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PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements.	4
Condensed Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009 Audited).	4
Condensed Statements of Operations for the three and nine month periods ended September 30, 2010 and 2009 and for the period from January 24, 1996 (inception) to September 30, 2010 (Unaudited)	5
Condensed Statements of Cash Flows for the nine month periods ended September 30, 2010 and 2009 and for the period from January 24, 1996 (inception) to September 30, 2010 (Unaudited)	6
Condensed Statements of Stockholders’ Equity (Deficit) for the nine month period ended September 30, 2010 and for the period from January 24, 1996 (inception) to September 30, 2010 (Unaudited) )	7
Notes to Financial Statements	8
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.  Controls and Procedures	21
PART II—OTHER INFORMATION
Item 1.  Legal Proceedings	22
Item 1A.  Risk Factors	22
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.  Defaults Upon Senior Securities	22
Item 4.  Reserved	22
Item 5.  Other Information	22
Item 6.  Exhibits	23
Signatures	24

 

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EXPLANATORY NOTE

This Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q of American Petro-Hunter, Inc., a Nevada corporation (the “Company,” “we,” “us,” or “our”) originally filed with the SEC on November 15, 2010, to among other things, to revise the discussion of our oil and gas properties in Note 2 to the financial statements and to revise Note 4 to the financial statements - Investments in Mineral Properties.

 

FORWARD-LOOKING STATEMENTS

 

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report.  Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms, or the negative of such terms.  Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements.  Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters.  Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 26, 2010.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

 

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q.  Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.  You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

 

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PART I—FINANCIAL INFORMATION

 

 

8.	Income Taxes

The Company follows ASC subtopic 740-10 (formerly Statement of Financial Accounting Standard No. 109, “Accounting for Income Taxes”) for recording the provision for income taxes.  ASC 740-10 requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.  Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate.  Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The Company’s effective income tax rate is higher than would be expected if the federal statutory rate were applied to income before tax, primarily because of expenses deductible for financial reporting purposes that are not deductible for tax purposes during the year ended December 31, 2009. The Company’s operations for the year ended December 31, 2009 and 2008 resulted in losses, thus no income taxes have been reflected in the accompanying statements of operations.

As of September 30, 2010, the Company has net operating loss carry-forwards of approximately $7,350,000 (December 31, 2009 - $4,510,829) which may or may not be used to reduce future income taxes payable. Current Federal Tax Law limits the amount of loss available to offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.  A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to this deferred asset. The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

9.	Subsequent Events

 

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. On November 13, 2010, the Company entered into a second amendment to the Convertible Debenture with Maxum whereby the parties agreed to reduce the conversion price applicable so such conversion from $0.90 per share to $0.25 per share.  On November 13, 2010, The Company entered in to an amendment to Promissory notes to amend the notes to extend the repayment date of the first note to August 13, 2011 and the repayment date of the second note to September 15, 2011.  The Company and Holder agreed to reduce the initial conversion price from $0.35 per share to $0.25 per share.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report.  Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments.  Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf.  We disclaim any obligation to update forward-looking statements.

 

Background

 

We are an oil and natural gas exploration and production (E&P) company with current projects in California, Kansas and Oklahoma.  As of September 30, 2010, we had no producing wells in California, two producing wells in Kansas and one producing well in Oklahoma, and rights for the exploration and production of oil and gas on more than an aggregate of approximately 11,613 acres in those states.  Subsequent to our quarterly period ended September 30, 2010, we had a second well ready to begin production in Oklahoma.  Typically, our interest in a well arises from a contract with another entity pursuant to which we provide financial support for certain costs incurred in the exploration and development of a project, which may include land costs, seismic or other exploration, and test drilling.  In exchange, we typically receive an interest in the proceeds from the project’s production.

 

We were formed on January 24, 1996 pursuant to the laws of the State of Nevada under the name Wolf Exploration, Inc.  In August 2001, we changed our name to American Petro-Hunter, Inc and began focusing our business on the exploration and eventual exploitation of oil and gas.

 

On April 6, 2009, we entered into a Participation Agreement with Archer Exploration, Inc. (“Archer”) to participate in the drilling for natural gas on a prospect located in Stanislaus County, California.  Pursuant to the agreement, we agreed to pay to Archer $200,000 for all costs in connection with the acquisition and operation of the prospect until completion of an initial test well, which includes historic engineering and geological development of the prospect as well as costs for a seismic program required to finalize and define the initial well location, in exchange for a 25% working interest in the prospect.  The assignment of the 25% interest will only be made upon the successful completion of the initial test well.  The seismic shoot began on August 10, 2009.  The results of the seismic indicate the need to reprocess the data and potentially add additional seismic lines to identify the test well locations.  We are planning additional seismic shoots prior to December 2010 and the combined data packages will be used to evaluate whether there is a suitable location for a test well.

 

On May 4, 2009, we entered into a binding Letter of Intent with S&W Oil & Gas, LLC (“S&W”) to acquire a 25% working interest and 81.5% net revenue interest on all commercial production in the 750-acre Poston Prospect #1 Lutters oilfield in Southwest Trego County, Kansas, for a purchase price of $64,536, which we have paid.  On June 16, 2009, the #1 Lutters Well  was completed at a total depth of 4,400 feet, encountering both oil and gas over a 46 foot interval.  The oil was excellent quality 35 degree light oil and tests resulted in 65% oil cut with 10% gas and mud with no water.  Oil production on the #1 Lutters Well began on June 18, 2009.  Current production for the #1 Lutters Well is 20 barrels per day.  The next well planned for the Poston Project was designated as the #2 Lutters Well, which was drilled to a total depth of 4,320 feet where we encountered good oil shows during drilling and in initial drill stem tests from a target zone.  After further drilling, we encountered good oil shows but we did not complete drilling of the well for commercial production because of the oil’s permeability and porosity.  However, management believes the project itself remains viable as there are additional offset opportunities for this project.  On July 1, 2010 we announced completion of the #3 Lutters Well, at a depth of 4,328 feet, as a direct-offset to the #1 Lutters Well.  On July 14, 2010, we announced that the #3 Lutters Well had begun production.  The current daily rate of the #3 Lutters Well is 20 barrels per day. Collectively, 40 barrels per day is going into the tanks for sale. Production is being reviewed and may increase in the future as production stabilizes. 2 offset locations are available and we plan to drill additional wells in 2011.

 

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On June 11, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil and natural gas in the 1,760-acre Brinkman Prospect located in Clark County, Kansas, approximately 20 miles south of Dodge City.  The project is proximal to historic oil production primarily from Marmaton Limestone with secondary objectives in the Morrow Sand.  Of significance, over 49,000 barrels have been produced from a seismic anomaly to the northeast of the chosen drilling location as well as Langdon Sands that has produced cumulative gas production in excess of 1 BCF.  We paid S&W a total of $22,833.28 for land acquisition, leasing, and seismic costs for a 25% working interest in the prospect.  In addition, we agreed to pay $56,466.66 to cover dry-hole cased drilling costs associated with the first exploratory oil well and 25% of all further going forward costs such as completion and related infrastructure costs.  If a successful commercial well is established, we will receive an 81.5% net revenue interest in the prospect.  On July 28, 2009, drilling on the Brinkman Prospect commenced and by August 14, 2009, drilling was completed.  Several oil and gas shows in the well were tested and deemed not commercially viable and were plugged and abandoned.  We may engage in future exploratory drilling at the Brinkman Prospect in the future, but no drilling is currently planned for the Brinkman Prospect in 2010.

 

On June 19, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil and natural gas in the Rooney Project located in southwestern Ford County, Kansas.  The Rooney Project is located in southwestern Ford County, Kansas, which is 20 miles due south of Dodge City.  The project consists of eight sections totaling 7,040 acres.  The Rooney Project is directly adjacent to the north edge of existing Morrow Sand oil and gas production.  An analog well designated as 3-30-25W in the Morrow pool has cumulatively produced 344,448 barrels of oil and 933,622 MCF gas.  There are multiple wells within two miles of our acreage that have produced in the 35,000 to 40,000 barrel range from discrete sand channels.  It is these sand channels that we attempted to identify through the completion of a 3D seismic shoot across the entire acreage.  Based on the 3D seismic shoot, we developed a minimum of five target locations for new wells.  Under the terms of the agreement with S&W, we paid S&W a total of $113,333.12 for land acquisition and leasing costs.  We also agreed to pay up to $216,666.64 for the 3D seismic shoot costs that include processing and interpretation, as well as 50% of all further going-forward costs such as completion and related infrastructure costs.  S&W has assigned a 50% of the working interest and 81.5% net revenue interest in the prospect to us.

 

On November 12, 2009, drilling at the #24-1 Double H Oil Well site in the Rooney Project commenced, and on December 9, 2009, we announced that a 12-foot pay zone was encountered that produced excellent quality 44 degree oil in the tubing up to the surface from 5,400 feet of depth with fluid test results returning 99% oil cut.  On January 4, 2010, the #24-1 Double H well at the Rooney Prospect commenced oil production, and we entered into an oil purchase contract with the National Co-op Refinery Association of McPherson Kansas to purchase all production at the Rooney lease at a premium to Kansas common oil prices of $3.85 per barrel above the daily price.  This price premium reflects the quality of the 44 degree oil being produced at Rooney.  The #24-1 Double H Oil Well required a re-completion due to casing separation that allowed the Dakota Formation producing fresh water to enter the well bore. Following a re-cementing of the casing, the limestone reservoir was treated to attempt to dehydrate the clays that were causing clogging of the perforations.  The reservoir at this location only may have been adversely impacted by the fresh water. In May 2010, the #2 Double H well in Kansas reached a total depth of 5,460 feet.  The #2 Double H is a direct offset to the #24-1 Double H discovery well.  The #2 Double H Well encountered oil shows in several formations down-hole including the targeted Morrow sand and Mississippian. Our engineering team is now assessing the results and will report on their findings and recommendations for the next step in the development program.

 

In February 2010, we drilled the Shelor 23-2 Well at the Rooney Project, which was drilled to a depth of 5,400 feet.  The well encountered a fault that cut off the reservoir at this easterly location and, although geological information was gained, did not result in any reservoir being identified.  The Shelor 23-2 Well was plugged and abandoned.

 

Having completed the #24-1 Double H Oil Well and drilled the #2 Double H Well and the Shelor 23-2 Well, we plan to further evaluate the Rooney Prospect as to its future potential for commercial oil for the fiscal year 2010. At this time, we have no plans for future development at Rooney and are considering sale options for our interests in the leases.

 

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On August 25, 2009, we entered into a binding Letter of Intent with S&W to participate in the drilling for oil in the Colby Prospect located in Thomas County, Kansas.  The 500 acre block has a well defined 3D seismic anomaly that includes seven potential zones to be tested.  We agreed to pay S&W cash in an amount to be determined for dry-hole cased drilling costs as well as 25% of all further going forward costs such as completion and related infrastructure costs.  If a successful commercial well is established, S&W will assign 25% of the working interest and 81.5% net revenue interest in the Prospect to us.  On October 20, 2009, we began drilling operations at the #1 Keck Well, and on November 4, 2009, drilling operations at this well ended.  While the well successfully encountered oil and gas in the target horizons, there were no adequate reservoirs in order to complete the well as a commercial producer.  Management believes that Colby remains a viable prospect, and further work and analysis will be required in order to fully develop the Colby lease.

 

On September 8, 2009, we entered into a Participation Agreement with Archer to participate in the drilling for natural gas on the Wurster Gas Project, a prospect located in Sacramento County, California, 20 miles south of the city of Sacramento.  The Wurster Prospect target lies due east of the Victory Gas Project in which we also have a 25% working interest.  This project targets Winters sandstones which have, in the Sacramento Valley, accounted for over 400 BCF of gas production to-date along the Upper Cretaceous Winters “Eastside Stratigraphic Trend.”  Pursuant to the Participation Agreement, we have paid Archer $25,000 for costs in connection with the acquisition and operation of the prospect up to the drilling of an initial test well in exchange for a 25% working interest in the prospect.  Further, we are responsible for and have paid $125,000 for dry hole costs.  We are also responsible for 25% of all expenditures in connection with the development and operation of the prospect for drilling.  We may elect not to participate in additional expenditures in connection with the prospect at which time we will forfeit any interests we have in the prospect.  On October 8, 2009, we began drilling operations at the Wurster Gas Prospect – Archer-Tsakopoulos #2 well, which was planned as a 7,800 foot test for gas indicated by 3D seismic tests.  We increased our working interest in the Archer-Tsakopoulos #2 well up to 36% by purchasing an additional 11% through the payment of a pro-rata share for the seismic reprocessing and drilling costs in the amount of $66,000.  On November 4, 2009, drilling at this well ended.  While the well successfully encountered oil and gas in the target horizons, there were no adequate reservoirs in order to complete the well as a commercial producer.

 

On April 21, 2010, we entered into an operating agreement with Bay Petroleum Corp. (“Bay”) to participate in the drilling for oil in northern Oklahoma (the “Prospect”).  Pursuant to operating agreement, we agreed to pay to Bay $52,125 for all costs in connection with the acquisition and operation of the Prospect up to the drilling of an initial test well in exchange for a 25% working interest and 80% net revenue interest in the Prospect. We are also responsible for 25% of all expenditures in connection with the development and operation of the Prospect for drilling. On June 1, 2010, we announced that the No. 1 well had been put into production.  The current daily rates are at the 21 barrels per day level, with water in the 400 barrel range or approximately 20% oil cut.  Dewatering is expected to increase the cut and barrels per day.  A water disposal well has been permitted and we are disposing water to the well.  On June 5, 2010 drilling commenced on the No. 2 well and on June 14, 2010, we announced that we had begun work on completion of the well.  On June 23, 2010, we announced that drilling had commenced on the No. 3 well.  On that date we also announced the acquisition of 3 additional blocks increasing our overall working interest participation up to 7 lease blocks currently.  The No. 2 and 3 wells are currently not producing commercial quantities of hydrocarbons.  On September 21, 2010, we announced that drilling commenced on the NOJ26 well at the Prospect.  On September 27, 2010, the well reached a depth of 3,455 feet and completion of the well began.  The NOJ26 well is being completed and has been fracture stimulated in the lower 40 foot shale zone. The upper 40 foot Mississippian zone is oil pay behind pipe and will be eventually completed and co-mingled with the shale production. Site facilities include a pumpjack, tanks and separator. We are connected to a gas line for future gas production at yet rates unknown.  We believe the Prospect will involve the drilling of at least one well per month with continued drilling through 2011, which represents an investment of approximately $1.4 million.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires management of our Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

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The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP.  We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.  A description of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended December 31, 2009.  As of, and for the nine months ended September 30, 2010, there have been no material changes or updates to our critical accounting policies.  

 

Results of Operations

 

The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

 

The financial statements mentioned above have been prepared in conformity with U.S. GAAP and are stated in United States dollars.

 

Comparison of nine month periods ended September 30, 2010 and September 30, 2009

 

For the nine month periods ended September 30, 2010 and September 30, 2009, we incurred a comprehensive loss of $2,074,123 and $1,199,774, respectively.  The increase was largely attributed to an increase in interest expense from $84,784 for the nine month period ended September 30, 2009 to $634,076 for the nine month period ended September 30, 2010.

 

General and administration expenses for the nine month period ended September 30, 2010 amounted to $306,319 compared to $282,225 in the same period of 2009.  Executive compensation for the nine month period ended September 30, 2010 was $364,000 compared to $135,749, in the same period of 2009.

 

We had no foreign currency gain or loss during the nine month period ended September 30, 2010 compared to a gain of $20,221 in the same period of 2009.

 

Comparison of three month periods ended September 30, 2010 and September 30, 2009

 

For the three month periods ended September 30, 2010 and September 30, 2009, we incurred a comprehensive loss of $1,004,774 and $705,599, respectively.  The increase was largely attributed to an increase in interest expense from $80,949 for the three month period ended September 30, 2009 to $179,218 for the three month period ended September 30, 2010.

 

General and administration expenses for the three month period ended September 30, 2010 amounted to $106,141 compared to $81,314 in the same period of 2009.  Executive compensation for the three month period ended September 30, 2010 was $79,000 compared to $63,000, in the same period of 2009.

 

We had no foreign currency gain or loss during the three month period ended September 30, 2010 compared to a foreign currency gain of $16,497 during the same period of 2009.

 

Period from inception, January 24, 1996 to September 30, 2010

 

We have an accumulated deficit during the development stage of $7,350,181.

 

As a development stage company, we currently have limited operations, principally directed at potential acquisition targets and revenue-generating opportunities.

 

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Liquidity and Capital Resources

 

As of September 30, 2010, we had cash of $3,307 and working capital deficiency of $2,428,367.  During the nine month period ended September 30, 2010, we funded our operations from revenue received and proceeds of private sales of equity and convertible notes and the exercise of warrants.  Our current cash requirements are significant due to planned exploration and development of current projects. We anticipate drilling 11 wells in Kansas and Oklahoma in 2010 which will cost approximately $2,100,000 and which will include several horizontal wells in Oklahoma and 4 vertical wells, as well as 2 wells in Kansas.  Additionally, we have other obligations to drill other properties and we expect to acquire rights in additional projects.  Accordingly, we expect to continue to primarily use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund exploration and development of our properties. Changes in our operating plans, increased expenses, acquisitions, or other events may cause us to seek even greater equity or debt financing in the future.

 

For the nine month period ended September 30, 2010, we used net cash of $592,484 in operations.  Net cash used in operating activities increased from $388,247 in the nine month period ended September 30, 2009.

 

We raised $1,539,459 during the nine month period ended September 30, 2010 from the issuance of common stock, and convertible notes and the exercise of warrants.

 

On May 17, 2010, the Company issued a Convertible Debenture to Maxum Overseas Fund, a foreign institutional investor (“Maxum”) in the principal amount of $1,500,000.  The Debenture provides that Maxum, at any time, and the Company, on the maturity date, may convert any remaining outstanding principal balance and accrued interest under the Debenture into shares of common stock of the Company.  The Company may also convert any remaining outstanding principal balance and accrued interest into common stock of the Company if the 5-day trailing volume weighted average price of the Company’s common stock is at least $1.50 per share.  On November 13, 2010, the Company entered into a Second Amendment to Convertible Debenture (the “Debenture Amendment”) with Maxum whereby the parties agreed to reduce the conversion price applicable to such conversions from $0.90 per share to $0.25 per share (subject to adjustment as provided in the Debenture).

On August 13, 2009 and September 15, 2009, the Company issued certain Secured Convertible Promissory Notes to an accredited investor (the “Holder”) (the “First Note” and the “Second Note”, and together, the “Notes”) each in the principal amount of $500,000.  The Notes provide that the Holder at any time, or the Company on the maturity date, may convert any remaining outstanding principal balance and accrued interest under the Notes into shares of common stock of the Company based on a per share conversion price of the lower of (i) $0.35 (the “Initial Conversion Price”), or (ii) a twenty five percent (25%) discount to the average closing trading price of a share of the Company’s common stock during the five (5) trading days prior to the conversion date.  On November 13, 2010, the Company entered into an Amendment to Promissory Notes (the “Notes Amendment”) to amend the Notes to extend the repayment date of the First Note to August 13, 2011 and the repayment date of the Second Note to September 15, 2011.  Pursuant to the terms of the Notes Amendment, the Company and the Holder agreed to reduce the Initial Conversion Price from $0.35 per share to $0.25 per share (subject to adjustment as provided in the Notes).

The Debenture Amendment and the Notes Amendment are attached to this Quarterly Report on Form 10-Q as Exhibits 10.1 and 10.2.

Our management believes that we will be able to generate sufficient revenue or raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term and long-term obligations.  However, there are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed.

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

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Item 1. Legal Proceedings.