PINX:STTX Stratex Oil & Gas Holdings Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

STTX Fair Value Estimate
Premium
STTX Consider Buying
Premium
STTX Consider Selling
Premium
STTX Fair Value Uncertainty
Premium
STTX Economic Moat
Premium
STTX Stewardship
Premium
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q/A
 
(Mark One)
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: June 30, 2012
 
Or
 
          o   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from         to  
 
Commission File Number: 333-164856
 
STRATEX OIL & GAS HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Colorado
 
94-3364776
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
         
30 Echo Lake Road, Watertown, CT
     
06795
(Address of principal executive offices)
     
(Zip Code)
                                                                                  
 
860-417-2465
 
 
(Registrant’s telephone number, including area code)
 
 
N/A
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    x    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   x   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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
 
Large accelerated filer   ¨
Accelerated filer   ¨
   
Non-accelerated filer   ¨
Smaller reporting company   x
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes   ¨ No   x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
As of August 20, 2012, there were 40,042,550 shares of common stock, no par value per share, outstanding.
 
 
 

 
 
TABLE OF CONTENTS
 
 
PART I-Financial Information
 
     
Item 1.
Financial Statements (unaudited)
  1
     
 
Consolidated Balance Sheets
  2
     
 
Consolidated Statements of Operations
  3
     
  Consolidated Statements of Cash Flows   4
     
 
Notes to Consolidated Financial Statements
  5
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  11
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  13
     
Item 4.
Controls and Procedures
  13
     
 
PART II-Other Information
 
     
Item 1.
Legal Proceedings
  14
     
Item 1A.
Risk Factors
  14
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  14
     
Item 3
Defaults upon Senior securities
  14
     
Item 4
Mine Safety Disclosure
  14
     
Item 5.
Other Information
  14
     
Item 6.
Exhibits
  14
 
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
 
1

 
 
 POWAY MUFFLER & BRAKE, INC.  
Balance Sheet
 
as at June 30, 2012 and December 31, 2011
 
             
   
June 30,
   
December 31,
 
   
2012
   
2011
 
ASSETS
 
(Unaudited)
       
Current Assets
           
Cash and Cash Equivalents
  $ 8,256     $ 14,440  
        Accounts Receivable
    16,423       9,855  
              Inventory
    6,504       7,389  
              Prepaid Rent
    1,857       1,857  
              Total Current Assets
    33,040       33,541  
                 
      Property and Equipment
    113,854       113,000  
              Accumulated Depreciation
    (95,212 )     (94,696 )
              Total Property and Equipment
    18,642       18,304  
                 
     Total Assets
  $ 51,682     $ 51,845  
                 
LIABILITIES AND SHAREHOLDERS' DEFICIT
               
      Current Liabilities
               
            Accounts Payable
  $ 9,323     $ 15,887  
            Sales Tax Payable
    1,887       -  
            Current portion, long term debt
    5,352       4,661  
            Total Current Liabilities
    16,562       20,548  
                 
Long Term Liabilities
               
Obligations under capital lease
    8,908       11,829  
                 
Other Liabilities
               
Stockholder's Loan
    79,687       79,687  
Due to affiliated company
    84,056       81,031  
      163,743       160,718  
                 
Total Liabilities
    189,213       193,095  
                 
Stockholders' Deficit
               
Common Stock, $0.01 par value;   authorized:
               
750,000,000 shares; issued and outstanding:
               
1,460,000 shares as at December 31, 2010
               
1,460,000 shares as at June 30, 2011
    1,460       1,460  
Additional Paid-In Capital
    192,842       192,842  
Deficit
    (71,314 )     (75,033 )
Deficit accumulated in the development stage
    (260,519 )     (260,519 )
                 
Total Stockholders' Deficit
    (137,531 )     (141,250 )
                 
     Total Liabilities and Shareholders' Deficit
  $ 51,682     $ 51,845  
 
 
2

 
 
POWAY MUFFLER & BRAKE, INC.
 
Statement of Operations
 
For the three and six months ended June 30, 2012
 
(Unaudited)
 
                         
                         
   
For the three months ended
   
For the six months ended
 
   
June 30,
   
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
                         
Sales
  $ 83,037     $ 72,777     $ 173,108     $ 144,785  
                                 
    Cost of Sales
    64,270       60,271       126,435       121,077  
                                 
Gross Profit
    18,767       12,506       46,673       23,708  
                                 
General and Administrative Expenses
                               
    Professional Fees
    1,853       10,910       8,804       18,655  
    Occupancy Costs
    8,064       8,052       16,120       16,160  
    Other  General and Administrartive Expenses
    8,705       7,296       18,030       13,729  
                                 
General and Administrative Expenses
    18,621       26,258       42,954       48,544  
                                 
Net Income before taxes
    146       (13,752 )     3,719       (24,836 )
                                 
    Provision for Income Taxes
    -       -       -       -  
                                 
Net Income after Taxes
  $ 146     $ (13,752 )   $ 3,719     $ (24,836 )
                                 
                                 
                                 
Net Income per common share, basic and diluted
  $ -     $ -     $ -     $ -  
                                 
Weighted average shares outstanding,
                               
basic and diluted
    1,460,000       1,460,000       1,460,000       1,460,000  
 
 
3

 
 
POWAY MUFFLER & BRAKE, INC.
 
Statement of Cash Flows
 
For the six months ended June 30, 2012
 
(Unaudited)
 
   
For the Six Months Ended
 
   
June 30,
 
   
2012
   
2011
 
  Cash flows from operating activities:
           
  Net Income from operations
  $ 3,719     $ (24,836 )
  Adjustments to reconcile net loss to
               
  net cash used by operating activities:
               
 Depreciation
    516       600  
  Change in operating assets and liabilities:
               
 Accounts Receivable
    (6,568 )     (3,293 )
 Prepaid Sales Tax
            563  
 Accounts Payable
    (6,564 )     1,123  
 Sales Tax Payable
    1,887       1,833  
 Inventory
    885       90  
 Current Portion, Long Term Debt
    691       (3,138 )
  Net cash provided by (used by) operating  activities
    (5,434 )     (27,058 )
                 
  Cash flows from investing activities:
               
 Capitalized leases
    (2,921 )     461  
      (854 )        
  Net cash (used by) investing activities
    (3,775 )     461  
                 
  Cash flows from financing activities:
               
 Proceeds of stockholders' loan
            7,500  
 Proceeds of loan from affiliated company
    3,025       24,951  
  Net cash provided by (used by)financing activities
    3,025       32,451  
                 
  Net increase (decrease) in cash
    (6,184 )     5,854  
                 
  Cash, beginning of the period
    14,440       195  
                 
  Cash, end of the period
  $ 8,256     $ 6,049  
                 
  Supplemental cash flow disclosure:
               
  Interest paid
  $ -     $ -  
  Taxes paid
  $ -     $ -  
 
 
 
4

 
 
POWAY BRAKE AND MUFFLER, INC.
 
NOTES TO THE FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2012
(Unaudited)

NOTE 1 – BASIS OF PREPARATION
 
These interim financial statements as of and for the six  months ended June 30, 2012 reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
 
These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end December 31, 2011 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six month period ended June 30, 2012 are not necessarily indicative of results for the entire year ending December 31, 2012.
 
NOTE 2 – ORGANIZATION AND DESCRIPTION OF BUSINESS

The financial statements presented are those of Poway Muffler and Brake, Inc., doing business as PMB Automotive Repair, (the “Company”).  The Company was incorporated as Ross Investments Inc. in Colorado on January 6, 1989. The Company was capitalized in 2000 and made preparations to enter business, but no revenue was subsequently earned.   The Company was dormant in 2007 and 2008 until a merger with Poway Brake and Muffler, Inc. was effected on December 15, 2008.  Poway Muffler and Brake, Inc. was a closely held private company operating a brake and muffler business in Poway, California. Ross Investments was the acquirer and surviving company. The President of Ross Investments, Bruce Penrod, resigned and was replaced by Alan Ligi, President of Poway Muffler and Brake. Ross Investments thereupon changed its name to Poway Brake and Muffler, Inc.

The original Poway Muffler and Brake Inc. was incorporated in California on August 15, 2003 to enter the muffler and brake business.  The Company purchased an existing business, Poway Muffler and Brake at 13933 Poway Road, Poway, California on August 30, 2003.  Alan J. Ligi assumed the offices of President, Secretary and Treasurer, and a Director.  On December 15, 2008 a merger was effected with Ross Investments Inc., a Colorado shell corporation.  The original Poway Muffler and Brake stock was cancelled.  Ross Investments was the acquirer and the surviving corporation.  Ross Investments Inc. then changed its name to Poway Brake and Muffler Inc.

Current Business of the Company

The Company operates a muffler and brake shop in a 2,060 square foot stand-alone leased building having three bays, an outside bay and a loft for inventory.  Apart from serving the public, the Company serves others in the automobile trade with whom they have formed business relationships:  truck fleets, auto dealerships, auto repair shops.

 
5

 
 
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING P0LICIES

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period.  Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company’s financial position and results of operations.

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued   ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price  that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

-  
Level 1:  Quoted prices in active markets for identical assets or liabilities

-  
Level 2:  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

-  
Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses.  The carrying amounts of such financial instruments as of June 30, 2012 were determined according to the following inputs:
 
 
6

 
 
     
Observable Inputs
         
 
Observable
 
Other Than
 
Unobservable
     
 
Inputs
 
Level 1 Prices
 
Inputs, significant
 
Total
 
 
Level 1
 
Level 2
 
Level 3
     
                 
Due to Affiliated Co.
      82,056         84,056  
Accounts Receivable
      16,423         16,423  
Accounts Payable
      9,323         7,323  
Stockholders' Loan
      79,687         79,687  
        187,489  
 
    187,489  

Income Taxes

The Company accounts for income taxes using the liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30,  2012 and December 31, 2011, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

The Company generated a deferred tax credit through net operating loss carryforward of approximately $332,000  However, a valuation allowance of 100% has been established.

Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.
 
Development Stage

The Company was in the development stage from inception, January 6, 1989 through December 31, 2008.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company for the six months ended June 30, 2012 recorded net income of $3,719, however cumulative losses of $(71,314) since exiting the development stage in 2008 indicate that the Company may have difficulty in continuing as a going concern.
 
Management has embarked on a sales campaign aimed at other businesses in the automobile trade.  However the ability of the Company to continue as a going concern is dependent on the successful stimulation of sales in order to fund operating losses and become profitable.  If the Company is unable to make it profitable, the Company could be forced to cease development of operations.  Management cannot provide any assurances that the Company will be successful in its operations.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Accounts Receivable

The company’s accounts receivable are trade receivables from local businesses and individuals in the auto repair business.  The Company expects to collect the receivables in the next accounting period.  An allowance for doubtful accounts has been established at zero, based on collection experience since 2003.

Inventory
 
     June  30,   December 31,
     2012   2011
       
 Finished Goods     $ 6,504     $  7,389
 Inventoried Costs       0  0
 Work in Process     0  0
 Raw Materials     0  0
 Supplies    0  0
       
     $ 6,504  $   7,389
                  
Inventories are stated at the lower of cost or market value.  Cost includes only the wholesale cost of mufflers.  Market value represents net realizable value.  Inventories consist of mufflers of various types available to be installed.  A periodic inventory system is maintained by 100% count.  Inventory in previous years was replaced as installed in order to maintain the optimum stock on hand available for immediate installation.  The inventory was thus kept at the same level year to year. In 2010 the Company’s muffler dealer developed a capability for short order, allowing inventory stocks to be run down.

 
7

 
 
Property and Equipment

Fixtures and equipment are stated at cost less accumulated depreciation and depreciated using straight line methods over the estimated useful lives of the related assets ranging from 7 to 10 years.  Maintenance and repairs are expensed currently. Fixtures and equipment including leasehold improvements totaled $113,854 as at June 30, 2012 ($94,696 at December 31, 2011) which, after application of depreciation, netted to $18,642 at June 30, 2012 and to $18,304 at December 31, 2011. The cost of normal maintenance and repairs is charged to operations as incurred.  Major overhaul that extends the useful life of existing assets is capitalized.  When equipment is retired or disposed, the costs and related accumulated depreciation are eliminated and the resulting profit or loss is recognized in income.

The Company purchased a Ricoh copier in the quarter ended March 31, 2012.
 
    March 31,  December 31,
     2012   2011
       
Equipment     $ 113,5054 $ 112,650
Furniture & Fixtures                   350              350
       
           113,854        113,000 
Accumulated depreciation        (    95,212)     (    94,696)
        $    18,642    $    18,304
Depreciation       $         516 $        1,508
 
Long-lived assets

The Company accounts for long-lived assets under the FASB (Financial Accounting Standards Board) ASC (Accounting Standard Codification) 340-10 Other Assets and Deferred Costs,  (SFAS 142 and 144): “Accounting for Goodwill and Other Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived Assets”) . In accordance with ASC 340-10, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset will not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.

Basic and Diluted Earnings Per Share

Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented.  ASC 260 requires presentation of basic earnings per share and diluted earnings per share.  Basic income (loss) per share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share (“Diluted EPS”) is similarly calculated. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. As at June 30, 20`12, there were no potentially dilutive securities.
 
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three months ended June 30, 2012 and 2011:
                                                                                                 
     June  30,
     2012   2011
Basic and diluted net earnings (loss) per share:
     
Numerator
     
  Net Income (Loss)        $  3,719   $(24,836)
Denominator
     
   Basic and diluted weighted average      
    number of shares outstanding     1,460,000   1,460,000
Basic and Diluted Net Loss Per Share        $    0.00      $    (0.02)
 
 
8

 
                                                                                                                                                                                 
Revenue Recognition

The Company's revenue recognition policies are in compliance with ASC 605-13 (Staff accounting bulletin (SAB) 104). Sales revenue is recognized at the date of completion of services to customers when a formal arrangement exists, the price is fixed or determinable, the delivery of services is completed, no other significant obligations of the Company exist and collectability is reasonably assured.

NOTE 3 – STOCKHOLDER’S LOAN
 
 June 30, 2012  December 31, 2011
   
$79,687  79,687
                                                                                                                                                                                                                                                                                       
The loan from a stockholder is not subject to interest, has no terms of repayment, is non callable and has no maturity.

NOTE 4  – RECENT ACCOUNTING PRONOUNCEMENTS
 
In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.
 
ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment is applicable to fiscal years beginning after December 15, 2011. Early application is permitted. The Company does not expect this ASU has a material impact on its financial position or carrying value of its intangible assets at this time.

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

There were no contingent liabilities as at June 30, 2012.

The Company signed a property lease on September 30, 2008 for a three year period plus an option to renew for five years at a re-negotiated rent, with a common area fee of $628 per month.  The lease was renewed for a five year period at $2,060 per month.
 
 
9

 
 
Future minimum lease payments required under the lease including common area fees are as follows, for fiscal years ending December 31:
 
2012  $ 32,256
 2013      32,256
2014     32,256
2015     24,192
   $120,960
                                                             
NOTE 6 – CAPITAL STRUCTURE

There was no stock issued in the six months ended June 30, 2012.

As at June 30, 2012 and December 31, 2011, the Company was authorized to issue 750,000,000 shares of $0.001 par value common stock, of which 1,460,000 shares were issued and outstanding at June 30, 2012 and December 31, 2011.
 
NOTE 7 – LEGAL PROCEEDINGS

There were no legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors.

NOTE 8 – SUBSEQUENT EVENTS

Events subsequent to June 30, 2012 have been evaluated through August 16, 2012, the date these statements were available to be issued, to determine whether they should be disclosed. 

On July 2, 2012, the Company acquired 100 shares of PMB Holdings, Inc., a Nevada corporation.  PMB Holdings, Inc. was a wholly owned subsidiary of the Company.

On July 2, 2012, the Company acquired 1,000 shares of Stratex Acquisition Corp., a Colorado corporation.  Stratex Acquisition Corp. was a wholly owned subsidiary of the Company.

As disclosed in the Company's 8-K filed with the SEC on July 12, 2012, as amended on July 13, 2012, Stratex Acquisition Corp. (“Acquisition Corp.”), a wholly-owned subsidiary of the Company, merged (the “Merger”) with and into Stratex Oil & Gas, Inc., a Delaware corporation (“Stratex”). Stratex was the surviving corporation of that Merger. As a result of the Merger, the Company acquired the business of Stratex, and will continue the existing business operations of Stratex as a wholly-owned subsidiary.  The Merger was completed on July 6, 2012. 

Concurrent with the Merger, the Company split off its wholly-owned subsidiary, PMB Holdings, Inc.. The Split-Off was accomplished through the cancellation of a portion of an outstanding loan owed to the Split-Off Shareholder by the Company in the amount of $79,687 as consideration for the Company's assets and liabilities. The assets and liabilities of the Company were transferred to Mr. Ligi, the former officer and director, in the Split-Off.
 
The Company sold and issued to 6 investors, 560,000 shares of the Company’s common stock for gross proceeds of $280,000 ($0.50/share).
 
 
10

 

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Overview
 
The Company was incorporated in January 1989 as Ross Investments, Inc. under the laws of the State of Colorado.  From the date of Incorporation through December, 2008, the Company was a development stage company engaged in the business is software design and development for trading rare coins on the internet.  Prior to completing development of the software, other companies came to market with similar software, making our software virtually unmarketable.  In 2008, the Company's sole officer and director began to seek other companies for potential merger.

On December 15, 2008, the Company completed a merger with Poway Muffler and Brake, Inc., a California corporation (“PMB-CA”). Pursuant to the Share Exchange Agreement, each of the outstanding shares of PMB-CA common stock was converted into one share of the Company’s common stock.  All 100,000 shares of PMB-CA’s total outstanding common stock were held by Allan Ligi, PMB-CA’s sole shareholder.  Accordingly, upon closing of the Merger, Mr. Ligi’s shares of PMB-CA were converted into 100,000 shares of the Company’s common stock.  In addition, upon the closing of the Merger, the Company amended its Articles of Incorporation to change its name from Ross Investments, Inc. to Poway Muffler and Brake, Inc.  PMB-CA was established in 1994 as a retail automotive repair and maintenance service business.

As disclosed in the Company's 8-K filed with the SEC on July 12, 2012, as amended on July 13, 2012, Stratex Acquisition Corp. (“Acquisition Corp.”), a wholly-owned subsidiary of the Company, merged (the “Merger”) with and into Stratex Oil & Gas, Inc., a Delaware corporation (“Stratex”). Stratex was the surviving corporation of that Merger. As a result of the Merger, the Company acquired the business of Stratex, and will continue the existing business operations of Stratex as a wholly-owned subsidiary.  The Merger was completed on July 6, 2012. 

Concurrent with the Merger, the Company split off its wholly-owned subsidiary, PMB Holdings, Inc.. The Split-Off was accomplished through the cancellation of a portion of an outstanding loan owed to the Split-Off Shareholder by the Company in the amount of $79,687 as consideration for the Company's assets and liabilities. The assets and liabilities of the Company were transferred to Mr. Ligi, the former officer and director, in the Split-Off.  

We are an independent energy company focused on the exploration, acquisition and production of crude oil in the North Dakota, Montana, Colorado, Kansas and Nebraska.  Our oil and natural gas operations are primarily concentrated in the Williston Basin of North Dakota and Montana and Denver-Julesburg Basin in Colorado.   Our corporate strategy is to internally identify prospects, acquire lands encompassing those prospects, and evaluate those prospects using subsurface geology, geophysical data and exploratory drilling. Using this strategy, we intend to develop an oil portfolio of proven reserves, as well as developmental and exploratory drilling opportunities.
 
Our core operating areas are the Williston Basin in North Dakota and Montana and the Denver-Julesburg Basin in Colorado. In the Williston Basin, we focus on oil production from multiple zones including the Bakken Shale, and Three Forks Sanish Formations.  In the Denver-Julesburg Basin we focus on the Niobrara Formations.

We typically hold minority interest leasehold acreage in our core operating areas. In these minority working interest leaseholds, we have historically participated, and expect to continue to participate, on a non-operated basis in the drilling and production of acreage operated by independent oil and gas operating companies.
 
By participating in drilling activities with larger operators, we seek to leverage their resources and expertise to efficiently gain exposure to potential new oil and gas production and proven reserves. In the Permian Basin, some of these operators have historically drilled and operated traditional, vertical wells. In the Williston Basin, we have participated in wells where the operators have historically drilled unconventional, horizontal wells into prospective oil and gas bearing shale formations.

As of July 6, 2012, we have approximately 22,337 net acres in  Sheridan, Montana,  Williams, Divide, Mountrail, and Stark, North Dakota,  Sioux, Nebraska, and Weld, Colorado.  We do not own the majority working interest in this acreage, nor do we have any ability to influence the potential development of this acreage within the terms of the lease.  These working interests grant us the right, as the lessee of the property, to explore for, develop and produce oil, natural gas and other minerals, while bearing our portion of related exploration, development and operating costs.
 
 
11

 
 
Commodity Prices
 
Our results of operations are heavily influenced by commodity prices. Factors that may impact future commodity prices, including the price of oil and natural gas, include:
 
 
developments generally impacting the Middle East, including Iraq, Iran, Libya and Egypt;
 
 
the extent to which members of the Organization of Petroleum Exporting Countries and other oil exporting nations are able to continue to manage oil supply through export quotas;
 
 
the overall global demand for oil;
 
 
overall North American natural gas supply and demand fundamentals;
 
 
the impact of the decline of the United States economy;
 
 
weather conditions; and
   
 
liquefied natural gas deliveries to the United States.

Although we cannot predict the occurrence of events that may affect future commodity prices or the degree to which these prices will be affected, the prices for any commodity that we produce will generally approximate current market prices in the geographic region of the production. From time to time, we will evaluate the benefits of hedging a portion of our commodity price risk to mitigate the impact of price volatility on our business.  
 
Results of Operations for the three and six months ended June 30, 2012 as compared to June 30, 2011:

The below results of operations are that of the Poway Muffler and Brake, Inc.

Gross revenue for the three months ending June 30, 2012 was $83,037, and operating expenses were $18,621.  Net income before taxes for the three months ending June 30, 2012 were $146 as compared to gross revenues of $72,777, operating expenses of $26,258 and a net loss of $13,752 for the three months ended June 30, 2011.

Gross revenue for the six months ending  June 30, 2012 was $173,108, and operating expenses were $42,954.  Net income before taxes for the three months ending June 30, 2012 were $3,719 as compared to gross revenues of $144,785, operating expenses of $48,544 and a net loss of $24,836 for the six months ended June 30, 2011.

Cumulative losses of $331,833 since inception January 6, 1989 indicate that the Company may have difficulty in continuing as a going concern.
 
Liquidity and Capital Resources:

We have incurred net operating losses and operating cash flow deficits since inception, continuing through the second quarter of 2012. We are in the early stages of acquisition and development of oil and gas leaseholds and properties, and we have been funded primarily by a combination of equity issuances and debt, and to a lesser extent by operating cash flows, to execute on our business plan of acquiring working interests in oil and gas properties and for working capital for production.

Our ability to obtain financing may be impaired by many factors outside of our control, including the capital markets (both generally and in the crude oil and natural gas industry in particular), our limited operating history, the location of our crude oil and natural gas properties and prices of crude oil and natural gas on the commodities markets (which will impact the amount of asset-based financing available to us) and other factors. Further, if crude oil or natural gas prices on the commodities markets decline, our revenues will likely decrease and such decreased revenues may increase our requirements for capital.

Any new debt or equity financing arrangements may not be available to us, or may be available only on unfavorable terms. Additionally, these alternatives could be highly dilutive to our existing stockholders, and may not provide us with sufficient funds to meet our long-term capital requirements. We have and may continue to incur substantial costs in the future in connection with raising capital to fund our business, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, which may adversely impact our financial condition. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs (even to the extent that we reduce our operations), we will be required to reduce operating costs, which could jeopardize our future strategic initiatives and business plans, and we may be required to sell some or all of our properties (which could be on unfavorable terms), seek joint ventures with one or more strategic partners, strategic acquisitions and other strategic alternatives, cease our operations, sell or merge our business, or file a petition for bankruptcy.

 
12

 
 
Our financial statements for the quarter ended June 30, 2012 were prepared assuming we would continue as a going concern, which contemplates that we will continue in operation for the foreseeable future and will be able to realize assets and settle liabilities and commitments in the normal course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that could result should we be unable to continue as a going concern.

Cash from Operating Activities

Cash used in operating activities was approximately $5,434 for the six months ended June 30, 2012. The cash used was associated with general working capital.

Cash from Investing Activities

Cash used for investing activities for six months ended June 30, 2012 was approximately $3,775, primarily for capitalized leases.

Cash from Financing Activities
 
Total net cash provided by financing activities was approximately $3,025 for the six months ended June 30, 2012.  The loans were from an affiliated company.
 
Planned Capital Expenditures
 
Dependent on our ability to obtain sufficient financing, development plans for 2012 include identifying and acquiring additional properties and leases in different operators and regions.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
This information has been omitted as the Company qualifies as a smaller reporting company.

Item 4. Controls and Procedures
 
(a) Evaluation of Disclosure Controls and Procedures
 
Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Accounting Officer), as of the end of the period covered by this report, our CEO and Chief Accounting Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. 
 
(b) Changes in Internal Control over Financial Reporting
 
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
13

 
 
PART II - Other Information
 
Item 1. Legal Proceedings
 
On May 18, 2012, we filed a complaint against Petrogulf Corporation in the U.S. District Court for the District of North Dakota alleging breach of an agreement to assign to us a non-operating, working interest in certain oil wells and oil & gas leases. We are seeking specific performance of the disputed agreement, an award of compensatory damages to be determined at trial, but in no event less than $50 million, plus interest, costs incurred in connection with this litigation and such relief as the court may deem proper. Petrogulf Corporation seeks declaratory judgment and monetary damages related to and arising from our complaint filing.
 
Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in our Current Report on Form 8-K filed on July 12, 2012 which could materially affect our business, financial condition or future results. The risks described in our Current Report on Form 8-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
None

Item 3.  Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosure

None

Item 5. Other Information

None

Item 6.  Exhibits
 
Exhibit No.
 
Description
     
2.1
 
Agreement and Plan of Merger and Reorganization, dated as of July 3, 2012, by and among Stratex Holdings, Inc. a Colorado corporation, Stratex Acquisition Corp., a Colorado corporation and Stratex Oil & Gas, Inc., a Delaware corporation (1)
2.2
 
State of Delaware Certificate of Merger (1)
2.3
 
State of Colorado Statement of Merger (1)
3.1
 
Articles of Incorporation of Stratex Acquisition Corp., as filed with the Secretary of State of Colorado on May 24 ,2012* (1)
3.2
 
Bylaws of Stratex Oil & Gas, Inc. (1)
3.3
 
Bylaws of Stratex Acquisition Corp. (1)
3.4
 
Articles of Amendment  of Poway Muffler and Brake, Inc. filed on May 25, 2012 (incorporated by reference to Form 8-K filed on June 6, 2012)
31.1
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
31.2
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
32.1
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
32.2
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
101 .INS
 
XBRL Instance Document (2)
101 .SCH
 
XBRL Taxonomy Schema (2)
101 .CAL
 
XBRL Taxonomy Calculation Linkbase (2)
101 .DEF
 
XBRL Definition Linkbase (2)
101 .LAB
 
Taxonomy Label Linkbase (2)
101 .PRE
 
XBRL Taxonomy Presentation Linkbase (2)
 
(1)
Incorporated by reference to Form 8-K filed on July 13, 2012
(2)
Pursuant to Rule 405(a)(2) of Regulation S-T, the registrant is relying upon the applicable 30-day grace period for the initial filing of its first Interactive Data File required to contain detail-tagged footnotes or schedules. The registrant intends to file the required detail-tagged footnotes or schedules by the filing of an amendment to this Quarterly Report on Form 10-Q within the 30-day period.
 
 
14

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
STRATEX OIL &GAS HOLDINGS, INC.
     
Date: August 20, 2012
By:
/s/ Stephen Funk
   
Stephen Funk
   
Chief Executive Officer and Director
   
(Principal Executive Officer)
     
Date: August 20, 2012
By:
/s/ Stephen Funk
   
Stephen Funk
   
Chief Financial Officer
   
(Principal Financial Officer)
 
 
 
15
 

 

PINX:STTX Stratex Oil & Gas Holdings Inc Quarterly Report 10-Q Filling

Stratex Oil & Gas Holdings Inc PINX:STTX Stock - Get Quarterly Report SEC Filing of Stratex Oil & Gas Holdings Inc PINX:STTX stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

Content Partners
PINX:STTX Stratex Oil & Gas Holdings Inc Quarterly Report 10-Q Filing - 6/30/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: PINX:STTX Stratex Oil & Gas Holdings Inc Quarterly Report 10-Q Filing - 3/31/2012  |  Next: PINX:STTX Stratex Oil & Gas Holdings Inc Quarterly Report 10-Q/A Filing - 6/30/2012