Scout Exploration, Inc - FORM 10-Q/A

Attached files

file	filename
EX-32.1 - SCOUT EXPLORATION 10Q/A, CERTIFICATION 906, CEO - Scout Exploration, Inc	scoutexh32_1.htm
EX-31.2 - SCOUT EXPLORATION 10Q/A, CERTIFICATION 302, CFO - Scout Exploration, Inc	scoutexh31_2.htm
EX-31.1 - SCOUT EXPLORATION 10Q/A, CERTIFICATION 302, CEO - Scout Exploration, Inc	scoutexh31_1.htm
EX-32.2 - SCOUT EXPLORATION 10Q/A, CERTIFICATION 906, CFO - Scout Exploration, Inc	scoutexh32_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q /A

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

For the quarterly period ended June 30, 2009

o Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______________ to ______________

Commission File Number 0 - 52280

SCOUT EXPLORATION, INC.

(Exact name of Small Business Issuer as specified in its charter)

Nevada	98-0504670
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

609-475 Howe Street, Vancouver, BC V6C 2B3

(Address of principal executive offices)

(604) 608-6314

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o No þ

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 o No o

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	o	Accelerated filer	o
	Non-accelerated filer	o	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

There are 13,947,000 common shares of Scout Exploration, Inc. issued and outstanding as of August 20, 2012.

Explanatory Note: The purpose of this Amendment to the report on Form 10-Q for the period ended June 30, 2009, is to disclose the company’s financial statements which have been restated to reflect the company’s investment in Kerrisdale Resources Limited (“KRL”), which was originally accounted for as a controlled subsidiary, but on review of the terms of the purchase agreement, we have determined that KRL was not controlled and is accounted for herein using the cost method.

PART I - FINANCIAL INFORMATION

Item 1

Financial Statements

Scout Exploration, Inc.

(an Exploration Stage Enterprise)

Interim Financial Statements

(Unaudited) (presented in US dollars)

June 30, 2009

INDEX

Interim Balance Sheets	4

Interim Statements of Stockholders’ Deficit	5

Interim Statements of Operations	6

Interim Statements of Cash Flows	7

Notes to the Interim Financial Statements	8

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


Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Balance Sheets
(Unaudited) (Presented in US Dollars)

	June 30, 2009			September 30, 2008
	As restated (note 3)

Assets
Current
Cash	$	4,960		$	31,560
Prepaid expenses		-			4,280
	$	4,960		$	35,840


Liabilities
Current
Accounts payable and accrued liabilities (note 6)	$	142,369		$	133,212
Due to related parties (Note 6)		21,628			-
		163,997			133,212
Stockholders' Deficit
Preferred stock
Authorized: 1,000,000 shares with par value of $0.01
Issued: Nil (2007 - Nil)		-			-
Common stock
Authorized: 50,000,000 shares with par value of $0.001
Issued: 8,947,000 (September 30, 2008 - 8,847,000)		8,947			8,847
Subscriptions received in advance		4,100			4,100
Subscriptions receivable		(5,246	)		(23,000	)
Additional paid in capital		996,853			981,953
Accumulated deficit		(1,163,691	)		(1,069,272	)
		(159,037	)		(97,372	)
	$	4,960		$	35,840


Going Concern (Note 1)

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


Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Stockholders' Deficit
(Unaudited) (Presented in US Dollars)

From Incorporation on February 1, 1999 to June 30, 2009
As Restated (note 3)

	Shares of				Additional		Subscriptions
	common		Capital		paid-in		received			Subscriptions			Accumulated
	stock		stock		capital		in advance			receivable			Deficit			Total

Balance February 1, 1999		-	$	-	$	-	$	-		$	-		$	-		$	-
Subscriptions received in advance		-		-		-		37,100			-			-			37,100
Net loss for the period		-		-		-		-			-			(32,002	)		(32,002	)
Balance September 30, 1999		-		-		-		37,100			-			(32,002	)		5,098
Net loss for the year		-		-		-		-			-			(3,829	)		(3,829	)
Balance September 30, 2000		-		-		-		37,100			-			(35,831	)		1,269
Shares issued for cash		3,700,000		3,700		33,300		(37,000	)		-			-			-
Net loss for the year		-		-		-		-			-			(3,754	)		(3,754	)
Balance September 30, 2001		3,700,000		3,700		33,300		100			-			(39,585	)		(2,485	)
Net loss for the year		-		-		-		-			-			(3,216	)		(3,216	)
Balance September 30, 2002		3,700,000		3,700		33,300		100			-			(42,801	)		(5,701	)
Net loss for the year		-		-		-		-			-			(3,120	)		(3,120	)
Balance September 30, 2003		3,700,000		3,700		33,300		100			-			(45,921	)		(8,821	)
Net loss for the year		-		-		-		-			-			(3,127	)		(3,127	)
Balance September 30, 2004		3,700,000		3,700		33,300		100			-			(49,048	)		(11,948	)
Net loss for the year		-		-		-		-			-			(10,776	)		(10,776	)
Balance September 30, 2005		3,700,000		3,700		33,300		100			-			(59,824	)		(22,724	)
Shares issued for cash		1,700,000		1,700		83,300		-			-			-			85,000
Shares issued for mineral property		500,000		500		24,500		-			-			-			25,000
Net loss for the year		-		-		-		-			-			(85,201	)		(85,201	)
Balance September 30, 2006		5,900,000		5,900		141,100		100			-			(145,025	)		2,075
Shares issued for cash and subscription receivable		1,400,000		1,400		208,600		-			(75,000	)		-			135,000
Net loss		-		-		-		-			-			(131,869	)		(131,869	)
Balance September 30, 2007		7,300,000		7,300		349,700		100			(75,000	)		(276,894	)		5,206
Cash received for subscriptions receivable		-		-		-		-			75,000			-			75,000
Shares issued for consulting services		150,000		150		74,850		-			-			-			75,000
Shares issued for cash		1,397,000		1,397		557,403		4,000			(23,000	)		-			539,800
Net loss		-		-		-		-			-			(792,378	)		(792,378	)
Balance September 30, 2008		8,847,000		8,847		981,953		4,100			(23,000	)		(1,069,272	)		(97,372	)
Shares issued for consulting services		100,000		100		14,900		-			-			-			15,000
Cash received for subscriptions receivable		-		-		-		-			17,754			-			17,754
Net loss		-		-		-		-			-			(94,419	)		(94,419	)
Balance June 30, 2009		8,947,000	$	8,947	$	996,853	$	4,100		$	(5,246	)	$	(1,163,691	)	$	(159,037	)

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


Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Operations
(Unaudited) (Presented in US Dollars)

	Cumulative from inception through June 30			Three months ended June 30						Nine months ended June 30
	2009			2009			2008			2009			2008
	As Restated			As Restated						As Restated
	(note 3)			(note 3)						(note 3)

Administrative expenses
Accounting and audit	$	159,485		$	4,562		$	2,320		$	19,371		$	16,451
Bank charges and interest		7,222			4,097			271			4,267			548
Consulting fees		117,983			869			-			15,869			83,904
Directors’ fees (note 6)		68,000			6,000			6,000			18,000			18,000
Filing fees, dues and subscriptions		15,956			1,004			1,002			5,391			2,912
Foreign exchange loss (gain)		9,864			5,223			5,180			638			9,701
Legal		108,488			-			7,632			269			13,180
Magazine rights		5,100			-			-			-			-
Management fees		35,575			-			-			-			-
Office and administration (note 6)		134,410			9,187			7,223			26,905			30,397
Promotion and travel		57,012			300			26,891			1,909			41,161
Transfer agent		16,976			600			200			1,800			1,000
		736,071			31,842			56,719			94,419			217,254

Resource property expenses
Acquisition costs		30,000			-			-			-			-
Exploration costs		860			-			-			-			-
		30,860			-			-			-			-

Loss from impairment of investment (Note 4)		396,760			-			417,240			-			417,240

Loss and comprehensive loss	$	(1,163,691	)	$	(31,842	)	$	(473,959	)	$	(94,419	)	$	(634,494	)

Basic and diluted loss per share				$	(0.00	)	$	(0.06	)	$	(0.01	)	$	(0.08	)

Basic and diluted weighted average shares outstanding					8,947,000			8,058,016			8,917,696			7,563,246

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


Scout Exploration, Inc.
(an Exploration Stage Company)
Interim Statements of Cash Flows
(Unaudited) (Presented in US Dollars)

	Cumulative from inception through June 30			Nine months ended June 30
	2009			2009			2008
	As Restated			As Restated
	(note 3)			(note 3)

Cash flows from operating activities
Net loss	$	(1,163,691	)	$	(94,419	)	$	(634,494	)
Adjustments to reconcile net loss to net cash
used in operating activities
Consulting services settled by issuance of common stock		115,100			15,000			75,000
Loss from impairment of investment		396,760			-			417,240
Expenses paid by subsidiary and forgiven		20,480			-			-
Unrealized foreign exchange		4,363			410			-
Changes in operating assets and liabilities
Prepaid expenses		-			4,280			4,280
Accounts payable and accrued liabilities		142,369			9,157			(17,063	)
		(484,619	)		(65,572	)		(155,037	)

Cash flows from investing activities
Acquisition of investment		(417,240	)		-			(417,240	)
		(417,240	)		-			(417,240	)

Cash flows from financing activities
Proceeds from Issuance of common stock		889,554			17,754			589,801
Advances from related parties		21,628			21,628			-
		911,182			39,382			589,801


Effect of exchange rate changes on cash		(4,363	)		(410	)		-

Increase (decrease) in cash		4,960			(26,600	)		17,524

Cash at beginning of the period		-			31,560			45,649

Cash at end of the period	$	4,960		$	4,960		$	63,173


Supplemental disclosure with respect to cash flows (Note 9)

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

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

June 30, 2009

1.	Nature of operations and going concern

Scout Exploration, Inc. (the “Company”) was incorporated in the State of Nevada on February 1, 1999. The Company was initially engaged in the business of designing, developing and marketing educational products. On April 10, 2006 the Company changed its name from Virtual Curricula Corp. to Scout Exploration, Inc.

The Company’s continuing operations, as intended, are dependent on management’s ability to raise required funding through future equity issuances, asset sales or a combination thereof, which is not assured. The Company has continued to suffer recurring losses from operations and has no established source of revenue. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary, should the Company be unable to continue as a going concern.

2.	Basis of presentation

The interim financial statements presented herein have been prepared by the Company in accordance with the accounting policies in its audited financial statements for the year ended September 30, 2008, except as noted below, and should be read in conjunction with the notes thereto.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim period presented have been made. The results of operations for the period presented is not necessarily indicative of the results to be expected for the year.

Interim financial data presented herein are unaudited, except for the balance sheet at September 30, 2008, which has been derived from the audited financial statements at that date.

Recently adopted accounting pronouncements

Effective October 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The adoption of SFAS 157 has not had any impact on the Company’s financial position, results of operations, or cash flows.

Effective October 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value. The adoption of SFAS 159 has not had any impact on the Company’s financial position, results of operations, or cash flows.

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

June 30, 2009

3.	Restatement of financial statements

The investment in Kerrisdale Resources Limited (“KRL”) (Note 4) was originally accounted for as a controlled subsidiary subject to consolidation. Upon further review of the terms of the acquisition, management has determined that KRL was not actually controlled. The financial statements have therefore been restated to show KRL as a non-controlled investment.

The effect of the restatement on the balance sheet as at June 30, 2009 is as follows:

	As previously				Effect of
	Reported				Restatement				Restated

Accounts payable and accrued liabilities		$	139,506			$	2,863			$	142,369
Common stock		$	8,847			$	100				8,947
Additional paid in capital		$	981,953			$	14,900				996,853
Accumulated deficit		$	(1,145,828	)		$	(17,863	)		$	(1,163,691	)

The effect of the restatement on the statement of operations for the six months ended March 31, 2009 is as follows:

	As previously				Effect of
	Reported				Restatement				Restated

Administrative expenses		$	76,557			$	17,862			$	94,419
Loss from discontinued operations		$	(25,132	)		$	25,132			$	-
Loss on disposal of discontinued operations		$	(398,417	)		$	398,417			$	-
Net loss		$	(500,106	)		$	405,687			$	(94,419	)
Foreign currency translation		$	22,458			$	(22,458	)		$	-
Comprehensive loss		$	(477,648	)		$	383,229			$	(94,419	)

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

June 30, 2009

4.	Share purchase agreement

On June 18, 2008, and subsequently amended, the Company entered into a Share Purchase Agreement with Brian Mahood, (the “Vendor”), whereby the Vendor agreed to sell 100% of the issued and outstanding Class A Voting Shares of Kerrisdale Resources Ltd. (“KRL”), an Alberta corporation, to the Company (the “Agreement”) with an effective date of January 1, 2008.

The purchase price for the shares was $760,849 ($775,000 CDN) (the “Purchase Price”) comprised of $24,543 ($25,000 CDN) paid in cash to the Vendor at the time of signing the January 28, 2008 Letter of Intent, $392,696 ($400,000 CDN) paid to the Vendor on Closing Date of June 18, 2008, and the issuance by KRL of a $343,610 ($350,000 CDN) debenture (the “Debenture”) to the Vendor with a maturity date of December 31, 2010, bearing interest at 6.75%. The Debenture was secured by a first charge on all of KRL’s assets. The agreement was subsequently amended such that the Debenture was increased to $360,000 CDN, of which $28,109 ($35,000 CDN) has been paid subsequent to June 30, 2008.

Subsequent to June 30, 2008, the Vendor notified the Company that in the Vendor’s opinion, the Company was in default of the Agreement, and demanded payment of $325,000.00 CDN plus interest and legal fees and expenses. Due to declines in the market price of petroleum and natural gas that have occurred since the acquisition of KRL, the cash flow from operations of KRL has not been sufficient to meet the payments required under the Agreement.

As a result of these factors, pursuant to a Settlement, Share Sale and Release Agreement, the Company agreed to sell 100% of its interest in KRL back to the Vendor for consideration of $1 and release both parties from all obligations under the original and amended share purchase agreements, with an effective date of April 1, 2009 and a closing date of June 30, 2009.

The investment in KRL is recorded at cost. A loss from impairment of the investment has been recorded to reflect the settlement reached with the vendor as detailed above.

5.	Resource properties

On March 4, 2006 the Company signed a letter of agreement with a non-arms length private Canadian Corporation for a 100% interest in and to the Wheaton River AAV 1-9 Claims situated in the Whitehorse Mining District of the Yukon Territory, Canada. Terms of the purchase require a cash payment of $5,000 by March 31, 2006 (paid) and $20,000 on or before September 30, 2006 (subsequently deferred to September 30, 2009), and the issuance of 500,000 common shares of the Company (issued at fair value of $0.05 per common share). The Vendor will retain a 3% net smelter royalty, up to 2% of which can be re-purchased for $2,000,000.

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

June 30, 2009

6.	Related party transactions

During the nine months ended June 30, 2009, directors’ fees of $18,000 (2008 - $18,000) were paid or accrued to two Directors of the Company.

During the nine months ended June 30, 2009, office and administration fees and management fees of $26,624 (2008 - $25,504) were paid or accrued to corporations controlled by a Director of the Company.

At June 30, 2009, $46,755 (2008 - $Nil) owed to Directors and corporations controlled by a Director of the Company was included in accounts payable. The balance is due on demand, has no specific terms of repayments, is non-interest bearing and is unsecured, and accordingly fair value cannot be reliably determined.

During the nine months ended June 30, 2009, directors of the Company advanced a total of $21,628 to the Company. The advances are due on demand, have no specific terms of repayment, are non-interest bearing and unsecured, and accordingly fair value cannot be reliably determined.

The above transactions occurred in the normal course of operations and were measured at the exchange value which represented the consideration established and agreed to by the related parties.

7.	Share purchase warrants

On May 20, 2009 1,397,000 share purchase warrants expired without having been exercised. As of June 30, 2009, Nil (September 30, 2008 – 1,397,000) share purchase warrants are outstanding.

8.	Financial instruments and risk management

Fair value

The Company’s financial instruments include cash and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

Foreign exchange risk

The Company expects to raise equity predominantly in United States dollars. The Company is conducting business in Canada where financial transactions are based on the Canadian dollar. As such, the Company is subject to risks due to fluctuations in the exchange rates for the U.S. and Canadian dollar. The Company does not enter into derivative financial instruments to mitigate its exposure to foreign currency risk.

At June 30, 2009 the Company had a minimal amount of bank indebtedness and $96,404 in accounts payable denominated in Canadian dollars. At June 30, 2009 CDN dollar amounts were converted at a rate of $1.16 Canadian dollars to $1.00 US dollar.

Scout Exploration, Inc.

Notes to the Interim Financial Statements

(Unaudited) (Presented in US dollars)

June 30, 2009

9.	Supplemental disclosure with respect to cash flows

Supplemental cash flow information for the nine months ended June 30, 2009 is as follows:

	2009		2008

Interest paid	$	-	$	-

Income taxes paid	$	-	$	-

10.	Subsequent events

On September 14, 2011 and as amended on July 31, 2012, the Company entered into a letter of intent with IDS Offshore Inc. (“IDS”) pursuant to which the Company may acquire the exclusive rights to certain intellectual property and patents surrounding the rapid oil boom project held and developed by IDS (the “Project”), for total cash consideration of $4,265,000 payable at various dates over a 3 year period commencing on July 31, 2012, and issuance of 5,000,000 common shares of the Company on signing the amended letter of intent (issued), and a total 7,500,000 common shares of the Company upon completion of various phases of the Project.

Item 2

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

Cautionary Note Regarding Forward Looking Statements

This report contains forward-looking statements that involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of precious and base metals, oil and gas, availability of funds, government regulations, operating costs, exploration costs, outcomes of exploration programs and other factors. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Our actual results may differ materially. In evaluating these statements, you should consider various factors. These factors may cause actual results to differ materially from any forward-looking statement. While these forward-looking statements are made in good faith and reflect our current judgment regarding our business plans, actual results from our operations will almost always vary, sometimes materially, from any future performance suggested herein.

General

The following discussion and analysis should be read in conjunction with our financial statements for the three and nine months ended June 30, 2009, and notes related thereto appearing elsewhere in this report.

Plan of Operations

Over the next year our plan of operations is to review our existing mineral property, evaluate potential acquisitions of additional mineral properties, and secure financing for the Company to carry out its operations.

As of June 30, 2009, we had cash on hand of $4,960 and negative working capital of $159,037.

On April 1, 2008, our Board of Directors approved a private placement of up to 2,000,000 “Units”, each Unit consisting of one share of our common stock at a purchase price of $0.40 per share and one warrant entitling the holder thereof the right to purchase one additional share of our common stock at a purchase price of $0.75 per share, at any time up to one year from the closing date of the private placement.. During May 2008, we completed the sale of 1,349,500 Units and raised net proceeds of $538,451, of which $25,000 was a subscription receivable as at June 30, 2008, and we received payment of this subscription receivable in July 2008.

We used most of the proceeds from the private placement offering to fund the acquisition of Kerrisdale Resources Ltd. with $ 392,696 ($400,000 CDN ) in cash, with an additional $343,610 ($350,000 CDN) evidenced by and secured by a General Security Agreement by and among Kerrisdale Resources Ltd. (“KRL”) and the vendor of KRL, Mr. Brian Mahood. The balance of the proceeds from the private placement was used to fund ongoing general and administrative expenses and to supplement working capital.

We will need to obtain additional financing in order to continue our plan of operations.

We believe that debt financing will not be a feasible alternative, as we do not have sufficient unencumbered tangible assets to secure any debt financing. We anticipate that additional financing will be equity financing from the sale of our common stock. However, we do not have any financing arranged and nor can we provide investors with any assurance that we will be able to raise sufficient funding from such potential equity financings. In the absence of such financing, we will not be able to continue exploration or development of our mineral claims and our business plan will then fail. Even if we are successful in obtaining equity financing to fund exploration of our mineral claims and acquisition of additional mineral properties as well as other operational costs, there is no assurance of success from such exploration activities. In the event we do not continue to obtain additional financing, we will be forced to abandon our mineral claims.

Purchase of Kerrisdale Resources Ltd.

Future Financing

We anticipate we will continue to rely on equity sales of our common stock to finance our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned exploration or development activities.

Results of Operations

General and administrative expenses have decreased from $56,719 for the three months ended June 30, 2008 to $31,842 for the three months ended June 30, 2009, mainly due to non-recurring legal and travel expenses incurred in the three months ended June 30, 2008 in connection with our acquisition of KRL.

Our loss for the three months ended June 30, 2009 was $31,842 as compared to $473,959 for the three months ended June 30, 2008. The loss for the three months ended June 30, 2008 included a one-time loss from impairment of investment of $417,240.

Item 3

Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4

Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 of the Exchange Act, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, these officers concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company's management, including our company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2012: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control over Financial Reporting

During the quarter ended June 30, 2009, there were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1

LEGAL PROCEEDINGS.

None.

Item 2

UNREGISTERED SALES OF EQUITY SECURITIES.

On or about March 10, 2008, we entered into a Business Consulting Agreement with Donald Jackler (the “Agreement”). As compensation to Mr. Jackler for his anticipated services to be provided pursuant to the provisions of the Agreement, we issued to Mr. Jackler 150,000 shares our common stock on April 1, 2008, in a private placement transaction with additional ascribed paid in capital of $0.499 per common share, as part of the total valuation of the 150,000 common shares to be issued pursuant to terms of the Agreement.

Additionally, as compensation to Mr. Jackler for his anticipated services, we agreed to grant and to issue Mr. Jackler options to purchase 100,000 shares of our common stock at an exercise price of $.40 per share for a period of one year from the date of execution of the Agreement dependent upon Mr. Jackler providing the anticipated services as provided for in the Agreement.

The shares of our common stock issued to Mr. Jackler were and will be “restricted securities”.

In July 2008, our Board of Directors rescinded the Agreement, due to Mr. Jackler’s non performance of the services as provided for in the Agreement. The previously issued 150,000 common shares will be cancelled and returned to our treasury.

Item 3

DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4

(REMOVED AND RESERVED)

Item 5

OTHER INFORMATION.

None.

Item 6

EXHIBITS

Exhibit 31.1

Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2

Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1

Certifications of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2

Certifications of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

Date: August 20, 2012

SCOUT EXPLORATION, INC.

By: /s/ John Roozendaal

Name: John Roozendaal

Title: President and Chief Executive Officer

By: /s/ Jason Walsh

Name: Jason Walsh

Title: Treasurer and Principal Accounting Officer

Scout Exploration, Inc - FORM 10-Q/A - August 21, 2012

Attached files

Scout Exploration, Inc Reports