Pavilion Energy Resources, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - Pavilion Energy Resources, Inc.	ex32.htm
EX-31.2 - Pavilion Energy Resources, Inc.	ex31_2.htm
EX-31.1 - Pavilion Energy Resources, Inc.	ex31_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31st 2009.

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

	For the transition period from _______________________to____________________________

Commission file number 000-28587

PAVILION ENERGY RESOURCES, INC.

(Exact name of small business issuer as specified in its charter)

Delaware		80-004053
(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

71431 Halgar Rd, Rancho Mirage CA 92270

(Address of principal executive offices)

(Issuer's telephone number) (323) 356-7777

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 x

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 months (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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	x

As of March 31, 2010, there were 150,083,012 shares of common stock, par value $.0001 per share

This report has not been reviewed by the independent auditor in accordance with the Act; however, the Company intends to submit an amended report reviewed by the independent auditor in due course.

TABLE OF CONTENTS

	PAGE


PART I – FINANCIAL INFORMATION	3

Item 1. Financial Statements (Unaudited)	3

Consolidated Balance Sheet as of December 31, 2009	3

Consolidated Statement of Operations Three and Six Months Ended December 31, 2009	4

Consolidated Statement of Cash Flows Six Months Ended December 31, 2009	5

Notes to Financial Statements	6

Note 1; Summary of Significant Accounting Policies	6

Note 2; Recent Events	6

Item 2. Management’s Discussion and Analysis	6

Results of Operations	7

Liquidity and Capital Resources	8

Risk Factors	8

Item 3. Controls and Procedures	8

PART II – OTHER INFORMATION	9

Item 1. Changes in Securities and Use of Proceeds	9

Item 2. Defaults Upon Senior Securities	9

Item 3. Other Information.	9

Item 6. Exhibits	10

Signatures	11

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheet	December-09			September-09
	(unaudited)			(unaudited)
Current Assets
Cash		2,000			2,000
Accounts/ Notes Receivable
Deposits
Total Current Assets		2,000			2,000

Property & Equipment		0			0
Accumulated Depreciation		(6,944	)		(3,472	)
Net Property & Equipment		3,056			6,528

Other Assets
Goodwill/Project lease proposals		1,500,000			1,500,000

Total Assets		1,495,056			1,498,528

Liabilities and Stockholder's Deficit
Current Liabilities
Debentures and accrued interest		650,000			650,000
Net Liabilities from discontinued operations
Total Current Liabilities		0			0

Long-term Liabilities
Notes payable and accrued interest- related parties		0			0
Total Long-term Liabilities		650,000			650,000

Common stock, $.0001 par value;
500,000,000 shares authorized,
150,083,012 shares issued and outstanding		1,500,830			1,500,830
Additional paid-in capital		17,896,205			17,946,205
Accumulated deficit		(18,195,041	)		(18,086,529	)
Total Stockholder's deficit		1,286,016			1,394,528

Total Liabilities and Stockholder's Deficit		1,936,016			2,044,528

The accompanying notes are an integral part of these financial statements.

Statement of Operations
	June-05			September-09			December-09
				(unaudited)			(unaudited)
Revenues		914,233			0			0

Cost of goods sold		194,186			0			0
Gross Profit (Loss)		720,047			0			0

Operating Expenses:
General Administrative/Professional & Consulting Fees		1,958,031			52,000			55,000
Write-off area notes receivable		1,092,096			0			0
Depreciation & amortization		4,123			3,472			6,944
Interest expense		201,013			0			0
Total Operating Expenses:		3,255,263			57,472			63,994

Profit (Loss		(2,535,216	)		(57,472	)		(63,994	)

Other Income (Expense):
Interest		10,496			0			0
Goodwill impairment		(250,000	)		0			0
Gain from discontinued operation		20,378			0			0
Total Other Income (Expenses):		(219,126	)		0			0

Net Profit (loss)		(2,754,342	)		(57,472	)		(63,994	)

The accompanying notes are an integral part of these financial statements.

Cash Flow From Operations
	June-05	September-09			December-09
		(unaudited)			(unaudited)


Net Loss			(57,472	)		(63,994	)

General Administrative/Professional & Consulting Fees			52,000			55,000
Depreciation & amortization			3,472			6,944
Interest expense			0			0

Cash beginning of period			0			2,000
Cash end of period			2,000			2,000

The accompanying notes are an integral part of these financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PVRE, as a development stage energy company has a History of ongoing Losses, Which May Continue and May Negatively Impact our Ability to achieve our Business Objectives.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements of PAVILION ENERGY RESOURCES INC. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in PVRE’s 10-K to be filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. Valuation on energy project proposals in development are Directors valuations and may not be realizable. The results of operations for interim are not necessarily indicative of the results to be expected for the full year.

NOTE 2 - RECENT EVENTS

The Company and partners progressed its various high-level wind power project proposals with state and federal governments. The company aims to secure funding and wind power delivery agreements with one or more states within the next year. The projects proposed have nation-changing potential to eliminate or reduce high-cost fossil fuels consumption.

The company’s technology partners have commenced refining various designs and computational flow dynamic (CFD) evaluation of various potential accelerator wind turbine configurations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERAITONS.

OVERVIEW

Pavilion Energy Resources, Inc. (PVRE, the Company is an energy exploration-development company focused on developing large-scale, wind power projects on a worldwide basis. PVRE operating as an Emerging Renewable Energy Exploration company has a History of ongoing Losses, Which May Continue for some time.

Management believes that environmentally sound, lower-cost wind power projects are the future of the global renewable energy business.

Management believes that the global financial, environmental and energy crisis has created an opportunity which can be exploited for large economic gain by providing cheaper, more efficient renewable energy power plants around the world.

Pavilion has access rights to a new wind turbine design, which has potential to deliver a 300-400% increase in electricity per unit of capital over current designs. PVRE plans to leverage this technology to secure large wind-farm acreage positions in regions with substantial energy usage and develop mega-scale wind projects on the leases when granted.

The cost of wind power is already dramatically less than the cost of solar electricity, which is running about 35 to 70 cents a kilowatt hour, which makes solar nothing more than a taxpayer-supported boondoggle today.

Offshore wind if generated using old-technology turbines is expected to cost in the range of 18 to 24 cents a kilowatt-hour. Using accelerated wind turbines, the cost is expected to be a much more affordable 9-10 cents a kilowatt-hour.

Today, the company is actively pursuing the development of several very-large renewable wind energy power development proposals. These vital lower-cost accelerated wind energy projects are a step toward the longer-term goal of an economically viable carbon neutral global economy.

Nine out of ten units of energy consumed in the US and the rest of the world come from fossil fuels. On an average day, US consumption of coal, oil, and natural gas amounts to 41 million barrels of oil equivalent. That’s equal to the average daily oil output of five Saudi Arabia's.

We believe that operating losses and negative operating cash flows are likely to continue for at least the next three years, because of expected additional costs and expenses related to energy project developments, strategic relationship development; and potential acquisitions of complementary businesses.

RESULTS OF OPERATIONS

FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2009

The Company is counting on at least one government having the foresight to seize the unique opportunity we proffer; to change their Nation’s and indeed the entire world's future by implementing lower-cost accelerating wind power technologies and strategies to cut pollution and greenhouse gases by moving to very cheap and abundant, renewable wind energy.

Many experts believe that the days of cheap oil are over. There is no doubt that oil will eventually run out. Whereas wind will never run out.

The Company and partners are preparing detailed financing proposals for development of the various wind power business opportunities.

The Company believes that governments must seriously entertain any strategy that may significantly reduce pollution and greenhouse gas emissions. Governments and energy investors must focus on the lowest-cost renewable energy power supply options first, because the world does not have an unlimited amount of capital.

For nations, the grand prize is an uninterruptible supply of cheap renewable energy. The Company believes that its accelerated Wind technology may provide the technology foundation for bringing inexpensive clean-energy independence for many nations.

In the US, the Company believes that it is critical that the US moves aggressively on an independent energy production pathway to reduce the huge risk connected with continuing to use oil as the primary energy source. Using homemade American wind energy would allow Americans to keep more of our money in the United States and send less overseas to purchase oil.

Accelerated jet-speed wind power is a “breakthrough” technology, which has the potential to reduce the economic and environmental harm from fossil fuels, saves consumers considerable money on energy. And when consumers have to spend less money on energy, they will spend more money in other parts of the economy—resulting in robust economic growth.

See; www.pvre.biz

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of operating capital have been shareholder and supplier loan agreements. At March 31 2010, we had negative working capital of approximately $700,000. Our current liabilities include approximately $650,000 in convertible notes.

The Company continues to suffer a working capital deficit, which is being covered by shareholder and contractor loans.

During the 3 months ended December 31, 2009, no shares of shares of common stock were issued .

PVRE employed one full-time and 5 part-time independent contractors.

Item 1A. Risk Factors.

The key risk facing the company is funding shortfalls. PVRE has a History of Losses, Which May Continue and May Negatively Impact our Ability to achieve our Business Objectives. We cannot assure investors that we can achieve or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to the risks and competition inherent in the ongoing operations of an emerging renewable energy business enterprise. There can be no assurance that future operations will be profitable.

Revenues and profits, if any, will depend upon various factors, including whether we will be able to continue expansion of our revenue. PVRE may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on PVRE.

If We Are Unable to Obtain Additional Funding Our Business Operations Will be Harmed and If We Do Obtain Additional Financing Our Then Existing Shareholders May Suffer Substantial Dilution.

We may require additional funds to sustain and expand our operational activities. We anticipate that if needed, we will require up to approximately $500,000 to fund our continued operations for the next twelve months, depending on revenue from operations. Additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. Any additional equity financing may involve substantial dilution to our then existing shareholders.

Item 3. Controls and Procedures

As the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclose controls and procedures as of the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Management of the Company has also evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, any change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q. There was no change in the Company’s internal control over financial reporting during the Company’s most recently completed fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. However, due to the limited number of Company employees engaged in the authorization, recording, processing and reporting of transactions, there is inherently a lack of segregation of duties. The Company periodically assesses the cost verses benefit of adding the resources that would remedy or mitigate this situation and currently, does not consider the benefits to outweigh the costs of adding additional staff in light of the limited number of transactions related to the Company’s operations.

PART II – OTHER INFORMATION

Item 1. Changes in Securities and Use of Proceeds

In the three month period ended December 31, 2009, the company did not issue any shares or securities.

Item 2. Defaults Upon Senior Securities.

There has been no material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of the Company or any of its significant subsidiaries exceeding 5 percent of the total assets of the registrant and its consolidated subsidiaries.

Item 3. Other Information.

Management believes that renewable electricity is increasingly becoming the lead form of energy used for transportation as well as homes and industry. Pavilion and JV partners have lodged high-level green power proposals with various State and Federal governments to capture the wind turbine manufacturing factory-jobs opportunity for their State and construct large-scale lowest-cost wind power developments.

US West Coast Clean Power Projects; PVRE has a 30% interest in two large proposed coastal wind power projects in the Western Seaboard of the US.

The California and Oregon Coastal Clean Power projects are each for 10,000MW output. The annual wind force in the wind lease application areas is the highest in the Western United States, potentially creating double the annual electricity output and possibly significantly higher profitability.

After feasibility studies and permitting is completed, the Company and partners plan to secure available US Government, 30% clean energy capital grant and low-interest project loan guarantees to finance up to 100% of the project construction costs.

California has mandated to secure 33% of its energy from renewables by 2020 and these proposed clean power projects are the only ones large enough to enable utilities to meet the mandate at affordable rates.

The project's estimated capital cost is estimated at one quarter that of a nuclear, coal or conventional wind plant. The wind-fuel is free.

No suitably positive responses have been received from Sacramento to date, so the company plans to re-file amended, expanded proposals in due course.

Texas Coastal Clean Power Project; PVRE is a 30% equity partner in a joint venture that has submitted an updated proposal to the Texas State Government to manufacture accelerating wind turbines and build a offshore large wind energy project. A South Texas Coast Green Aluminum Smelter joint project investigation has also been proposed. The JV is now seeking development funding.

Japan Coastal Clean Power Project; PVRE is a 10% equity partner in a joint venture (JV) that has submitted a multi-billion dollar proposal to the Japanese government to develop a wind energy project in multiple locations adjacent to its coastline in the Sea of Japan, Sea of Okhotsk and Pacific Ocean.

Peter Sterling, President and Chief Executive Officer of Pavilion, commented, "Japan currently imports essentially all its energy. Once completed, this project would generate enough clean, renewable energy to replace up to five million barrels of oil imports per day at a more competitive cost than any other generating technology. Further benefits include lower future carbon tax payments and new local jobs for the design, fabrication and installation of new wind power technology and for operation and maintenance of the wind farms."

Substantial potential clean energy revenues could accrue to PVRE's 10-30% equity, in any one of these proposed power projects if-when completed. The Company management expects to eventually secure at least one large-scale wind power plant approval from the numerous proposals it is participating in, as detailed herein.

Management believes that PVRE’s proposed accelerated wind energy projects are a step toward the longer term goal of an economically viable carbon neutral economy.

Item 6. Exhibits

Exhibit Number	Title of Exhibit

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

32	Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURE

In accordance with the requirements of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PAVILION ENERGY RESOURCES INC. (Registrant)

	By:	/s/ Peter J. Sterling
		Peter J. Sterling
		Chief Executive Officer


	By:	/s/ Peter J. Sterling
		Peter J. Sterling
		Chief Financial Officer

Dated: July 22nd, 2010

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