respectively.

NOTE 7:      STOCK OPTION AND EMPLOYEE BENEFIT PLANS

STOCK OPTION PLANS

The Company's stock option plan (the 2008 Stock Option Plan) allows for the issuance of incentive and nonqualified stock options to employees and consultants of the Company. Options granted under the Plan are generally for periods not to exceed ten years and generally must be at prices not less than 100% of the estimated fair value of the stock on the date of grant as determined by the Board of Directors. Options granted to shareholders who own greater than 10% of the outstanding stock are established at 110% of the estimated fair value of the stock on the date of grant. Stock options granted by the Company to others are primarily for legal and investment banking services. There are no options outstanding under the 2008 Plan at September 30, 2009.

On November 25, 2008, the Company established the 2008 Stock Option Plan (the Plan”). The Plan registers via an S8 registration statement up to 450,000 shares of common stock to be issued to qualified recipients. Eligible participants in the Plan shall be key employees, non-employee directors, and consultants of the Company and its subsidiaries, whether or not members of the Board, as the Committee, in its sole discretion, may designate from time to time. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the types and amounts of their respective awards. In January 2009, 437,006 shares were issued pursuant to compensation agreements, primarily with consultants.The stock grants were valued at $222,873 and this amount is included in the 2009 consolidated statement of operations. There are options for 12,994 shares available for grant pursuant to the Plan at September 30, 2009.

11

In connection with the Company's acquisition of SGI in 2001, the Company renegotiated the stock options previously granted to former members of management. These options for 21,698 common shares were considered a new grant pursuant to SFAS No. 123(R). These options are fully vested, do not expire and are exercisable at $4.00 per share, the adjusted closing bid price of the Company's common stock on the date of grant. Accordingly, no compensation was charged to income using the intrinsic value method of accounting. These options were granted under the 1997 Stock Option Plan.

The Company had two previous Stock Option Plans, the 1997 Stock Option Plan and the 2004 Stock Option Plan. Both Plans were terminated on November 25, 2008. There had been no activity in either of the Plans since 2005. The options for 21,698 shares from the 1997 Plan discussed above, remain outstanding.

NOTE 8:          COMMITMENTS AND CONTINGENCIES

Leases

The Company currently maintains its corporate office at 3651 Lindell Road, Suite D#146, Las Vegas, Nevada 89103 on a month-to-month basis. Our chief executive officer is providing the space at no cost. In addition, we have maintained an operations office on a month-to-month basis in Santa Monica, California at a cost of $18,573 in 2009 and $21,918 in 2008.

 
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ITEM 2:     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This information statement contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause our actual results to differ materially from those indicated by such forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this information statement to conform such statements to actual results. Management's discussion and analysis should be read in conjunction with our financial statements and the notes herein.

Going Concern

At September 30, 2009, we had total assets of $6,747 and total liabilities of $158,807, all of which is owed to related parties. We have been able to continue operations only through advances from our CEO and loans from Xtreme.

The Company will continue to require working capital until it acquires a business capable of supporting operations. In addition, the Company will plan, with the acquisition of oil and gas mineral interests, to make substantial investments in drilling for oil and gas. In order to make these investments and meet cash requirements, the Company will be required to raise substantial funds, either through private placements of its equity or through loans.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Results of Operations

Comparison of the three months ended September 30, 2009 and 2008

    During the three months ended September 30, 2009 and 2008, we had no revenue.    
 
   

During the three months ended September 30, 2009 , our general and administrative expenses were $35,135 as compared to $39,440 in the year earlier period. The principal components of our general and administrative expenses were officers compensation of $15,000 in each year, audit fees of $6,461 and $7,156 in 2009 and 2008, respectively, and rent of $ 7,767 and $6,855 in 2009 and 2008, respectively.

   


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Comparison of the nine months ended September 30, 2009 and 2008

    During the nine months ended September 30, 2009 and 2008, we had no revenue.    
 
   

During the nine months ended September 30, 2009, our general and administrative expenses were $111,132 as compared to $123,233 in the year earlier period. The principal components of our general and administrative expenses were officers compensation of $ 45,000 in each year, audit fees of $28,683 and $28,627 in 2009 and 2008, respectively, and rent of $18,573 and $21,918 in 2009 and 2008, respectively.

   
 
   

During the nine months ended September 30, 2009 and 2008, we realized a loss of $8,994 and $295,926, respectively, from sales of marketable securities.

   
 
   

During the nine months ended September 30 , 2009 and 2008, we recorded net unrealized gains on our marketable securities in the amount of $6,900 and $248,002, respectively . The unrealized gain results when a marketable security is sold that had a previously recorded unrealized loss. When sold, the actual loss is included in realized losses and the previously recorded unrealized loss is reversed, thus creating an unrealized gain.

   
 
   

During the nine months ended September 30, 2009 we received a refund of $15,887 from the carryback of an NOL from 2008 to 2006.

   



Our Plan of Operation for the Next Twelve Months

On October 1, 2008, we entered into a letter of intent (LOI”) with Xtreme Oil & Gas, Inc. (Xtreme”) to acquire certain oil and gas or mineral interests located in Oklahoma and Texas and the interest in two entities licensed and bonded as operators in Oklahoma and Texas. We agreed to issue 18,000,000 shares of our common stock, shares of newly designated preferred stock in exchange for existing warrants of Xtreme and we agreed to assume the liability for unpaid salaries and fees due to the employees and independent contractors providing services to the Seller and pay these liabilities with 4,000,000 shares of common stock to be registered with an S-8 after the Company filed to withdraw its election to be regulated as a BDC. On November 24, 2008, the Company amended its LOI to extend the closing date until March 30, 2009 and issued 2,500,000 shares of common stock as an extension fee. The total purchase price was to be reduced by the extension fee. On April 6, 2009, the Company and Xtreme agreed to rescind the extension agreement and the 2,500,000 shares were returned to the Company and cancelled. The rescinded LOI expired under its original terms on December 31, 2008.

We intend to continue to pursue an acquisition of an oil and gas company, although, it is uncertain if this can be accomplished.

14

 

Off Balance Sheet Arrangements

•   None.


Contractual Obligations

•   None.

 
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ITEM 3:     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4:      CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of September 30, 2009. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the CEO concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including insuring that such information is accumulated and communicated to the Company’s management, including the CEO, as appropriate to allow timely decisions regarding required disclosure.
 
(b) Changes in Internal Controls
 
There have been no changes in internal controls or in other factors that could materially affect these controls during the quarter ended September 30, 2009, including any corrective actions with regard to significant deficiencies and material weaknesses.

 
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PART II:     OTHER INFORMATION

ITEM 1:     LEGAL PROCEEDINGS

Not Applicable.

ITEM 1A:      RISK FACTORS

Not Applicable.

ITEM 2:     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None during the current quarter.

ITEM 3:     DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4:     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable

ITEM 5:     OTHER INFORMATION

Mr. Bryce Knight, CEO, assumed the duties of Chief Financial Officer on September 19, 2006, upon the resignation of the former CFO.

ITEM 6:     EXHIBITS

The following exhibits are filed with this report on Form 10-Q.

Exhibit 31     Certifications pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002     

Exhibit 32     Certifications pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002

17

SIGNATURE

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.

    SMALL CAP STRATEGIES, INC.    
 
Date: November 10, 2009     By: /s/ Bryce Knight    
    Bryce Knight    
    Chief Executive Officer and    
    Chief Financial Officer    


 

                      

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