Attached files
file | filename |
---|---|
EX-32.1 - EFACTOR GROUP CORP. | ex32-1.htm |
EX-31.2 - EFACTOR GROUP CORP. | ex31-2.htm |
EX-31.1 - EFACTOR GROUP CORP. | ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
(Mark
One)
Form
10-Q
[√]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30,
2009
|
or
[
]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period
from ______________________ to
____________________________
|
Commission
file number: 000-51569
|
STANDARD
DRILLING, INC.
|
(Name of registrant as specified
in its charter)
|
Nevada
|
84-1598154
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
1640
Terrace Way, Walnut Creek, CA
|
94597
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(925)
938-0406
|
(Registrant's
telephone number, including area
code)
|
not
applicable
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
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 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 [√] 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 (§ 232.405 of this
chapter) during the preceding 12 (or for such shorter period that the registrant
was required to submit and post such files). Yes [ ]
No [ ]
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule
12b-2 of the Exchange Act.
Large
accelerated filer
|
[
]
|
Accelerated
filer
|
[
]
|
Non-accelerated
filer
|
[
]
|
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 [ ]
Indicated the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date. 33,458,880 shares of common stock are issued and
outstanding as of November 18, 2009.
TABLE
OF CONTENTS
Page
No.
|
||
PART
I. - FINANCIAL INFORMATION
|
||
Item
1.
|
Financial
Statements
|
1
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
7
|
Item
3.
|
Quantative
and Qualitative Disclosures About Market Risk.
|
10
|
Item
4T
|
Controls
and Procedures.
|
10
|
PART
II - OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings.
|
10
|
Item
1A.
|
Risk
Factors.
|
10
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
10
|
Item
3.
|
Defaults
Upon Senior Securities.
|
10
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
10
|
Item
5.
|
Other
Information.
|
10
|
Item
6.
|
Exhibits.
|
10
|
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This report contains forward-looking
statements. These forward-looking statements are subject to known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements were based on various
factors and were derived utilizing numerous assumptions and other factors that
could cause our actual results to differ materially from those in the
forward-looking statements. These factors include, but are not
limited to, our ability to consummate the acquisition of an operating entity
and/or assets, our ability to generate revenues and pay our operating expenses,
our ability to raise capital as necessary, economic, political and market
conditions and fluctuations, government and industry regulation, interest rate
risk, U.S. and global competition, and other factors. Most of these
factors are difficult to predict accurately and are generally beyond our
control. You should consider the areas of risk described in
connection with any forward-looking statements that may be made
herein. Readers are cautioned not to place undue reliance on these
forward-looking statements and readers should carefully review this report in
its entirety, including the risks described in "Item 1A. - Risk
Factors". Except for our ongoing obligations to disclose material
information under the Federal securities laws, we undertake no obligation to
release publicly any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this report, and you
should not rely on these statements without also considering the risks and
uncertainties associated with these statements and our business.
OTHER
PERTINENT INFORMATION
Unless
specifically set forth to the contrary, when used in this report the terms
“Standard Drilling", "we"", "our", the "Company" and similar terms refer to
Standard Drilling, Inc., a Nevada corporation. In addition, when used
herein and unless specifically set forth to the contrary, “2009” refers to the
year ending December 31, 2009 and “2008” refers to the year ended December 31,
2008.
PART
1 - FINANCIAL INFORMATION
Item 1.
Financial Statements.
STANDARD
DRILLING, INC.
(A Development Stage Company)
Balance
Sheets
|
ASSETS
|
|||||||||
September
30,
|
December
31,
|
||||||||
2009
|
2008
|
||||||||
CURRENT
ASSETS
|
(Unaudited)
|
||||||||
Cash and cash equivalents | $ | 323,027 | $ | 485,200 | |||||
Total Current Assets | 323,027 | 485,200 | |||||||
TOTAL ASSETS | $ | 323,027 | $ | 485,200 | |||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|||||||||
CURRENT
LIABILITIES
|
|||||||||
Accounts payable | $ | - | $ | - | |||||
Total Current Liabilities | - | - | |||||||
TOTAL LIABILITIES | - | - | |||||||
STOCKHOLDERS'
EQUITY
|
|||||||||
Preferred stock; 10,000,000 shares authorized, | |||||||||
at $0.001 par value, zero shares issued and outstanding | - | - | |||||||
Common stock; 100,000,000 shares authorized, | |||||||||
at $0.001 par value, 33,458,880 and 33,458,880 | |||||||||
shares issued and outstanding, respectively | 33,459 | 33,459 | |||||||
Additional paid-in capital | 17,872,951 | 17,872,951 | |||||||
Accumulated deficit | (17,583,383 | ) | (17,421,210 | ) | |||||
Total Stockholders' Equity | 323,027 | 485,200 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' | |||||||||
EQUITY | $ | 323,027 | $ | 485,200 | |||||
The
accompanying condensed notes are an integral part of these interim
financial statements.
|
1
STANDARD
DRILLING, INC.
(A Development Stage
Company)
|
Statements
of Operations
|
(Unaudited)
|
From
Inception
|
||||||||||||||||||||
of
the
|
||||||||||||||||||||
Development
|
||||||||||||||||||||
Stage
on
|
||||||||||||||||||||
For
the Three
|
For
the Nine
|
February
14,
|
||||||||||||||||||
Months
Ended
|
Months
Ended
|
2006
Through
|
||||||||||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
REVENUES
- Drilling
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
COST
OF SALES
|
- | - | - | - | - | |||||||||||||||
GROSS
PROFIT
|
- | - | - | - | - | |||||||||||||||
OPERATING
EXPENSES
|
||||||||||||||||||||
Consulting
|
30,000 | 41,000 | 46,476 | 1,401,447 | 1,583,363 | |||||||||||||||
General
and administrative
|
15,110 | 47,716 | 118,670 | 77,716 | 211,476 | |||||||||||||||
Total
Operating Expenses
|
45,110 | 88,716 | 165,146 | 1,479,163 | 1,794,839 | |||||||||||||||
OPERATING
LOSS
|
(45,110 | ) | (88,716 | ) | (165,146 | ) | (1,479,163 | ) | (1,794,839 | ) | ||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||||||
Interest
expense
|
- | - | - | - | - | |||||||||||||||
Interest
income
|
537 | - | 2,973 | - | 3,856 | |||||||||||||||
Total
Other Income
|
||||||||||||||||||||
(Expense)
|
537 | - | 2,973 | - | 3,856 | |||||||||||||||
LOSS
BEFORE
|
||||||||||||||||||||
DISCONTINUED
|
||||||||||||||||||||
OPERATIONS
|
(44,573 | ) | (88,716 | ) | (162,173 | ) | (1,479,163 | ) | (1,790,983 | ) | ||||||||||
Loss
from Discotinued
|
||||||||||||||||||||
Operations
|
- | - | - | - | (15,792,400 | ) | ||||||||||||||
NET
LOSS
|
$ | (44,573 | ) | $ | (88,716 | ) | $ | (162,173 | ) | $ | (1,479,163 | ) | $ | (17,583,383 | ) | |||||
BASIC
AND DILUTED
|
||||||||||||||||||||
LOSS
PER SHARE
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.04 | ) | ||||||||
WEIGHTED
AVERAGE
|
||||||||||||||||||||
NUMBER
OF SHARES
|
||||||||||||||||||||
OUTSTANDING
|
33,458,880 | 34,207,000 | 33,458,880 | 34,207,000 |
The
accompanying condensed notes are an integral part of these interim
financial statements.
|
2
STANDARD
DRILLING, INC.
(A Development Stage
Company)
|
|||
Statements
of Stockholders' Equity (Deficit)
|
|||
Additional
|
Stock
|
Prepaid
|
Retained
|
|||||||||||||||||||||
Common
Stock
|
Paid-In
|
Subscriptions
|
Stock
|
Earnings
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Receivable
|
Awards
|
(Deficit)
|
|||||||||||||||||||
Balance
at inception on February 14, 2006
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Initial
capital from founding shareholders for services rendered
|
23,000,000 | 23,000 | - | - | - | - | ||||||||||||||||||
Issuance
of common stock for cash, prepaid services, and
|
||||||||||||||||||||||||
subscriptions
receivable
|
22,073,000 | 22,073 | 18,026,709 | (370,000 | ) | (722,755 | ) | - | ||||||||||||||||
|
||||||||||||||||||||||||
Net
loss for the period from inception on February 14, 2006
|
||||||||||||||||||||||||
through
December 31, 2006
|
- | - | - | - | - | (3,624,042 | ) | |||||||||||||||||
Balance,
December 31, 2006
|
45,073,000 | 45,073 | 18,026,709 | (370,000 | ) | (722,755 | ) | (3,624,042 | ) | |||||||||||||||
Cash
received on subscriptions receivable
|
- | - | - | 317,600 | - | - | ||||||||||||||||||
Amortization
of prepaid services to paid-in capital
|
- | - | (742,472 | ) | - | 722,755 | - | |||||||||||||||||
Write-off
of stock subscriptions receivable
|
- | - | - | 52,400 | - | - | ||||||||||||||||||
Common
shares cancelled
|
(10,866,000 | ) | (10,866 | ) | (55,754 | ) | - | - | - | |||||||||||||||
Net
loss for the year ended December 31, 2007
|
- | - | - | - | - | (12,243,212 | ) | |||||||||||||||||
Balance,
December 31, 2007
|
34,207,000 | 34,207 | 17,228,483 | - | - | $ | (15,867,254 | ) | ||||||||||||||||
Fair
value of options granted and amended
|
- | - | 643,720 | - | - | - | ||||||||||||||||||
Common
shares cancelled
|
(748,120 | ) | (748 | ) | 748 | - | - | - | ||||||||||||||||
Net
loss for the year ended December 31, 2008
|
- | - | - | - | - | (1,553,956 | ) | |||||||||||||||||
Balance,
December 31, 2008
|
33,458,880 | 33,459 | 17,872,951 | - | - | (17,421,210 | ) | |||||||||||||||||
|
||||||||||||||||||||||||
Net
loss for the nine months ended
|
||||||||||||||||||||||||
September
30, 2009 (unaudited)
|
- | - | - | - | - | (162,173 | ) | |||||||||||||||||
Balance,
September 30, 2009 (unaudited)
|
33,458,880 | $ | 33,459 | $ | 17,872,951 | $ | - | $ | - | $ | (17,583,383 | ) |
The
accompanying notes are an integral part of these financial
statements.
|
3
STANDARD
DRILLING, INC.
(A Development Stage
Company)
|
Statements
of Cash Flows
|
(Unaudited)
|
From
Inception
|
||||||||||||
of
the Development
|
||||||||||||
Stage
on
|
||||||||||||
For
the Nine
|
For
the Nine
|
February
14, 2006
|
||||||||||
Months
Ended
|
Months
Ended
|
Through
|
||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (162,173 | ) | $ | (1,479,163 | ) | $ | (17,583,383 | ) | |||
Adjustments
to reconcile net loss to net cash
|
||||||||||||
used
by operating activities:
|
||||||||||||
Depreciation,
depletion and amortization
|
- | - | 476,710 | |||||||||
Common
stock issued for services
|
- | - | 575,242 | |||||||||
Loss
on equity investment
|
- | - | 59,146 | |||||||||
Gain
on disposal of equity instruments
|
- | - | (39,497 | ) | ||||||||
Fair
value of options granted
|
- | 643,720 | 643,720 | |||||||||
Write-off
of notes receivable
|
- | - | 600,000 | |||||||||
Loss
on disposal of assets
|
- | - | (476,709 | ) | ||||||||
Changes
in operating assets and liabilities
|
||||||||||||
Change
in accounts receivable
|
- | 600,000 | (197,463 | ) | ||||||||
Increase
in prepaid expenses
|
- | - | (219,165 | ) | ||||||||
Decrease
in deposits
|
- | - | 5,285 | |||||||||
Change
in accounts payable
|
- | 5,292 | 1,303,028 | |||||||||
Increase
in accrued expenses
|
- | - | (728,051 | ) | ||||||||
Net
Cash Used by Operating Activities
|
(162,173 | ) | (230,151 | ) | (15,581,137 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase
of oil and gas properties
|
- | - | (2,427,507 | ) | ||||||||
Change
in fixed assets
|
- | - | 1,074,406 | |||||||||
Change
in deposits on fixed assets
|
- | - | 671,138 | |||||||||
Change
in notes receivable
|
- | - | (600,000 | ) | ||||||||
Cash
paid on equity investment
|
- | - | (87,500 | ) | ||||||||
Net
Cash Used by Investing Activities
|
- | - | (1,369,463 | ) | ||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Change
in notes payable, net
|
- | - | - | |||||||||
Cash
received on subscriptions receivable
|
- | - | 317,600 | |||||||||
Sale
of common stock for cash
|
- | - | 16,956,027 | |||||||||
Net
Cash Provided by Financing Activities
|
- | - | 17,273,627 | |||||||||
NET
DECREASE IN CASH
|
(162,173 | ) | (230,151 | ) | 323,027 | |||||||
CASH
AT BEGINNING OF PERIOD
|
485,200 | 795,436 | - | |||||||||
CASH
AT END OF PERIOD
|
$ | 323,027 | $ | 565,285 | $ | 323,027 | ||||||
SUPPLIMENTAL
DISCLOSURES OF
|
||||||||||||
CASH
FLOW INFORMATION
|
||||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | - | $ | 544 | $ | 11,324 | ||||||
Income
Taxes
|
$ | - | $ | - | $ | - |
The
accompanying condensed notes are an integral part of these interim
financial statements.
|
4
STANDARD
DRILLING, INC.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
NOTE
1 - CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows at September 30, 2009, and for
all periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
2008 audited financial statements. The results of operations for the
periods ended September 30, 2009 and 2008 are not necessarily indicative of the
operating results for the full years.
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES
Recently Adopted Accounting
Pronouncements
Effective
June 30, 2009, the Company adopted a new accounting standard issued by the FASB
related to the disclosure requirements of the fair value of the financial
instruments. This standard expands the disclosure requirements of fair value
(including the methods and significant assumptions used to estimate fair value)
of certain financial instruments to interim period financial statements that
were previously only required to be disclosed in financial statements for annual
periods. In accordance with this standard, the disclosure requirements have been
applied on a prospective basis and did not have a material impact on the
Company’s financial statements.
On
September 30, 2009, Sputnik adopted changes issued by the Financial Accounting
Standards Board (FASB) to the authoritative hierarchy of GAAP. These
changes establish the FASB Accounting Standards Codification (Codification) as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with GAAP. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The
FASB will no longer issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue
Accounting Standards Updates. Accounting Standards Updates will not
be authoritative in their own right as they will only serve to update the
Codification. These changes and the Codification itself do not change
GAAP. Other than the manner in which new accounting guidance is
referenced, the adoption of these changes had no impact on the Financial
Statements.
Recently Issued Accounting
Standards
In August
2009, the FASB issued an amendment to the accounting standards related to the
measurement of liabilities that are recognized or disclosed at fair value on a
recurring basis. This standard clarifies how a company should measure the fair
value of liabilities and that restrictions preventing the transfer of a
liability should not be considered as a factor in the measurement of liabilities
within the scope of this standard. This standard is effective for the Company on
October 1, 2009. The Company does not expect the impact of its adoption to be
material to its financial statements.
In
October 2009, the FASB issued an amendment to the accounting standards related
to the accounting for revenue in arrangements with multiple deliverables
including how the arrangement consideration is allocated among delivered and
undelivered items of the arrangement. Among the amendments, this standard
eliminated the use of the residual method for allocating arrangement
considerations and requires an entity to allocate the overall consideration to
each deliverable based on an estimated selling price of each individual
deliverable in the arrangement in the absence of having vendor-specific
objective evidence or other third party evidence of fair value of the
undelivered items. This standard also provides further guidance on how to
determine a separate unit of accounting in a multiple-deliverable revenue
arrangement and expands the disclosure requirements about the judgments made in
applying the estimated selling price method and how those judgments affect the
timing or amount of revenue recognition. This standard, for which the Company is
currently assessing the impact, will become effective for the Company on January
1, 2011.
5
STANDARD
DRILLING, INC.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
NOTE
3 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and allow it to continue as
a going concern. The ability of the Company to continue as a going concern is
dependent on the Company obtaining adequate capital to fund operating losses
until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However, management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE
4 – SUBSEQUENT EVENTS
There
were no subsequent events from the end of the quarter to November 13,
2009.
6
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
Overview
We are considered a "shell company"
under Federal securities laws. Our business plan is to seek to acquire
assets or shares of an entity actively engaged in business which generates
revenues in exchange for our securities. We will not restrict our search to
any specific business, industry, or geographical location and we may participate
in a business venture of virtually any kind or nature. This discussion of
the proposed business is purposefully general and is not meant to be restrictive
of our virtually unlimited discretion to search for and enter into potential
business opportunities. Management anticipates that it may be able to
participate in only one potential business venture because we have nominal
assets and limited financial resources. This lack of diversification
should be considered a substantial risk to our stockholders because it will not
permit us to offset potential losses from one venture against gains from
another.
Plan
of Operations
We currently plan to investigate and,
if such investigation warrants, acquire a target company or business seeking the
perceived advantages of being a publicly held corporation and, to a lesser
extent that desires to employ our funds in its business. Our principal business
objective for the next 12 months and beyond will be to achieve long-term growth
potential through a combination with a business rather than immediate,
short-term earnings. We will not restrict our potential candidate target
companies to any specific business, industry or geographical location and, thus,
may acquire any type of business.
Our
ability to effectively pursue our business plan has been adversely impacted by a
number of factors related to our former operations. The efforts on
our behalf by Mr. David S. Rector, our sole officer and director and the
individual responsible for our efforts to identify and close an acquisition with
an operating company, have been substantially focused on matters related matters
arising from a default by PBT Capital Partners, LLC under the terms of a
September 2007 agreement and amendments thereto related to the sale of assets to
this entity, and pending litigation which has resulted from this
default.
PBT
Capital Partners, LLC is a private company whose sole shareholder was Prentis B.
Tomlinson, Jr., our former Chairman and Chief Executive Officer. As a
result of PBT Capital Partners, LLC’s default under the various agreements, on
September 15, 2009 we received a copy of a Final Judgment entered against our
company on June 30, 2009 in the District Court in Johnson County, Texas in the
aggregate amount of approxmatley $202,874 for taxes, penalties, interest and
attorneys fees, including continuing interest, related to four tracts of
land. The court also awarded Romfor West Africa, Ltd. judgment
against our company in the amount of $8,325, plus additional attorneys’ fees in
the conditional event of appeal. The aforedescribed judgment relates
to the unpaid property taxes. Romfor West Africa, Ltd., a
cross-plaintiff in the action underlying the judgment, has also served us with
written discovery.
We have
hired counsel in Texas to evaluate our options with respect to the judgment as
well as to represent us in our efforts to collect the amounts due to us by PBT
Capital Partners, LLC under a $600,000 note and to cause that company and Mr.
Tomlinson to perform in accordance with the various
agreements. However, until these matters are essentially resolved the
uncertainty related thereto will continue to adversely impact our ability to
close a business combination with an operating company.
As of the
date of this filing, while we have had conversations with potential merger or
acquisition targets, we have not entered into any definitive agreement with any
party. In our efforts to analyze potential acquisition targets, we may consider
the following kinds of factors:
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•
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Potential for growth, indicated
by new technology, anticipated market expansion or new
products;
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•
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Competitive position as compared
to other firms of similar size and experience within the industry segment
as well as within the industry as a
whole;
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•
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Strength and diversity of
management, either in place or scheduled for
recruitment;
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•
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Capital requirements and
anticipated availability of required funds, to be provided by us or from
operations, through the sale of additional securities, through joint
ventures or similar arrangements or from other
sources;
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•
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The cost of participation by us
as compared to the perceived tangible and intangible values and
potentials;
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•
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The extent to which the business
opportunity can be advanced;
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•
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The accessibility of required
management expertise, personnel, raw materials, services, professional
assistance and other required items;
and
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•
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Other relevant
factors.
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In applying the foregoing criteria, no
one of which will be controlling, our management will attempt to analyze all
factors and circumstances and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries, and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex. Due to
the limited capital we have available for investigation, we may not discover or
adequately evaluate adverse facts about the opportunity to be
acquired.
The manner in which we participate in
an opportunity will depend upon the nature of the opportunity, our respective
needs and desires as well as those of the promoters of the opportunity, and the
relative negotiating strength of us and such promoters.
It is likely that we will acquire our
participation in a business opportunity through the issuance of common stock or
other securities. Although the terms of any such transaction cannot be
predicted, it should be noted that in certain circumstances the criteria for
determining whether or not an acquisition is a so-called "tax free"
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), depends upon the issuance to the stockholders of the
acquired company of at least 80% of the common stock of the combined entities
immediately following the reorganization. If a transaction were structured to
take advantage of these provisions rather than other "tax free" provisions
provided under the Code, all prior stockholders would in such circumstances
retain 20% or less of the total issued and outstanding shares. Under other
circumstances, depending upon the relative negotiating strength of the parties,
prior stockholders may retain substantially less than 20% of the total issued
and outstanding shares. This could result in substantial additional dilution to
the equity of those who were our stockholders prior to such
reorganization.
7
Our present stockholders will likely
not have control of a majority of our voting shares following a reorganization
transaction. As part of such a transaction, our current director may resign and
new directors may be appointed without any vote by stockholders.
In the case of an acquisition, the
transaction may be accomplished upon the sole determination of our management
without any vote or approval by stockholders. In the case of a statutory merger
or consolidation directly involving our company, it will likely be necessary to
call a stockholders' meeting and obtain the approval of the holders of a
majority of the outstanding shares. The necessity to obtain such stockholder
approval may result in delay and additional expense in the consummation of any
proposed transaction and will also give rise to certain appraisal rights to
dissenting stockholders. Most likely, management will seek to structure any such
transaction so as not to require stockholder approval if possible.
It is anticipated that the
investigation of specific business opportunities and the negotiation, drafting
and execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial cost for
accountants, attorneys and others. If a decision is made not to participate in a
specific business opportunity, the costs theretofore incurred in the related
investigation would not be recoverable. Furthermore, even if an agreement is
reached for the participation in a specific business opportunity, the failure to
consummate that transaction may result in our loss of the related costs
incurred.
During the first nine months of 2009 we
had only minimal expenses, which mainly consisted of filing fees and expenses
associated with our ongoing public reporting expenses and minimal fees
associated with searching out potential merger or acquisition
targets.
We do not currently engage in any
business activities that provide us with positive cash flows. As such, the costs
of investigating and analyzing business combinations for the next approximately
12 months and beyond will be paid with our current cash and other current assets
on hand and through funds raised through other sources, which may not be
available on favorable terms, if at all.
During the next 12 months we anticipate
incurring costs related to:
• filing of our quarterly, annual and
other reports under the Securities Exchange Act of 1934, and
• costs relating to consummating an
acquisition.
We believe we will be able to meet
these costs with our current cash on hand.
Results
of Operations
Three Months Ended September
30, 2009
Revenues
and Other Income
We had no revenues in either of the
three month periods ended September 30, 2009 or 2008. We had no other
income for either of the three month periods ended September 30, 2009 or
2008.
Expenses
We had general and administrative
expenses of $15,110 in the three month period ended September 30, 2009, a
decrease of $32,606 from the $47,716 of general and administrative expenses
incurred in the three month period ended September 30, 2008. We also
incurred $30,000 in consulting fees during the three months ended September 30,
2009, a decrease of $11,000 from the $41,000 in consulting fees incurred during
the comparable period of 2008. We recorded interest income of $537 in the three
months ended September 30, 2009, an increase of $537 from the three months ended
September 30, 2008. The increase in interest income is attributable to the
fact that the Company’s cash account balances being moved into interest-bearing
accounts. During
the quarter we reduced our insurance expenses by approximately $3,000 per month,
however, we anticipate that this reduction will be offset by increased legal
fees related to the defaults by PBT Capital Partners, LLC and related ligation
described earlier in this section.
Net
Losses
We had a net loss of $(44,573), or
$0.00 per share, during the three month period ended September 30, 2009,
compared to a net loss of $(88,716), or $0.00 per share, during the comparable
period of 2008.
Nine Months Ended September
30, 2009
Revenues
and Other Income
8
We had no revenues in either of the
nine month periods ended September 30, 2009 or 2008. We had no other income
for either of the nine month periods ended September 30, 2009 or
2008.
Expenses
We had general and administrative
expenses of $118,670 in the nine month period ended September 30, 2009, a
decrease of $1,282,777 from the $1,401,447 of general and administrative
expenses incurred in the six month period ended June 30, 2008. We incurred
consulting expenses in the amount of $46,476 during the nine months ended
September 30, 2009, a decrease of $31,240 from the $77,716 incurred during the
comparable period of 2008. The decrease in general and administrative
expenses is primarily attributable to a decrease in stock options granted for
services. We recorded interest income of $2,973 in the nine months ended
September 30, 2009, an increase of $2,973 from the nine months ended September
30, 2008. The increase in interest income is attributable to the fact that
the Company’s cash account balances being moved into interest-bearing
accounts.
Net
Losses
We had a
net loss of $(162,173), or $0.00 per share, during the nine month period ended
September 30, 2009, compared to a net loss of $(1,479,163), or $0.04 per share,
during the comparable period of 2008. The primary reason for the decrease
in net loss was a decrease in stock options granted for services.
Liquidity
and Capital Resources
At September 30, 2009, we had current
assets consisting solely of cash and cash equivalents of $323,027. At
September 30, 2009, we had current liabilities of $-0-. At September 30,
2009, we had a total accumulated deficit of $17,583,383.
We expect to have monthly overhead
costs of approximately $22,000 per month for the next twelve months, of which
approximately $5,000 pertains to legal fees, $5,000 pertains to accounting fees,
and $12,000 pertains to basic general and administrative expenses incurred in
the pursuit of various business opportunities. These estimates, however, are subject to
change if our legal fees increase as described elsewhere herein.
Since our inception, our primary sources of liquidity have been generated
by the sale of equity securities (including the issuance of securities in
exchange for goods and services to third parties and to pay costs of
employees). Our future liquidity and our liquidity in the next 12 months,
depends on our continued ability to obtain sources of capital to fund our
continuing operations and to seek out potential merger and acquisition
partners. As of September 30, 2009, our remaining cash balance will be
sufficient to cover our current liabilities, obligations and contractual
commitments for the remainder of 2009. The actual amount and timing of our
capital expenditures may differ materially from our estimates. In addition,
we may need to raise additional capital through the sale of equity and/or debt
securities to complete the acquisition of an operating company; however, it
is unlikely that we will be able raise additional capital until we identify and
possibly close such an acquisition for our company. Even then, given the
relative present illiquidity of the capital markets there are no assurances we
will be able to raise any necessary capital. If we are not able to raise
capital as necessary, it is possible we will be unable to close an acquisition
which will provide operating revenues to our company. In that event, the
likelihood that we can continue as a going concern is doubtful and investors
could lose their entire investment in our company.
Cash
Flows
For the nine months ended September 30,
2009, net cash used by operating activities was $162,173, attributable entirely
to a net loss of $162,173. We did not report any cash used in investing or
financing activities during the nine months ended September 30,
2009.
Off-Balance
Sheet Arrangements
As of September 30, 2009, we had no
off-balance sheet arrangements.
Critical
Accounting Policies
Our discussion and analysis of our
financial condition and results of operations is based upon our unaudited
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of any contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related to uncollectible receivables,
investment values, income taxes, the recapitalization and contingencies. We base
our estimates on various assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
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.
9
Recent
Accounting Pronouncements
The Company does not expect the
adoption of any recently issued accounting pronouncements to have a significant
impact on the Company’s results of operations, financial position or cash
flows.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
Not applicable for a smaller reporting
company.
Item
4T. Controls and Procedures.
Evaluation of Disclosure Controls
and Procedures. We maintain "disclosure controls and
procedures" as such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934. In designing and evaluating our disclosure
controls and procedures, our management recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of disclosure controls
and procedures are met. Additionally, in designing disclosure
controls and procedures, our management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible disclosure
controls and procedures. The design of any disclosure controls and
procedures also is based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.
Based upon the evaluation of our sole
officer and director of our disclosure controls and procedures as of September
30, 2009, the end of the period covered by this Quarterly Report on Form 10-Q
(the "Evaluation Date"), our Chief Executive Officer who also serves as our
Chief Financial Officer has concluded that as of the Evaluation Date that our
disclosure controls and procedures were not effective such that the information
relating to our company, required to be disclosed in our Securities and Exchange
Commission reports (i) is recorded, processed, summarized and reported within
the time periods specified in SEC rules and forms and (ii) is accumulated and
communicated to our management, including our Chief Executive Officer, to allow
timely decisions regarding required disclosure. Our management concluded that
our disclosure controls and procedures were not effective as a result of
material weaknesses in our internal control over financial reporting. We are a
small organization with only one employee. Under these circumstances it is
impossible to segregate duties. We do not expect our internal controls to be
effective until such time as we complete an acquisition of an operating company
and even then there are no assurances that our disclosure controls will be
adequate in future periods.
Changes in Internal Control over
Financial Reporting. There have been no changes in our
internal control over financial reporting during our last fiscal quarter that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
None.
Item
1A. Risk Factors.
Not applicable for a smaller reporting
company.
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.
No.
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Description
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31.1
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Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive
Officer
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31.2
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Rule
13a-14(a)/ 15d-14(a) Certification of Chief Financial
Officer
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32.1
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Section
1350 Certification of Chief Executive Officer and Chief Financial
Officer
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10
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.
STANDARD
DRILLING, INC.
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November
19, 2009
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By: /s/
David S.
Rector
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David
S. Rector, Chief Executive Officer, Chief Financial
Officer
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11