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EX-31.2 - Glen Rose Petroleum CORPv211982_ex31-2.htm
EX-31.1 - Glen Rose Petroleum CORPv211982_ex31-1.htm
EX-32.1 - Glen Rose Petroleum CORPv211982_ex32-1.htm
EX-32.2 - Glen Rose Petroleum CORPv211982_ex32-2.htm
EX-10.28 - Glen Rose Petroleum CORPv211982_ex10-28.htm
EX-10.29 - Glen Rose Petroleum CORPv211982_ex10-29.htm
EX-10.22(A) - Glen Rose Petroleum CORPv211982_ex10-22a.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010

¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________.

Commission File No. 001-10179

Glen Rose Petroleum Corporation

(Exact name of registrant as specified in charter)
 
Delaware
 
87-0372864
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification
No.)
 
22762 Westheimer Parkway, Suite 515, Katy, Texas 77450

(Address of principal executive offices)

(832) 437-0329

 (Issuer’s telephone number)

(Former name, former address and former fiscal year if changed since last report)
 
Copies of all communications to:
Marc Ross, Esq.
Andrew Smith, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, New York 10006
Phone: (212) 930-9700
Fax: (212) 930-9725

Securities registered pursuant to Section 12(b) of the Act: None  

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.001 par value

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. x  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 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.
¨  Large accelerated filer
¨  Accelerated filer
¨  Non-accelerated filer (Do not check if a smaller reporting company)
x  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   x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of February 11, 2011, the Company had 17,659,677 shares outstanding.

 

 

GLEN ROSE PETROLEUM CORPORATION—FORM 10-Q
TABLE OF CONTENTS
 
   
Page Number
P ART I - FINANCIAL INFORMATION
   
     
Item 1 - Financial Statements
 
F-1
     
Condensed Consolidated Balance Sheets at December 31, 2010 (unaudited) and March 31, 2010
 
F-1
     
Condensed Consolidated Statements of Operations for the three months and nine months ended December 31, 2010 and December 31, 2009 – Unaudited
 
F-3
     
Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2010 and December 31, 2009 - Unaudited
 
F-4
     
Notes to Unaudited Condensed Consolidated Financial Statements
 
F-6
     
Item 2 - Management’s Discussion and Analysis or Plan of Operation
 
1
     
Item 4 - Controls and Procedures
 
8
     
PART II - OTHER INFORMATION
   
     
 
8
     
 
9
     
 
9
     
Item 4 – Removed and Reserved
 
9
     
 
9
     
 
10
     
  
13

 

 

PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS.
GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES

   
December 31,
   
March 31,
 
   
2010
   
2010
 
   
(Unaudited)
       
 
   
       
             
CURRENT ASSETS
           
Cash
  $ 29,382     $ 455,233  
Cash held in escrow
    -       2,750,000  
Accounts receivable
    165,197       -  
Security deposits
    1,000       -  
Notes receivable
    226,292       197,808  
Inventory
    55,433       54,947  
Prepaid expenses
    39,078       121,667  
Total current assets
    516,382       3,579,655  
                 
OIL AND GAS PROPERTIES, accounted for using the full cost method
               
Unproven
    1,116,150       1,050,000  
Proven
    4,503,109       4,096,039  
      5,619,259       5,146,039  
                 
PROPERTY AND EQUIPMENT, at cost
               
Asset held under capital lease
    26,571       -  
Field equipment
    897,310       123,666  
Computer equipment
    38,333       15,833  
Vehicles
    87,472       41,281  
      1,049,686       180,780  
                 
Less accumulated depreciation
    (92,491 )     (36,981 )
  
    957,195       143,799  
                 
OTHER ASSETS:
               
Equipment deposit
    -       8,907  
                 
TOTAL ASSETS
  $ 7,092,836     $ 8,878,400  

See notes to the consolidated condensed financial statements.

 
F-1

 

GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)

   
December 31,
   
March 31,
 
   
2010
   
2010
 
   
(Unaudited)
       
           
             
CURRENT LIABILITIES
           
Accounts payable and accrued expense
  $ 955,944     $ 752,133  
Accrued interest
    271,566       53,675  
Note payable – related party
    30,714       28,935  
Notes payable – other
    44,893       39,258  
Current portion of obligation under capital lease
    6,480       -  
Total current liabilities
    1,309,597       874,001  
                 
               
Asset retirement obligation
    74,128       71,686  
Convertible notes payable, net of unamortized discount and loan fee
    2,649,291       1,906,908  
Notes payable - other
    2,489,780       2,489,780  
                 
Total liabilities
    6,522,796       5,342,375  
                 
SHAREHOLDERS’ EQUITY
               
Preferred stock, $.0001 par value, 5,000,000 shares authorized, none issued or outstanding
    -       -  
Common stock, $.001 par value, 20,000,000 shares authorized; 17,631,441 shares issued and outstanding at
December 31, 2010, and 16,659,641 shares issued and outstanding at March 31, 2010
    17,631       16,660  
Common stock subscription receivable
    (91,282 )     (88,912 )
Additional paid-in capital
    55,129,949       54,550,837  
Members' distributions*
    (5,762 )     -  
Accumulated deficit
    (54,480,496 )     (50,942,560 )
Total shareholders’ equity
    570,040       3,536,025  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 7,092,836     $ 8,878,400  

* Variable interest entity activity, see Note 9 to the accompanying financial statements.

See notes to the consolidated condensed financial statements.

 
F-2

 

GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
                         
OPERATING REVENUES
                       
Oil and gas sales
  $ 477,403     $ 33,660     $ 747,640     $ 97,801  
TOTAL OPERATING REVENUES
    477,403       33,660       747,640       97,801  
                                 
OPERATING COSTS AND EXPENSES
                               
Production and operating
    334,193       16,083       570,791       81,000  
Impairment of long-term asset
    -       -       124,870       -  
Depreciation, depletion and accretion
    117,181       7,198       205,692       37,774  
General and administrative
    501,981       208,930       1,802,842       600,396  
Stock compensation expense
    124,038       169,580       580,085       260,814  
TOTAL OPERATING COSTS AND EXPENSES
    1,077,393       401,791       3,284,280       979,984  
                                 
LOSS FROM OPERATIONS
    (599,990 )     (368,131 )     (2,536,640 )     (882,183 )
                                 
OTHER INCOME (EXPENSE)
                               
Interest income
    10,778       8,287       31,117       23,472  
Gain on cancellation of indebtedness
    -       3,000       34,860       3,000  
Loss on disposal of asset
    -       -       -       (23,712 )
Other income
    -       2,000       -       4,550  
Interest expense
    (366,766 )     (43,630 )     (1,067,274 )     (109,395 )
NET LOSS
  $ (955,978 )   $ (398,474 )   $ (3,537,937 )   $ (984,268 )
                                 
Loss per share (basic and diluted)
  $ (0.05 )   $ (0.03 )   $ (0.20 )   $ (0.09 )
                                 
Weighted average number of shares outstanding (basic and diluted)
    17,577,055       11,541,361       17,265,027       11,541,361  

See notes to the consolidated condensed financial statements.

 
F-3

 

GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

   
For the Nine Months Ended
 
   
December 31,
 
   
2010
   
2009
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (3,537,937 )   $ (984,268 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Loss on impairment of long-term asset
    124,870       -  
Depreciation, depletion and accretion
    205,692       37,774  
Net gain on settlement of debt
    34,860       -  
Stock compensation expense
    580,085       260,814  
Net loss on disposal of equipment
    -       23,712  
Gain on relief of indebtedness
    -       (3,000 )
Changes in assets and liabilities:
               
Trade and other receivables
    (167,568 )     16,422  
Short term notes receivable
    (28,483 )     (22,856 )
Inventory
    (486 )     (24,178 )
Prepaid expenses and other assets
    137,233       22,627  
Accounts payable and accrued expenses - related party
    -       (100,178 )
Accounts payable and accrued expenses
    162,786       334,181  
Interest added to note payable
    398,159       26,887  
Interest on amortization of discount and loan fees
    569,529       59,850  
Net cash used in operating activities
    (1,521,260 )     (352,213 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Additions to oil and gas properties
    (745,830 )     (200,936 )
Proceeds from sale of property, plant and equipment
    -       2,352  
Additions to equipment
    (834,888 )     (5,900 )
Loan repayments
    -       19,937  
Net cash used in investing activities
    (1,580,718 )     (184,547 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from borrowings
    -       500,380  
Issuance of common stock
    -       100,000  
Reduction in capital lease obligation
    (12,466 )     -  
Payments on notes payable
    (55,645 )     (12,000 )
Distribution to members *
    (5,762 )     -  
Net cash provided by (used in) financing activities
    (73,873 )     588,380  
                 
NET INCREASE (DECREASE) IN CASH
    (3,175,851 )     51,620  
                 
CASH, beginning of year
    3,205,233       18,867  
                 
CASH, end of year
  $ 29,382     $ 70,487  

* Variable interest entity activity, see note 9 to the accompanying financial statements.

See notes to the consolidated condensed financial statements.

 
F-4

 

   
For the Nine Months Ended
 
   
December 31,
 
   
2010
   
2009
 
   
(Unaudited) 
   
(Unaudited) 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 
   
 
 
Cash paid during the year for:
           
Interest
  $ 94,916     $ -  
Taxes
  $ -     $ -  
                 
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
               
Beneficial conversion feature on note payable
  $ -     $ -  
 
 
F-5

 

GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

Glen Rose Petroleum Corporation’s (the “Company,” “we” or “our”) interim condensed consolidated financial statements are unaudited. They contain all necessary adjustments (consisting only of normal recurring adjustments) for a fair statement of the referenced interim period results.  These interim period results do not indicate expected full-year results or results for future quarters/periods, due to several factors, including price volatility of crude oil and natural gas, price volatility of commodity derivatives, volatility of interest rates, estimates of reserves, drilling risks, geological risks, transportation restrictions, timing of acquisitions, product demand, market competition, interruption(s) in production, our ability to obtain additional capital, and the success of proposed enhanced oil recovery work (EOR). These consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in Glen Rose Petroleum Corporation’s Form 10-K and Form 10-K/A for the year ended March 31, 2010.
 
We prepared the accompanying financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and included the accounts of Glen Rose Petroleum Corporation and its wholly-owned subsidiaries and variable interest entities in which management considers the Company to be the primary beneficiary.  We eliminated intercompany accounts and transactions.  Management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies.  Actual results may differ from those estimates.  We made significant assumptions in valuing the Company’s unproved oil reserves, which may affect the amounts at which oil properties are recorded. We have computed the Company’s stock-based compensation expense using assumptions such as volatility, expected life and the risk-free interest rate.  Those assumptions may be revised in the near term, in which case these estimates will revised, and these revisions could be material.

We prepared the Company’s financial statements on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business.  The Company has incurred substantial losses from operations and has a working capital deficit, which history and circumstance raise substantial doubt as to the Company’s ability to continue as a going concern. The Company had a net loss of $3,537,937 for the nine months ended December 31, 2010 and a net loss of $2,509,790 for the fiscal year ended March 31, 2010 and, as of the same periods, the Company had an accumulated deficit of $54,480,496, and $50,942,560, respectively.  During the quarter ended December 31, 2010, the Company did not raise any gross proceeds of additional equity financing.  The Company is currently seeking additional capital to develop its properties and expand its operations.  However; the Company can provide no assurance that it will be able to obtain the needed funds.  Until such funds are obtained and/or positive results from planned property development materialize, doubt about its ability to continue as a going concern may remain.

Currently we have one customer who buys 100% of our production.

Principles of Consolidation and Presentation
 
The consolidated financial statements include the accounts of Glen Rose Petroleum Corporation (the “Company”, “we” or “our”) and its wholly-owned subsidiaries, Glen Rose Petroleum Services, UHC Petroleum Corporation, UHC Petroleum Services Corporation and National Heritage Sales Corporation.  In addition, Glen Rose Partners I LLC, a variable interest entity for which the Company has been determined to be the primary beneficiary, is also included in the condensed consolidated financial statements.
 
In February 2010, UHC New Mexico Corporation (“New Mexico”), a wholly-owned non-operating subsidiary of the Company was transferred to Blackwood Capital Limited, a company controlled by our Chief Executive Officer. The transfer was a requirement of the Iroquois financing (See Note 6).

The name of the Company was changed from United Heritage Corporation to Glen Rose Petroleum Corporation in May, 2008.

 
F-6

 

Concurrent with the name change, the Company entered into a statutory merger whereby it moved its state of incorporation from Utah to Delaware and United Heritage Corporation, the Utah Corporation, merged into the newly formed Delaware Corporation, Glen Rose Petroleum Corporation.
 
All significant intercompany transactions and balances were eliminated in consolidation.
 
Nature of Operations
 
Glen Rose Petroleum Corporation owns contiguous oil and gas properties located in Edwards County, Texas. The Company began production of the Texas properties during the year ended March 31, 2000. The Company sold a significant portion of its oil and gas properties in 2007. The Company continues to operate its remaining contiguous oil properties located in Edwards County, Texas and does not operate oil or gas properties in any other fields or areas.
 
Revenue Recognition
 
Oil and gas production revenues are recognized at the point of sale. Production not sold at the end of the fiscal year is included as inventory in the accompanying consolidated financial statements.
 
Inventory
 
Inventory consists of oil in tanks, which is valued at the lower of the cost to produce the oil or the current available sales price.
 
Oil and Gas Properties
 
The Company uses the full cost method of accounting under which all costs incurred in the acquisition, exploration and development of oil and natural gas reserves, including costs related to unsuccessful wells and estimated future site restoration and abandonment, are capitalized until such time as the aggregate of such costs net of accumulated depletion and oil and natural gas related deferred income taxes, on a country-by-country basis, equals the sum of 1) the discounted present value (at 10%), using prices as of the end of each reporting period on a constant basis, of the Company’s estimated future net cash flows from estimated production of proved oil and natural gas reserves as determined by independent petroleum consultants, less estimated future expenditures to be incurred in developing and producing the proved reserves but excluding future cash outflows associated with settling asset retirement obligations accrued on the balance sheet; plus 2) the cost of major development projects and unproven properties not subject to depletion, if any; plus 3) the lower of cost or estimated fair value of unproven properties included in costs subject to depletion; less 4) related income tax effects.  If net capitalized costs exceed this limit, the excess is expensed unless subsequent market price changes eliminate or reduce the indicated write-down in accordance with U.S. SEC Staff Accounting Bulletin (“SAB”) Topic 12D.  Depletion is computed using the units-of-production method whereby capitalized costs, net of estimated salvage values, plus estimated future costs to develop proved reserves and satisfy asset retirement obligations, are amortized over the total estimated proved reserves on a country-by-country basis. Investments in major development projects are not depleted until either proved reserves are associated with the projects or impairment has been determined.
 
During the quarter ended December 31, 2010, the Company’s oil and gas properties did not have an impairment to recognize because it did not exceed its ceiling test limit.

 
F-7

 

GLEN ROSE PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Property and Equipment
 
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets primarily by the straight-line method as follows:
 
Equipment
 
3-14 years
Vehicles
 
3-5 years

Gains and losses resulting from sales and dispositions of property and equipment are included in current operations. Maintenance and repairs are charged to operations as incurred. During the nine months ended December 31, 2010 and December 31, 2009, the Company recorded depreciation expense of $55,510 and $18,203 respectively, which was charged to operations as incurred.
 
Earnings (Loss) per Common Share
 
The Company adopted the provisions of ASC Topic 260-10, Earnings Per Share (“EPS”). ACS Topic 260-10 provides for the calculation of basic and diluted earnings per share.  Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the nine months ended December 31, 2010 and December 31, 2009, basic and diluted loss per share are the same since the calculation of diluted per share amounts would result in an anti-dilutive calculation that is not permitted and therefore not included. At December 31, 2010, the Company had potential common shares consisting of options and warrants exercisable into 28,226,420 shares, debt of $3,350,000 convertible into 11,666,667 shares, and an option granted to convert a 12.5% working interest in the Company’s Wardlaw lease into 2,222,222 shares. At December 31, 2009, the Company had potential common shares consisting of options and warrants exercisable into 25,634,752 shares.
 
Cash Flows Presentation
 
For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
 
Concentration of Credit Risk
 
The Company primarily transacts its business with one financial institution. The account balances in that institution may from time-to-time exceed the federally insured limit of $250,000.

During the nine months ended December 31, 2010 and 2009, substantially all of the Company’s revenue was generated from contracts with one customer.

Use of Estimates
 
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of oil and gas reserves, the asset retirement obligation and impairment on unproved properties are inherently imprecise and may change materially in the near term.

 
F-8

 

Financial Instruments
 
Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and notes payable. Recorded values of cash, receivables, payables and short-term debt approximate their respective fair values due to short maturities of these instruments. Recorded values of long-term notes payable approximate fair values, since their effective interest rates are commensurate with prevailing market rates for similar obligations.
 
Issuance of Stock for Non-Cash Consideration

All issuances of the Company's stock for non-cash consideration have been assigned a per share amount equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration received pertains to services rendered by consultants and others and has been valued at the market value of the shares on the dates issued.

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions ASC Topic 505-10 Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and EITF 00-18, Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with ASC Topic 505-10, an asset acquired in exchange for the issuance of fully vested, nonforfeitable equity instruments should not be presented or classified as an offset to equity on the grantor's balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of the fully vested non-forfeitable common stock issued for future consulting services as prepaid services in its consolidated balance sheet.
 
Long-Lived Assets
 
Long-lived assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. For the nine months ended December 31, 2010, under the ceiling test pertaining to its oil properties, the Company did not have an impairment.

Income Taxes
 
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in ASC Topic 740-10, Accounting for Income Taxes. As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
 
NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS
 
In January 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-01 (ASU 2011-01) Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 .  ASU 2011-01 temporarily delay the effective date of the disclosures about troubled debt restructurings.  The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated.  Currently, the guidance is anticipated to be effective for interim and annual period ending after June 15, 2011.    The Company does not expect the provisions of ASU 2011-01 to have a material effect on its financial position, results of operations or cash flows.

 
F-9

 
 
In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-29 (ASU 2010-29) Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force).  The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  The amendments in the Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The amendments in the Update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.  The Company does not expect the provisions of ASU 2010-29 to have a material effect on its financial position, results of operations or cash flows.

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-28 (ASU 2010-28) Intangibles – Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issued Task Force). The amendments in the Update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist.  The qualitative factors are consistent with the existing guidance which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more like than not reduce the fair value of a reporting unit below its carrying amount.  For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010.  Early adoption is not permitted.  The Company does not expect the provisions of ASU 2010-28 to have a material effect on its financial position, results of operations or cash flows.

NOTE 3 – INVENTORY

Inventory consists of oil in tanks of $55,433 and $54,947 at December 31, 2010 and March 31, 2010, respectively.  Inventory is valued at the lower of cost to produce the oil or the current available sales price.

NOTE 4 – INCOME TAXES

Included in Company’s net deferred tax assets are approximately $4,977,000 of potential future tax benefits from prior unused tax losses. Realization of these tax assets depends on sufficient future taxable income before the benefits expire. It is not certain that the Company will have sufficient future taxable income to utilize the loss carry-forward benefits before they expire. Therefore, an allowance has been provided for the full amount of the net deferred tax asset. The Company’s recent change of majority ownership significantly reduced its ability to utilize its net operating losses.

NOTE 5 – STOCK OPTIONS

The following table summarizes pertinent information with regard to our stock option Plans for the nine months ended December 31, 2010:

   
Option
and
   
Weighted Average
Exercise
 
   
Rights
   
Price
 
Outstanding at beginning of year, April 1, 2010
   
1,020,000
   
$
1.63
 
Granted
               
Exercised
               
Forfeited
               
Expired
               
                 
Outstanding at December 31, 2010
   
1,020,000
     
1.63
 
                 
Exercisable at December 31, 2010
   
1,020,000
   
$
1.63
 
 
The weighted average contractual life of options outstanding and exercisable at December 31, 2010 was 1.15 years. The weighted average grant date fair value for options granted was $0.95 for the nine months ended December 31, 2010.

During the quarter ended December 31, 2010, the Company did not grant any options.

 
F-10

 

NOTE 6 – NOTES PAYABLE

Blackwood Ventures LLC

During the quarter ended December 31, 2010 and 2009, the Company accrued interest in the amount of $607 and $7,036 respectively, which was charged to operations.  As of December 31, 2010, the note balance, including accrued interest was $30,714.  Blackwood Ventures LLC was a related party at the inception of the note. This note is currently subject to a lawsuit with a former officer of the Company.

Buccaneer Energy Corporation

During the quarter ended December 31, 2010 and 2009, the Company accrued interest in the amount of $1,977 and $1,619, which was charged to operations.  The balance of this note at December 31, 2010 was $44,893. Buccaneer Energy Corporation was a related party at the inception of the note.  This note is currently subject to a lawsuit with a former officer of the Company.

Installment Obligation

The Company is financing premiums on certain insurance policies. The obligation is paid in three quarterly installments of $19,196 including interest assessed at an annual rate of 6.91%. The first installment was due and paid in June 2010. The balance of this obligation was fully paid at December 31, 2010. Interest charged to operations on this obligation during the quarter ended December 31, 2010 totaled $486.

Lothian Put Option Holders

In February 2010, the Company entered into novation agreements with the option holders to convert the put option liabilities into unsecured notes payable totaling $2,489,780. These notes are assessed interest at an annual rate of 4% and mature on September 30, 2011, when the principal balances and accrued interest thereon are due; however, the Company has the right to extend the maturity dates to September 30, 2012 with an increase in the interest rate charged on the notes to 6% per annum.  Interest accrued on these notes and charged to operations for the quarter ended December 31, 2010 amounted to $38,177. The balance of this obligation at December 31, 2010, including accrued interest of $136,523, totaled $2,626,303.

Iroquois Capital Opportunity Fund, LP

Convertible Debt

On March 3, 2010, the Company issued secured convertible notes and warrants to Iroquois Capital Opportunity Fund and 12 other investors in exchange for $3,350,000. The notes mature in two years and accrue interest at an annual rate of 8%. The Company, at its election during the first 180 days and, with the Note holder’s permission, thereafter, can elect to defer the required quarterly interest payments by calculating accrued interest for the quarter using the rate of 12% per annum and agreeing to add the accrued interest amount to the principal amount of the notes.  The outstanding principal and interest on the notes is convertible into Company common stock at the option of each note holder at $0.30 per share with the Company having the right to force conversion once the Company achieves a greater than $1.25 share price and minimum daily volume of $2,000,000.  The maximum number of conversion common stock shares for the notes’ principal amounts, assuming all shares are converted, is 11,666,667 common stock shares.  The notes are secured by all of the Company’s and its subsidiaries’ assets.   The investors are also receiving a total of 11,666,667 warrants exercisable at $0.60 per share with five year terms.  The warrants have cashless exercise provisions.  Should the Company issue common stock to third parties for consideration less than the note conversion price or the warrant exercise price during the term of the notes or warrants, the note conversion price and the warrant exercise price shall be adjusted downward to equal the price at which the Company issued that common stock. The Company incurred loans fees of $250,311 which is being amortized over the life of the loan and is being netted against the balance of the notes.

 
F-11

 

The subscription agreement also calls for the Company to have a director nominated by Iroquois Capital Opportunity Fund LP or its assignee.  Accordingly, the Company has amended its bylaws to provide for such a “Nominated Director.”  Further, under the amended bylaws, the Nominated Director must approve certain business decisions without regard to the vote of the other Directors, including (i) the Company’s or Subsidiary’s annual budget; (ii) acquisition or disposition of material assets, outside the ordinary course of business; (iii) formation or dissolution of the Company or Subsidiary; (iv) expenditure of or incurring of an obligation of $20,000 or more for a single purpose during any consecutive twelve month period unless such expenditure has been approved in a budget approved by the board of directors of the Company or Subsidiary (“single purpose” may include an approved general plan of operations relating to oil and gas production and shall not be a reference to the engagement of any single vendor in connection with such approved general plan of operations relating to oil and gas production), provided such expenditure has been approved in a budget approved by the board of directors of the Company and Subsidiary, as applicable;  (v) open or close any account with any financial institution; (vi) initiation or settlement of any litigation, arbitration or judicial proceeding; and (vii) the issuance of any equity of the Company or right to receive or acquire any equity of the Company, or modification of any of the foregoing outstanding at any time.  The Nominated Director bylaw provision ceases to be effective when the notes are paid.

In accordance with terms of the loan, the $3,350,000 was placed in escrow. Pursuant to the terms of the Escrow Agreement, funds held in escrow are released at the Company’s written request promptly after the Escrow Agent receives a certified resolution of the Company’s board of directors which must include the affirmative approval of the Nominated Director. As of December 31, 2010, no funds remained in escrow.

Pursuant to ASC Topic 470-20, “Debt with Conversion and Other Options,” the convertible notes were recorded net of discounts that include the relative fair value of the warrants amounting to $1,999,257.  The discounts are amortized and charged to operations over the two year life of the debt using the effective interest method.  The initial value of the warrants of $1,999,257 was calculated using the Black Scholes Option Model with a risk free interest rate of 2.27%, volatility of 121.39%, and trading price of $0.24 per share.

Pursuant to the terms of the promissory notes, for the first 180 days after delivery of the promissory notes, the Company is to either pay accrued interest by the end of each calendar quarter or deliver each note holder an Allonge which increases the principal amount of the holder’s note by adding the accrued interest.  The promissory notes also provide that if the Company pays by cash the interest rate for calculating interest due is at the rate of 8% per annum and if the Company elects to deliver an Allonge to each of the note holders a 12% interest rate shall be applied to the interest accrued.  A default interest rate of 15% will be applicable during any event of default and until the default is cured.

From July 1, 2010 to August 20, 2010 the Company was in default for having failed to send the Allonges to the note holders.  The Company accrued interest in the amount of $74,576 for this period at the 15% default rate.  The Company cured the default on August 20, 2010.  An election was made by the Company to pay 9 of the 13 note holders the 8% interest in the amount of $94,916 from the cure date to the end of the quarter.  The interest was paid on October 4, 2010 as agreed by the Company and the note holders.  The remaining 4 note holders and the Company elected to execute an Allonge and to have their interest accrued at the rate of 12% from the cure date to the end of the quarter.  This interest totaled $5,238.    Interest charged to operations on the cumulative principal of the notes for quarter ended September 30, 2010 totaled $108,297.  The balance of the notes at September 30, 2010, net of discounts and loan fees totaling $1,063,329, was $2,446,143.

Subsequent to the end of the quarter ended December 31, 2010, the Company and the holder of a majority-in-interest of the Company’s convertible promissory notes sold to Iroquois Capital Opportunity Fund and other investors negotiated an adjustment to the interest rate under the promissory notes for the quarter. It was agreed that interest would accrue at 15% for the entire quarter and that the portion of the interest accrued at 8% would be paid in cash on January 24, 2011, and that the remaining accrued interest could be paid at the Company’s election in cash or by delivery on January 24, 2011, of allonges to the promissory notes increasing the principal balances thereof.  The cash interest payment and allonges were delivered on January 24, 2011.
Interest charged to operations on the cumulative principal of the notes for quarter ended December 31, 2010 totaled $135,043.  The balance of the notes at December 31, 2010, net of discounts and loan fees totaling $873,563, was $2,649,291.

NOTE 7 - NOTE RECEIVABLE

Bowie Operating Company LLC

The loan due from Bowie Operating Company, LLC is assessed interest at rate of 18% per annum. The loan is evidenced by a secured promissory note, which is currently in default, and was due on demand after September 1, 2009. Interest accruing on the note and credited to operations during the quarter ended December 31, 2010 and 2009 was $8,334 and $6,404, respectively. The balance of the principal and interest on the note as of December 31, 2010 was $189,274. Bowie Operating Company LLC was a related party at the inception of this note. This note is currently subject to a lawsuit with a former officer of the Company. The Company continues to record interest on the note as well as the notes principal on its financials until the lawsuit dispute is resolved.

 
F-12

 

Buccaneer Energy Corporation

The loan due from Buccaneer Energy Corporation is assessed interest at rate of 18% per annum. The loan is evidenced by a secured promissory note, which is currently in default, and was due on demand after December 31, 2009. Interest accruing on the note and credited to operations during the quarter ended December 31, 2010 was $1,630. The balance of the principal and interest on the note as of December 31, 2010 was $37,017.  Buccaneer Energy Corporation was a related party at the inception of this note.  This note is currently subject to a lawsuit with a former officer of the Company. The Company continues to record interest on the note as well as the notes principal on its financials until the lawsuit dispute is resolved.

NOTE 8– STOCKHOLDERS’ EQUITY

In January 2008, the Company reincorporated and changed its domicile from Utah to Delaware pursuant to a Reincorporation and Merger Agreement. Prior to the reincorporation, the Company had 120 million common shares authorized. In the reincorporation, the Company believed it maintained the same number of authorized shares. However, by reason of an administrative error on the part of the Company, this was not the case, and only 20 million common shares were authorized for issuance. The Company discovered this technical defect in December 2010 and immediately acted to cure the defect by obtaining majority shareholder approval to increase the number of authorized shares to 150 million (See Note 11 – Subsequent Events).

During the quarter ended December 31, 2010, the Company did not issue shares of common stock to directors as compensation for their services rendered.   The Company previously issued 240,000 shares of common stock to certain directors as prepaid compensation, at quarter ended September 30, 2010.  The services were rendered during the quarter ended December 31, 2010 and, accordingly, the $84,000 (representing the value of the shares) was charged to operations and is included in stock compensation expense.

During the quarter ended December 31, 2010, the Company issued 53,500 shares of common stock to its Chief Financial Officer as incentive compensation for services rendered under his contract. The shares were valued at $11,235 which was charged to operations.

During the quarter ended December 31, 2010, the Company issued warrants to purchase 70,000 shares of common stock to its Chief Financial Officer as compensation for his services.  The options were valued at $15,303 which was charged to operations.  The exercise prices of these options were range from $0.75 per share to $1.50 per share.

During the quarter ended December 31, 2010, the Company issued 37,500 shares of common stock to James Casperson, a consultant as compensation for services to be rendered under his consulting engagement agreement.. The shares were valued at $13,500 which was charged to operations.

NOTE 9- VARIABLE INTEREST ENTITY

In February 2010, the Company sold a 12.5% working interest in the production of newly drilled wells located in Wardlaw Field to Glen Rose Partners I, LLC, (“Partners”) for $1,000,000. Pursuant to the terms of the purchase and sale agreement, the Company is required to pay all of Partners’ drilling and production costs until Partners’ carried costs equal $2,000,000.  Further, for five years,  Partners  will also have conversion rights to convert its working interest in the Wardlaw Prospect with an imputed value equal to the working interest purchase price as adjusted, into the Company’s common stock in the same manner as the secured convertible notes are convertible, except that Partners conversion price shall be 150% of the secured convertible notes’ conversion price in effect as of the conversion date, provided that the secured convertible notes remain outstanding on the date of such conversion.  Partners is an affiliate of Iroquois Capital Opportunity Fund, LP

 The Company complies with the accounting guidance related to consolidation of variable interest entities (“VIEs”). Under this guidance, a reporting entity is required to determine the primary beneficiary who would consolidate the VIE in its financial statements. The determination uses a qualitative approach based upon which variable interest holder has the power to direct economic performance related activities of the VIE, as well as the obligation to absorb losses or right to receive benefits that could potentially be significant to the VIE. This guidance requires the primary beneficiary assessment to be performed on an ongoing basis. The Company has evaluated its relationship with Partners and has determined it is the primary beneficiary because until Partners receives $2,000,000 in revenue 1) the Company has all decision making control on the respective wells and 2) the Company is required to incur all of the financial risks pertaining to the respective wells’ drilling and production costs.

Partners’ operating activity included in the accompanying condensed consolidated statements of operations is as follows:

   
Three Months Ended
   
Nine Months Ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
                         
Oil and gas sales
  $ 808     $ -     $ 6,816     $ -  
                                 
Operating costs and expenses Production taxes
    (33 )     -       (279 )     -  
                                 
Net income from operations
  $ 775     $ -     $ 6,537     $ -  

 
F-13

 

NOTE 10 – COMMITMENT AND CONTINGENCIES

Commitment

The Company entered into a consulting agreement in February 2010, for a period of thirty six months.  Under the agreement, $25,000 is to be paid monthly to the consultant, If the hours expended by the consultant in any month exceed 100 hours, the consultant shall have the right to limit each future month’s commitment to 100 hours in the absence of an agreement for compensation for such excess work.

Minimum future consulting payments are as follows:

December 31,
     
2011
 
$
300,000
 
2012
   
300,000
 
2013
   
25,000
 
         
Total minimum consulting payments
 
$
625,000
 

Contingencies

The Company is involved in various claims incidental to the conduct of our business. Based on consultation with legal counsel, we do not believe that any claims, either individually or in the aggregate, to which the Company is a party will ultimately have a material adverse effect on our financial condition or results of operations.

For a current report regarding ongoing legal proceedings involving the Company and other material claims, reference is made to Item 3 of Part I of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2010, which is incorporated herein.

NOTE 11 – SUBSEQUENT EVENTS.

 
a)
Increase in number of authorized common and preferred shares

On December 22, 2010, the Company’s majority stockholders, by written consent in lieu of a meeting, approved the Certificate of Amendment to the Company’s Articles of Incorporation increasing the Company’s authorized common shares to 150,000,000 and its preferred shares to 5,000,000. The increase will be effective upon the filing of the Certificate of Amendment.

 
b)
Designation of Series D Convertible Preferred Stock

On January 6, 2011, the Company filed the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Designation”), with the Secretary of State of Delaware which designates 15,000 of its preferred shares as Series D Convertible Preferred Stock (“Series D”). Under the designation, the purchase price per each share of Series D is $300. Each holder of Series D is entitled to 1,000 votes and shall vote in the same class as the common shares. Upon the confirmation by the Secretary of State of the filing of the above-indicated amendment to the Company’s articles of incorporation, each share of Series D that is then issued and outstanding will automatically convert into 1,000 shares of the Company’s common stock. The designation provides for penalties to the Company if it fails to convert the Series D shares into common shares within three days from the date the Secretary of State confirms the filing of the amendment to the articles of incorporation.

 
c)
Sale of Series D Preferred Shares

On January 21, 2011the Company entered into purchase agreements (the “Purchase Agreements”) with accredited non-U.S. investors (the “Investors”) for the issuance and sale of an aggregate of 7,000 shares of the Company’s Series D Convertible Preferred Stock, for aggregate proceeds equal to $2.1 million. ABG Sundal Collier Norge ASA (“ABG”) who acted as an advisor to the investors in connection with the sale, was issued 280 shares of preferred stock in connection with the sale.  The shares will automatically convert into 7,280,000 shares of the Company’s common stock upon the effectiveness of the amendment to the Company’s articles of incorporation increasing its authorized common stock, as discussed above.

In connection with the sale, the Investors also were issued two series of warrants (the “Warrants”) to purchase shares of the Company’s common stock, par value $.001 (the “Common Stock”). One series consists of two year warrants to purchase, in the aggregate, 7,000,000 shares of common stock with an exercise price of $0.40 per share. The second series consists of three year warrants to purchase, in the aggregate, 7,000,000 shares of common stock with an exercise price of $0.60 per share. The warrants do not permit cashless exercise and are closed to exercise for 6 months.  ABG also received a two year warrant and three year warrant, each for the purchase of up to 280,000 shares of common stock under the same terms as discussed above.

 
d)
Issuance of Common Shares

On February 10, 2011, the Company issued 150,000 shares of its common stock to The Hewlett Fund in consideration of the conversion $45,000 of their convertible note.

 
F-14

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

The following discussion and analysis of our financial condition, plan of operation and liquidity should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this quarterly report on Form 10-Q, and our audited financial statements and the notes thereto and our Management’s Discussion and Analysis or Plan of Operation contained in our annual report on Form 10-K for the fiscal year ended March 31, 2010.

OVERVIEW

Glen Rose Petroleum Corporation (“Glen Rose”) is a Delaware corporation formed in 2008.  The Company was previously United Heritage Corporation, a Utah corporation that was formed in 1981 and was reincorporated in Delaware in 2008. The reincorporation entailed a reincorporation merger agreement between Glen Rose Petroleum Company and United Heritage Corporation, but there were no substantive changes in assets or personnel and we also have continuous financial reporting through the reincorporation.

Glen Rose owns UHC Petroleum Corporation (“Petroleum”), a Texas corporation, which is a licensed operator with the Texas Railroad Commission.  Petroleum is an independent producer of crude oil based in Katy, Texas.  Petroleum operates the Wardlaw Field.  The Wardlaw Field lies in Edwards County, Texas in the southeast portion of the Val Verde Basin and is approximately 28 miles west of Rocksprings and 550 miles west of Dallas.  Current oil production from the field comes from the Glen Rose formation at a depth of less than 600 feet.  The Company’s petroleum leaseholds consist of approximately 10,502 gross acres, of which more than 10,000 acres are undeveloped.  The leaseholds include 85 wellbores.  Of these, 75 are capable of producing. The Company has recorded and installed pumps on 48 of these wellbores and is in the process of ongoing evaluation to determine which of the available 75 wellbores are best suited for production. We are currently producing between 85 - 105 barrels of oil per day and look to increase this to a target of 125 - 150 barrels per day upon the completion of an evaluation of all wells and processes. Petroleum has a gross working interest of 100% and a net revenue interest of 75% of the current Wardlaw Field production. The original lease term was extended by a period of 90 days each time a well was drilled; therefore, based on prior drilling, the primary lease term is currently extended to 2014.

 
1

 

The Company entered into a new lease on June 14, 2010 with Carol Ann Adamson, who is Trustee of the Sandra Jym Adamson Trust, as well as the agent and attorney-in-fact for Sandra Jym Adamson.  The lease is adjacent to the Company’s Wardlaw lease and consists of 665 acres.  The term is for 3 years, which will pay royalties in the amount of 20% of the gross production, with an option for a further 779 acres to be leased at $50 per acre for not less than 160 acres every 6 months.

We produce a raw commodity. Currently one purchaser buys 100% of our production.  However, we believe that other purchasers are available for our production. Our customer risk primarily stems from the purchaser’s solvency relating to outstanding balances. The purchaser has historically paid in a timely manner and we have no information that would indicate that it would be unable to continue paying in the future.

We have no patents, trademarks, material intellectual property license agreements, franchises, or labor contracts.

In addition to Petroleum, Glen Rose also owns, UHC Petroleum Services Corporation (“Services”) a Texas corporation. Our other subsidiary is National Heritage Sales Corporation, a Texas corporation. National Heritage Sales Corporation has not operated for a number of years, and the Company plans to wind up this corporation in the coming year. Until recently, UHC New Mexico Corporation was a non-operating subsidiary of Glen Rose. Pursuant to a Common Stock Purchase Agreement dated February 12, 2010, it was sold to Blackwood Capital Limited, a company controlled by our Chief Executive Officer. At the time of the sale, it had no assets but was subject to a current UCC filing and ongoing expenses relating to maintaining its corporate existence. Glen Rose determined that the expense of enforcing and collecting the indebtedness of UHC New Mexico Corporation owing to Glen Rose likely would exceed the proceeds realized by Glen Rose from such enforcement and collection activities. Accordingly, Glen Rose approved the cancellation and forgiveness of such indebtedness effective as of the date of the closing on the sale to Blackwood Capital Limited.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q and other reports filed from time to time with the Securities and Exchange Commission by Glen Rose Petroleum Corporation (referred to as the “Company”, “we”, “us” or “our”), contains certain forward-looking statements and information based upon the beliefs of, and data currently available to, our management, as well as estimates and assumptions made by our management regarding the Company’s financial condition, future operating performance, results of operations and other statements that are not statements of historical fact. The words “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan” “forecast” or the negative of these terms and similar expressions and variations thereof are intended to identify such forward-looking statements. These forward-looking statements appear in a number of places in this Form 10-Q and reflect the current view of our management with respect to future events. Such forward-looking statements are not guarantees of future performance and are subject to certain important risks, uncertainties, assumptions and other factors relating to our industry and operations which could cause results to differ materially from those anticipated, believed, estimated, expected intended or planned. Some of these risks include, among other things:

 
·
whether we will be able to find financing/produce cash flows to continue/expand our operations;
 
·
whether changes in regulatory requirements will adversely affect our business;
 
·
environmental risks;
 
·
volatility in commodity prices, supply of, and demand for, oil and natural gas;
 
·
whether the recovery methods that we use in or will use in our oil and gas operations succeed;
 
·
the ability of our management to execute its plans to meet its goals;
 
·
general economic conditions, whether internationally, nationally, or in the regional and local markets in which we operate, which may be less favorable than expected;
 
·
the difficulty of estimating the presence or recoverability of oil and natural gas resources and future production rates and associated costs;

 
2

 

 
·
the ability to retain key members of management and key employees and to attract additional talent as required;
 
·
drilling and operating risks and expense cost escalations; and
 
·
other uncertainties, all of which are difficult to predict and many of which are beyond our control.

Except as otherwise required by law, we undertake no obligation to update any of the forward-looking statements contained in this quarterly report Form 10-Q after the date of this report.

GOING CONCERN STATUS

Our financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business.  As of the filing date of this quarterly report on Form 10-Q, we have incurred substantial losses from our operations and we have a working capital deficit which raises substantial doubt as to our ability to continue as a going concern.  We had net loss of $3,537,937 for the nine months ended December, 2010 and a net loss of $2,509,790 for the fiscal year ended March 31, 2010.  As of the same periods, we had an accumulated deficit of $54,480,496 and $50,942,560, respectively.  Unless we are able to attract the financing needed to develop our properties, there can be no assurance that we will be able to continue as a going concern.

Management is currently reviewing the Company’s operations with the intent of increasing revenue and reducing expenses. In addition, Management is also seeking funding with third parties through the issuance of debt and equity and through attracting tax-benefitted investment. In addition, we are also in discussions with third parties regarding sharing arrangements relating to our interest in the Wardlaw Field including farm outs. There is no assurance that our attempts to obtain funding or find a suitable party in connection with the further development of the Wardlaw Field will be successful.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies, including the assumptions and judgments underlying those policies, are more fully described in the notes to our audited financial statements contained in our annual reports on Forms 10-K for the fiscal years ended March 31, 2010 and March 31, 2009.  We have consistently applied these policies in all material respects. Investors are cautioned, however, that these policies are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially.  Set forth below are the accounting policies that we believe most critical to an understanding of our financial condition and liquidity.

Oil and Gas Properties

Proved Reserves - Proved reserves are defined by the Securities and Exchange Commission as those volumes of crude oil; condensate, natural gas liquids and natural gas that geological and engineering data demonstrate with reasonable certainty are recoverable from known reservoirs under existing economic and operating conditions. Proved developed reserves are volumes expected to be recovered through existing wells with existing equipment and operating methods. Although our engineers are knowledgeable of and follow the guidelines for reserves established by the Securities and Exchange Commission, the estimation of reserves requires engineers to make a significant number of assumptions based on professional judgment.  Reserve estimates have been updated at least annually and consider recent production levels and other technical information about each well. Estimated reserves are often subject to future revision, which could be substantial, based on the availability of additional information including: reservoir performance; new geological and geophysical data, including that provided by additional drilling; technological advancements; price and cost changes; and other economic factors.  Changes in oil and gas prices can lead to a decision to start-up or shut-in production, which can lead to revisions to reserve quantities. Reserve revisions in turn cause adjustments in the depletion rates utilized by the Company.  The Company cannot predict what reserve revisions may be required in future periods.

 
3

 

Depletion rates are determined based on reserve quantity estimates and the capitalized costs of producing properties. As the estimated reserves are adjusted, the depletion expense for a property will change, assuming no change in production volumes or in the costs capitalized.  Estimated reserves are used as the basis for calculating the expected future cash flows from a property, which are used to determine whether that property’s reported value may be impaired.  Reserves are also used to estimate the supplemental disclosure of the standardized measure of discounted future net cash flows relating to oil and gas producing activities and reserve quantities in Note 15 to the consolidated financial statements in our March 31, 2010 Form 10-K. Changes in the estimated reserves are considered changes in estimates for accounting purposes and are reflected on a prospective basis.

We employ the full cost method of accounting for our oil and gas production assets, which are located in the southwestern United States. Under the full cost method, all costs associated with the acquisition, exploration and development of oil and gas properties are capitalized and accumulated in cost centers on a country-by-country basis.  The sum of net capitalized costs and estimated future development and dismantlement costs for each cost center is depleted on the equivalent unit-of-production basis using proved oil and gas reserves as determined by independent petroleum engineers.

Net capitalized costs are limited to the lower of unamortized cost net of related deferred tax or the cost center ceiling.  The cost center ceiling is defined as the sum of (i) estimated future net revenues, discounted at 10% per annum, from proved reserves, based on un-escalated year-end prices and costs; (ii) the cost of properties not being amortized; (iii) the lower of cost or market value of unproved properties included in the costs being amortized; less (iv) income tax effects related to differences between the book and tax basis of the oil and gas properties.

The ceiling test is affected by a decrease in net cash flow from reserves due to higher operating or finding costs or reduction in market prices for natural gas and crude oil.  These changes can reduce the amount of economically producible reserves.  If the cost center ceiling falls below the capitalized cost for the cost center, we would be required to report an impairment of the cost center’s oil and gas assets at the reporting date.

Impairment of Properties - We will continue to monitor our long-lived assets recorded in oil and gas properties in our consolidated balance sheet to ensure they are fairly presented.  We must evaluate our properties for potential impairment when circumstances indicate that the carrying value of an asset could exceed its fair value.  A significant amount of judgment is involved in performing these evaluations since the results are based on estimated future events.  Such events include a projection of future oil and natural gas sales prices, an estimate of the ultimate amount of recoverable oil and gas reserves that will be produced from a field, the timing of future production, future production costs, and future inflation.  The need to test a property for impairment can be based on several factors, including a significant reduction in sales prices for oil and/or gas, unfavorable adjustment to reserves, or other changes to contracts, environmental regulations or tax laws.  All of these factors must be considered when testing a property's carrying value for impairment.  We cannot predict whether impairment charges may be required in the future.

Revenue Recognition - Oil and gas production revenues are recognized at the point of sale. Production not sold at the end of the fiscal year is included as inventory at the lower of cost or market value.

Income Taxes - Included in our net deferred tax assets are approximately $4,977,000 of potential future tax benefits from prior unused tax losses (“net operating loss carry-forwards”).  Realization of these tax assets depends on sufficient future taxable income before the benefits expire.  We are unsure if we will have sufficient future taxable income to utilize the benefits from net operating loss carry-forwards before the losses expire.  Therefore, we have provided an allowance for the full amount of the net deferred tax asset. Moreover, our recent change of majority ownership significantly reduced our ability to utilize our net operating losses carry-forwards.

Accounting Estimates - Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. In particular, there is significant judgment required to estimate oil and gas reserves, impairment of unproved properties and asset retirement obligations.  Actual results could vary significantly from the results that are obtained by using management’s estimates as well as those of independent third-party petroleum engineering firms.

 
4

 

Convertible Debentures - If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”).  A BCF is recorded as a debt discount pursuant to EITF Issue No. 98-5 (“EITF 98-05”), Accounting for Convertible Securities with Beneficial Conversion Features or Contingency Adjustable Conversion Ratio, and EITF Issue No. 00-27, Application of EITF Issue No. 98-5 to Certain Convertible Instruments.  In those circumstances, the convertible debt will be recorded net of the discount related to the BCF.   The Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

RESULTS OF OPERATIONS

The following comparison of selected financial data for the three months and nine months ended December 31, 2010 and financial data for the three months and nine months ended December 31, 2009 are derived from our unaudited consolidated condensed financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.  This information is qualified in its entirety by, and should be read in conjunction with, such financial statements and related notes contained therein.

   
Three Months Ended
   
Nine Months Ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
   
(Unaudited)
   
(Unaudited)
 
Income Data
                       
Revenues
 
$
477,403
     
33,660
     
747,640
     
97,801
 
Depreciation, depletion and accretion
   
117,181
     
7,198
     
205,692
     
37,774
 
Total operating costs and expenses
   
1,077,393
     
401,791
     
3,284,280
     
979,984
 
                                 
Loss from operations
   
(599,990)
     
(368,131)
     
(2,536,640)
     
(882,183)
)
                                 
Income tax
   
  -
     
  -
     
  -
     
  -
 
                                 
Net loss
 
$
(955,978)
     
(398,474)
     
(3,537,937)
     
(984,268)
)
                                 
Basic and diluted loss per share
 
$
(0.05)
     
(0.03)
     
(0.20)
     
(0.09)
)
                                 
Weighted average number of shares outstanding
   
17,577,055
     
11,541,361
     
17,265,027
     
11,541,361
 

Oil and Gas Results

Three Months Ended December 31, 2010 and  2009

Our revenues increased $443,743 or approximately 1,318%, to $477,403 for the three months ended December 31, 2010, as compared to $33,660 for the three months ended December 31, 2009. The increase in revenue in 2010 compared to 2009 was due to significant increase in production due to new development and the reworking of our wells.

Our total operating costs and expenses increased $675,602 or approximately 168%, to $1,077,393 for the three months ended December 31, 2010, as compared to $401,791 for the three months ended December 31, 2009. The increase in our operating expenses was primarily attributable to adding new employees, increases in production activities, and increases in other general and administrative expenses for the three months ended December 31, 2010.

Our depreciation, depletion and accretion increased by $109,983, or approximately 1,528%, to $117,181 for the three months ended December 31, 2010, as compared to $7,198 for the three months ended December 31, 2009.  Substantially all of our increase pertained to the depreciation, depletion and accretion expenses incurred in our oil properties.

 
5

 

General and administrative expenses increased $293,051, or approximately 140%, to $501,981 for the three months ended December 31, 2010, as compared to $208,930 for the three months ended December 31, 2009.  This increase in our general and administrative expenses during the current three month period is primarily attributable the addition of new employees, legal and other professional fees.

Our loss from operations increased from $368,131 for the three months ended December 31, 2009, to $599,990 for the three months ended December 31, 2010. This change in our loss from operations is primarily attributable to an increase in stock compensation expenses, professional fees and the other factors discussed above.

Interest expense increased from $43,630 for the three months ended December 31, 2009 to $366,766 for the three months ended December 31, 2010.

Our net loss increased $557,504 from $398,474 for the three months ended December 31, 2009, to $955,978 for the three months ended December 31, 2010.

Nine Months Ended December 31, 2010 and  2009

Our revenues increased $649,839, or approximately 664%, to $747,640 for the nine months ended December 31, 2010, as compared to $97,801 for the nine months ended December 31, 2009. The increase in revenue in 2010 compared to 2009 was due to significant increase in production due to new development and the reworking of our wells.

Our total operating costs and expenses increased $2,304,296, or approximately 235%, to $3,284,280 for the nine months ended December 31, 2010, as compared to $979,984 for the nine months ended December 31, 2009. The increase in our operating expenses was primarily attributable to adding new employees, increases in production activities, and increases in other general and administrative expenses for the three months ended December 31, 2010.

Our depreciation, depletion and accretion increased by $167,918, or approximately 445%, to $205,692 for the nine months ended December 31, 2010, as compared to $37,774 for the nine months ended December 31, 2009.  Substantially all of our increase pertained to the depreciation, depletion and accretion expenses incurred in our oil properties.

General and administrative expenses increased $1,202,446, or approximately 200%, to $1,802,842 for the nine months ended December 31, 2010, as compared to $600,396 for the nine months ended December 31, 2009.  This increase in our general and administrative expenses during the current three month period is primarily attributable the addition of new employees, legal and other professional fees.

Our loss from operations increased from $882,183 for the nine months ended December 31, 2009, to $2,536,640 for the nine months ended December 31, 2010. This change in our loss from operations is primarily attributable to an increase in stock compensation expenses, professional fees and the other factors discussed above.

Interest expense increased from $109,395 for the nine months ended December 31, 2009 to $1,067,274 for the nine months ended December 31, 2010. Interest expensed in 2010 included $135,043 that accrued on our debt due Iroquois and also included amortization of the discount on this debt totaling $157,792 for the nine months ended December 31, 2010.

Our net loss increased $2,553,669 from $984,268 for the nine months ended December 31, 2009, to $3,537,937 for the nine months ended December 31, 2010.

 
6

 
 
LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our revenues have not been adequate to support our operations.  We anticipate that this will change in the near future as a result of our capital raising and development efforts, combined with operating changes.

Current liabilities increased from $874,001 at March 31, 2010 to $1,309,597 at December 31, 2010, an increase of $435,596, or approximately 50%.  Increases during the nine months ended December 31, 2010 were mainly due to the accrual of  interest payable of $271,566 at December 31, 2010 compared to $53,675 due at March 31, 2010,

We had working capital deficit of $793,215 at December 31, 2010, as compared to working capital of $2,705,654 at March 31, 2010, a working capital decrease of $3,498,869 or approximately 129%. The decrease in our working capital resulted primarily from the cost outlaid to increase the overall operations and production of the Company.

Cash Flow

Our operations used $1,521,349 of cash in the nine months ended December 31, 2010. This is primarily due to a net loss of $3,537,937, net of non-cash operating expenses totaling $2,016,677. Cash of $1,580,718 was used in investing activities during the same nine month period, which consisted of $745,830 in expenditures relating to the development of our oil properties, and $834,888 was incurred in the purchases of related equipment.  Cash used in our financing activity during the nine months ended December 31, 2010 included $12,466, in payments used to reduce our capital lease obligation and $55,645 in principal debt reduction on our insurance financing obligation.

 At December 31, 2010, we had cash on hand in the amount of $29,382 as compared to $70,487 at December 31, 2009.

Glen Rose will incur significant costs through its planned development program for its Wardlaw Field leases and related opportunities, cash flow permitting. The program will begin by reworking many of the existing well bores, as well as begin to drill new wells, which will be completed upon deploying the necessary funding.  There can be no assurance of success, and unless production and sales of oil and gas significantly increase, we may not be able to attain profitability, or even be able to continue as a going concern.  We will require additional funding to attempt to significantly increase our production and have been attempting to secure such funding.

Except as otherwise discussed in this quarterly report, we know of no trends, events or uncertainties that have, or are reasonably likely to have, a material impact on our short-term or long-term liquidity or on our net sales or revenues from continuing operations.  We do not currently have any significant commitments for capital expenditures for the next twelve months, but do have significant plans, depending upon success of the pilot flooding program and our success in attracting capital.
 
 
7

 

 
ITEM 4.   CONTROLS AND PROCEDURES
 
Glen Rose carried out an evaluation, under the supervision and with the participation of management, of the effectiveness of the design and operation of the Company’s financial controls and procedures for the quarter ended December 31, 2010. This evaluation was undertaken in consultation with internal and external accountants. Based on the evaluation, information about which is included in the following paragraph, our then-Chief Executive Officer and Chief Financial Officer concluded that our internal controls and reporting procedures were not effective to ensure that information required to be disclosed by us in the reports that we filed or submitted under the Securities Exchange Act of 1934 was recorded, processed, summarized and reported in compliance with internal controls ordinarily required of publicly-traded firms in the manner specified in the Securities and Exchange Commission’s rules and forms. There have since been material changes in internal control over financial reporting during current quarter that are reasonably likely to materially affect our internal control over financial reporting. These controls/procedures include utilization of internal accountant to perform accounting and bookkeeping functions, including bank reconciliations and other reviews of payables, receivables and other assets; another firm to review such work and prepare adjusting entries, and independent audit by a CPA firm.

Glen Rose Petroleum Corporation’s management is responsible for establishing and maintaining systems of adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13(a)-15(f). Because of its inherent limitations, internal control over and outside independent audit of financial reporting may not prevent or detect misstatements.

In the year ending March 31, 2010, Glen Rose Petroleum Corporation's management team evaluated the effectiveness the design and operation of the Company's financial controls and procedures and internal control over financial reporting in accordance with the standards set forth by the Public Company Accounting Oversight Board ("PCAOB") in the United States.

In management's opinion, based on the assessment completed for the year ended March 31, 2010 and the assessment for the quarter ended December 31, 2010, the internal control over financial reporting was and continues to be operating effectively.
 
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the quarter ended December 31, 2010, there were no changes in our internal controls or in other factors that could significantly affect internal control over financial reporting subsequent to the date of their above evaluation.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

For a current report regarding ongoing legal proceedings involving the Company and other material claims, reference is made to Item 3 of Part I of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2010, which is incorporated herein, subject to the following:

Recon Petrotechnologies Oklahoma, Inc., v. UHC Petroleum Corporation and Glen Rose Petroleum Corp.

Trial has been scheduled for Spring 2011.

Forbes Energy Services, LLC successor in interest to CC Forbes Company, LP v. UHC Petroleum Corporation

Discovery has begun.

Langston Family Partnership and Buccaneer Energy Corporation v. Glen Rose Petroleum Corporation

The Company has filed a counterclaim in the matter.

Gonzalo v. Kayla Parks and Glen Rose Petroleum Corp.

On September 22, 2010, an action was commenced in the District Court in Edwards County, Texas.  The matter appears to be based upon an automobile accident and it has been referred to the Company’s insurance carrier for defense.
 
8

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

There were no reportable events under this Item 2 during the quarterly period ended December 31, 2010.
  
Subsequent to the quarter ended December 31, 2010, the Company entered into purchase agreements (the “Purchase Agreements”) dated as of January 21, 2011 with accredited non-U.S. investors (the “Investors”) for the issuance and sale of an aggregate of 7,000 shares of the Company’s Series D Convertible Preferred Stock, par value $.0001 per share (the “Shares”), for aggregate proceeds equal to $2.1 million from the sale (the “Sale”). ABG Sundal Collier Norge ASA (“ABG”) who acted as an advisor to the investors in connection with the Sale, was issued 280 shares of Preferred Stock in connection with the Sale.  The Shares are convertible into 7,280,000 shares of the Company’s common stock, automatically upon the effectiveness of an amendment to the Company’s articles of incorporation increasing its authorized common stock to not less than 125 million shares.  The terms of conversion, and other rights and privileges of the Preferred Stock are provided in the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Designation”), filed with the Secretary of State of the State of Delaware on January  6, 2011.

In connection with the Sale, the Investors also were issued two series of warrants (the “Warrants”) to purchase shares of the Company’s common stock, par value $.001 (the “Common Stock”). One series consists of two year warrants to purchase, in the aggregate, 7,000,000 shares of common stock with an exercise price of $0.40 per share. The second series consists of three year warrants to purchase, in the aggregate, 7,000,000 shares of common stock with an exercise price of $0.60 per share. The warrants do not permit cashless exercise and are closed to exercise for 6 months.  ABG also received a two year warrant and three year warrant, each for the purchase of up to 280,000 shares of common stock.

The warrants do not permit cashless exercise and are closed to exercise for 6 months.

In connection with the Sale, Investors were granted “piggyback” registration rights with regard to the common stock and demand registration rights under certain limited circumstances.

The sale of the Shares and the Warrants was made pursuant to Regulation S of the Securities Act, and in reliance upon exemptions from registration under applicable state securities laws.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Buccaneer Energy Corporation

The Company is involved in a litigation with Buccaneer Energy Corporation with regard to its liability owed to Buccaneer as well as Buccaneers receivable owed the Company.  The Company believes the amounts related to the notes payable and receivable recorded in its financials could be in default depending on the resolution of the dispute.  The Company continues to record the principal balances of the note payable and note receivable as well as the interest accruals on both in its financials until this dispute is resolved between the parties.

Bowie Operating Company LLC

The Company is involved in a litigation with Bowie Operating Company LLC with regard to its liability owed.  The Company believes the amounts related to the notes payable in its financials could be default depending on the resolution of the dispute.  The Company continues to record the principal balances notes and receivables as well as the interest accruals until this dispute is resolved between the parties.

Convertible Promissory Notes

During the current quarter ended December 31, 2010, the Company became aware of, and notified the holder of a majority-in-interest of the Company’s convertible promissory notes sold to Iroquois Capital Opportunity Fund and other investors, of the existence of a default under the promissory notes by reason of the Company’s authorized common stock being only 20 million shares. This default was waived by the holder of a majority-in-interest in connection with the Company’s Regulation S offering described in Note 11 to our financial statements in this Report, subject to certain specified conditions in the waiver document filed as Exhibit 10.3, to our Current Report on Form 8-K filed on January 25, 2011.

ITEM 4. REMOVED AND RESERVED.

ITEM 5. OTHER INFORMATION

None.
 
 
9

 
 
ITEM 6.   EXHIBITS

Exhibits

3.1 Certificate of Incorporation filed in Delaware on May 22, 2008, incorporated by reference to Exhibit 3.1 to Registrant’s Form 10-K for period ending March 31, 2008 filed July 14, 2008.

3.3 Bylaws of Corporation, incorporated by reference to Exhibit 3.1 to Registrant’s Form 10-K for period ending March 31, 2008 filed July 14, 2008.

3.3(a) Amendment to By-Laws, incorporated by reference to Exhibit 3.3(a) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July22, 2010.

3.3(b) Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed on January 25, 2011.

3.3(c) Amended and Restated Certificate of of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed on January 25, 2011.

4.1  Secured Convertible Note (Iroquois) (see Exhibit 10.11).

4.2  Form of Common Stock Purchase Warrant issued to Iroquois Capital Opportunity Fund, LLC and other investors on March 3, 2010 (see Exhibit 10.13).

4.3 Form of Common Stock Purchase Warrant issued to DK True Energy Development Ltd., incorporated by reference to Exhibit 4.3 to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

4.4 Form of Common Stock Purchase Warrant issued to RTP Secure Energy Corp., incorporated by reference to Exhibit 4.4 to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

4.4(a) Registration Rights Agreement for Warrant issued to RTP, incorporated by reference to Exhibit 4.4(a) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

4.5 Form of Common Stock Purchase Warrants issued to Joseph Tovey, incorporated by reference to Exhibit 4.5 to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

4.5(a) Registration Rights Agreement for Warrant issued to Tovey, incorporated by reference to Exhibit 4.5(a) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

4.6 Registration Rights Agreement, with the purchasers of Series D Convertible Preferred Stock, incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed on January 25, 2011.

4.7 Form of Warrant issued to purchasers of Series D Convertible Preferred Stock, incorporated by reference to Exhibit 4.2 to Registrant’s Form 8-K filed on January 25, 2011.

10.1 1995 Stock Option Plan, incorporated by reference to Exhibit 10.3 of the Registrant’s Form SB-2 Registration Statement filed May 4, 2004.

10.2 1998 Stock Option Plan, incorporated by reference to Exhibit 99.01 the Registrant’s Form S-8 registration statement filed on September 30, 1998 as document number 333-64711.

10.3 2000 Stock Option Plan, incorporated by reference to Exhibit 4.01 of Registrant’s Form S-8 Registration Statement filed on December 6, 2000.

10.4 2008 Stock Option Plan, incorporated by reference to Exhibit 10-1 to Registrant’s Form S-8 Registration Statement filed May 30, 2008.

10.5 Amended Agreement with Joseph F. Langston, incorporated by reference to Exhibit 10.5 to Registrant’s Form 10-K filed July 13, 2009.
  
10.7 Debenture issued to Blackwood Ventures, LLC dated January 28, 2009, incorporated by reference to Exhibit 10.6 to Registrant’s Form 10-Q filed November 20, 2009.

10.8 Consulting Agreement with DK True Energy Development Ltd. and RTP Secure Energy Corp. dated November 27, 2007, incorporated by reference to Exhibit 10-1 to Registrant’s Form 8-K filed December 3, 2007.
 
 
10

 
 
10.8a Termination of Consulting Agreement with DK True EnergyDevelopment Ltd. and Mutual Release, incorporated by reference to Exhibit 10.8a to the Registrant’s Form 10-K, filed on July 14, 2010.

10.9 Consulting Agreement with Blackwood Capital, Ltd. dated January 15, 2008, incorporated by reference to Exhibit 10-2 to Registrant’s Form 8-K filed January 22, 2008.

10.9(a) Amendment to Consulting Agreement with Blackwood Capital, Ltd., incorporated by reference to Exhibit 10.5 to Registrant’s Form 10-Q filed November 20, 2009.

10.9(b) 8.5% Senior Secured Convertible Debenture and Warrant Purchase Agreement, incorporated by reference to Exhibit 10.6 to Registrant’s Form 10-Q filed November 20, 2009.

10.10 Subscription Agreement (Iroquois), incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.11 Form of Secured Convertible Promissory Note (Iroquois), incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.12 Security Agreement (Iroquois), incorporated by reference to Exhibit 10.12 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.12(a) Waiver of default, incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K, filed on January 25, 2011.

10.13 Form of Warrant (Iroquois), incorporated by reference to Exhibit 10.13 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.14 Working Interest Purchase and Sale Agreement (Iroquois), incorporated by reference to Exhibit 10.14 to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.15 Consulting Agreement with Blackwood Ventures, LLC dated January 28, 2009, incorporated by reference to Exhibit 10.5 to Registrant’s Form 10-Q filed November 20, 2009.

10.16 Consulting Agreement with Iromad, LLC (Iroquois), incorporated by reference to Exhibit 10.16 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.17 Form of Option Holder Novation Agreement, incorporated by reference to Exhibit 10.17 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.18 Termination and Settlement Agreement with Joseph Tovey, incorporated by reference to Exhibit 10.18 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.19 Employment Agreement with Ruben Alba, incorporated by reference to Exhibit 10.19 to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.20 Employment Agreement with Kenneth E. Martin, incorporated by reference to Exhibit 10.20 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.21(a)  Agreement for short-term financing with Dr. Howard Berg, incorporated by reference to Exhibit 10.21(a) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.21(b) Senior Secured Note in the principal amount of $250,000, incorporated by reference to Exhibit 10.21(b) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.21(c) Security Agreement, incorporated by reference to Exhibit 10.21(c) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.
 
 
11

 
 
10.21(d ) Warrants issued to Dr. Howard Berg, incorporated by reference to Exhibit 10.21(d) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.21(e) Registration Rights Agreement for Warrants issued to Dr. Howard Berg, , incorporated by reference to Exhibit 10.21(e) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.22  Second Addendum to Amended and Restated Promissory Note made by World Link Partners, LLC in favor of Registrant, incorporated by reference to Exhibit 10.22 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.22(a) Third Addendum to Amended and Restated Promissory Note, dated September 24, 2010.*

10.23 Management Consulting Services Agreement with Weisshorn Management Services, Inc., incorporated by reference to Exhibit 10.23 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.24 Employment Agreement with Sam Smith, incorporated by reference to Exhibit 10.24 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.25 Consulting Agreement with Compagnie Ressources Naturelles et D’Investissment SA, incorporated by reference to Exhibit 10.25 to the Registrant’s Form 10-K, filed on July 14, 2010.

10.26(a) Adamson-Glen Rose Lease, June 2010, incorporated by reference to Exhibit 10.26(a) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.26(b) Adamson-Memorandum of Lease to UHC Petroleum, incorporated by reference to Exhibit 10.26(b) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.26(c) Adamson Option, July 2010, incorporated by reference to Exhibit 10.26(c) to Registrant’s Form 10-K/A for period ending March 31, 2010 filed July 22, 2010.

10.27 Application Form for the purchase of the Company’s Series D Convertible Preferred Stock, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on January 25, 2011,

10.28 Engagement Letter, dated January 15, 2011, between the Company and Barry J. Pierce, CPA.*

10.29 Consulting Agreement, dated October 25, 2010, between the Company and James Casperson.*

14 Code of Ethics, incorporated by reference to Exhibit 14 to Registrant’s Form 10-KSB for the year ending March 30, 2004 filed June 29, 2004.

21 Subsidiaries of the Company, incorporated by reference to Exhibit 21 to Registrant’s Form 10-K for period ending March 31, 2008 filed July 14, 2008.

31.1 Certification of Principal Executive Officer*

31.2 Certification of Principal Accounting and Financial Officer*

32 .1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act*

32.2 Certification of Principal Accounting and Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act*

*Filed herewith.
 
 
12

 
 
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
GLEN ROSE  PETROLEUM CORPORATION
     
Date: February __, 2011
By:
/s/ Andrew Taylor-Kimmins
   
Andrew Taylor-Kimmins
   
President and Chief Executive Officer
     
Date: February __, 2011
By:
/s/ Kenneth E. Martin
   
Kenneth E. Martin
   
Chief Financial Officer
 
 
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