BrewBilt Brewing Co - Quarter Report: 2012 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

Grid Petroleum Corp.

(Exact name of registrant as specified in its charter)

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 [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.

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 314,273,653 shares as of October 3, 2012.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2012 are not necessarily indicative of the results that can be expected for the full year.

GRID PETROLEUM CORP.

(formerly SUNBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Balance Sheet

as of September 30, 2012 and March 31, 2012

GRID PETROLEUM CORP.

(formerly SUBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Statement of Operations

GRID PETROLEUM CORP.

(formerly SUNBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Statement of Cash Flows

GRID PETROLEUM CORP.

 (An Exploration Stage Company)

Notes to Consolidated Financial Statements

September 30, 2012

(Expressed in US Dollars)

(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These unaudited interim financial statements as of and for the six months ended September 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 unaudited 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 March 31, 2012 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 September 30, 2012 are not necessarily indicative of results for the entire year ending March 31, 2013.

Organization and Description of Business

Grid Petroleum Corp. (the “Company”) was incorporated in the State of Nevada with the name Sunberta Resources Inc. on November 15, 2006. The Company was, until March 31, 2009, an exploration stage company which had as its principal business the acquisition and exploration of mineral claims.

On November 16, 2006 the Company acquired all the issued and outstanding shares of Sunberta Resources Inc. (“Sunberta Alberta”), an inactive corporation incorporated in the province of Alberta, Canada on September 19, 2006. Sunberta Alberta was registered as an extraprovincial company in British Columbia, Canada on November 15, 2006. The consideration for the acquisition of Sunberta Alberta was 2,000 shares (on a post-split basis) of the Company.

In January, 2007 Sunberta Alberta acquired seven placer claim tenures on southern Vancouver Island, British Columbia, Canada. During the year ended March 31, 2009, the Company abandoned three of the placer claim tenures and decided to abandon the remaining four properties. Between May 31, 2009 and June 14, 2009, the remaining four placer claim tenures expired.  The carrying cost of the properties was written off and the operations associated with the properties were treated in the financial statements as discontinued operations in the year ended March 31, 2009. The Company entered the development stage on March 31, 2009 to seek other opportunities. See also note 2.

On November 18, 2009 the Company changed its name to Grid Petroleum Corp.

The Company’s activities to December 31, 2009 were carried on in Alberta and British Columbia, Canada. In February, 2010 operations were carried on in England. In mid-2010 the Company began to focus on its mineral properties in the United States, and activities of the Company thenceforth were controlled from the United States.

On March 17, 2010, the Company acquired oil and gas leases in Wyoming for consideration of $300,000.00 cash. See also note 4. The Company intends to explore for oil and gas on these properties. The Company entered an exploration stage on March 31, 2010.

On January 20, 2011, the Company entered into a Share Exchange Agreement (the “Agreement”) with a Nevada corporation, Joaquin Basin Resources Inc.,( “Seller”), and its stockholders,( “Selling Shareholders”). Pursuant to the provisions of the Agreement, the Company agreed to issue to the Selling Shareholders (i) 62,000,000 shares of Company common stock and (ii) 2,076,324 shares of convertible preferred stock, in exchange for the transfer and delivery to the Company by the Selling Shareholders of the 62,000,000 shares of common stock issued by the Seller, which were all of the issued and outstanding securities of the Seller. As a result of the related transaction on February 1, 2011, the Seller became a wholly owned subsidiary of the Company. The issue of preferred stock was delayed until January 21, 2012. None of the parties to the Agreement is a related person.

Principles of Consolidation

The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, Sunberta Alberta and Joaquin Basin Resources, Inc.  All significant inter-company balances and transactions have been eliminated.

Cash equivalents comprise certain highly liquid instruments with a maturity of six months or less when purchased.  As at September 30, 2012, the Company did not have any cash equivalents.

Mineral Properties and Exploration Expenses

Mineral properties purchased are capitalized and carried at cost.  Exploration and development costs are charged to operations as incurred until such time that proven or probable ore reserves are discovered.  From that time forward, the Company will capitalize all costs to the extent that future cash flow from reserves equals or exceeds the costs deferred.  The deferred costs will be amortized using the unit-of-production method when a property reaches commercial production. At September 30, 2012, the Company is no longer in the mineral exploration business.

Oil and Gas Properties and Exploration Expenses

Oil and gas property acquisition costs are capitalized and carried at cost. Exploration and development costs are accounted for on the successful-efforts method, whereby the costs related to successful projects are capitalized and all costs incurred as a result of unsuccessful projects are expensed when it is determined that the exploration efforts on that property are unsuccessful. At September 30, 2012, the Company has not incurred any exploration or development costs on its oil and gas properties.

Advertising Expenses

Advertising costs are expensed as incurred. The Company has not incurred any advertising costs in the six months ended September 30, 2012 and 2011.

Asset Retirement Obligations

The Company has adopted FASB Accounting Standards Codification Topic (“ASC”) No. 410, Asset Retirement and Environmental Obligations which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred.   ASC No. 410 requires a liability to be recorded for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of the related long-lived asset.  The liability will be accreted and the asset will be depreciated over the life of the related assets.  Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. The Company has not incurred any asset retirement obligations as at September 30, 2012.

Foreign Currency

The functional currency is the US Dollar. Transactions in foreign currencies other than the functional currency, if any, are re-measured into the functional currency at the rate in effect at the time of the transaction. Re-measurement gains and losses that arise from exchange rate fluctuations are included in income or loss from operations. Monetary assets and liabilities denominated in the functional currency are translated into US Dollars at the rate in effect at the balance sheet date.  Revenue and expenses denominated in the functional currency are translated at the average exchange rate.  Other comprehensive income includes the foreign exchange gains and losses that arise from translating from the functional currency into US Dollars.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles of United States of America 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 financial statements and the reported amounts of revenues and expenses

during the reporting period.  Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

Loss Per Share

Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed 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 of September 30, 2012 the Company has potentially dilutive securities outstanding in convertible debt per Note 6. The Company has also issued warrants for the purchase of common stock related to a financing agreement. These securities if exercised would be anti-dilutive, since the Company is in a loss position. They have therefore not been included in the calculation of weighted average number of shares outstanding.

Fair Value of Financial Instruments

The carrying value of cash, demand loan, accounts payable and accrued liabilities at September 30, 2012 reflected in these financial statements approximates their fair value due to the short-term maturity of the instruments.

Comprehensive Income

The Company has adopted ASC No. 220, Comprehensive Income.  Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities.

Income taxes

The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward. A valuation allowance of 100% has been established.

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

Exploration Stage

The Company entered the exploration stage upon its inception. The Company exited the exploration stage and entered the development stage on March 31, 2009 when the Company’s mineral claims tenures in British Columbia were abandoned and the Company started seeking new businesses. The Company exited the development stage and entered a new exploration stage on March 31, 2010 after the Company had acquired oil and gas properties in Wyoming and started planning to explore the properties.

Impairment of Long-Lived Assets

The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operation cash flows in accordance with ASC No. 144, Property, Plant and Equipment.  If impairment is deemed to exist, the asset will be written down to its fair value.  Fair value is generally determined using a discounted cash flow analysis.  As at September 30, 2012, the Company does not believe any adjustment for impairment is required.

The Company will periodically analyze exploration efforts, once exploration on its oil and gas properties has commenced, to determine which projects have been unsuccessful in establishing proved reserves. The costs of unsuccessful projects will be expensed.

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.

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.

Presentation

Loss on Elimination of Convertible Notes,  recorded under Accumulated (Deficit) during the Exploration Stages on the balance sheet at the fiscal year ended March 31, 2012, is recorded under Accumulated Other Comprehensive Income (Loss) at September 30, 2012 to match current classification.

2. BASIS OF PRESENTATION – GOING CONCERN

These consolidated financial statements have been prepared on a going-concern basis which assumes the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future.

The Company has experienced losses since its inception:

a.                   $173,275 in the pre-development stage to March 31, 2009

b.                   $123,849 in the development stage in the year ended March 31, 2010

c.                    $834,271 in the exploration stage in the year ended March 31, 2011

d.                   $621,640 in the exploration stage in the year ended March 31, 2012

e.                    $500,616 in the exploration stage in the six months ended September 30, 2012.

Total losses: $2,253,651

The Company also has limited business operations, which raises substantial doubt about the Company's ability to continue as a going concern.  The ability of the Company to meet its commitments as they become payable, including the completion of acquisitions, exploration and development of oil and gas properties and projects, is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations.  There are no assurances the Company will be successful in achieving these goals.

The Company does not have sufficient cash to fund its desired exploration for the next twelve months. The Company has arranged financing and intends to draw upon this financing arrangement to fund administration and exploration. This financing may be insufficient to fund expenditures or other cash requirements required to find, develop and exploit oil and gas reserves to the point of profitable operations. There can be no assurance the Company will be successful in finding oil and gas reserves. The Company plans to seek additional financing if necessary in a private or public equity offering to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

These financial statements do not give effect to adjustments to the amounts and classifications to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

3. FIXED ASSETS

Fixed assets consist of the following:

4. OIL AND GAS PROPERTIES

The Company has oil and gas properties in Wyoming and California.

Wyoming.

Oil and gas properties in Wyoming that cost $85,334 consist of four leases issued by the United States Department of the Interior Bureau of Land Management, #WYW158664 and #WYW158665 dated August 1, 2004, #WYW159734 and #159737 dated February 1, 2004. These leases cover 3,744.57 acres in the Jonah Prospect, South of the Jonah Field in the Greater Green River Basin, Wyoming. These leases are subject to a 12.5% royalty retained by the lessor and 5% overriding royalty retainer by the seller. The leases were acquired by the Company March 17, 2010 for $300,000 cash from a related party. The related party had paid $80,000 to paid-in capital by the remaining $220,000. No exploration work has been conducted by the Company on the properties to September 30, 2012.

Lease #WYW158664 covers property legally described as ALL Township 28N Range 110 West 6^th Meridian Sublette County, Wyoming Section 6-lots 1-7; S2NE; SENW; E2SW; N2SE Section 7 Lots 1-4; E2W2 Section 17 N2 Section 19 Lots 3 & 4; E2SW Section 30 Lots 1-4; E2W2; SE. The annual rent on this property is $3,296 and was paid by the seller up to August 1, 2010.

Lease #WYW158665 covers property legally described as All Township 28N Range 110 West 6^th Meridian Sublette County, Wyoming Section 28 SW Section 29 S2 Section 31 Lots 1-4; S2NE; E2W2; SE. The annual rent on this property is $2,038 and was paid by the seller up to August 1, 2010.

Lease #WYW159734 covers property legally described as All Township 27N Range 107 West 6^th Meridian Sublette County, Wyoming Section 5 Lotsl-4; S2N2; 52. The annual rent on this property is $6,390 and was paid by the seller up to February 1, 2011.

Lease #WYW159737 covers property legally described as All Township 27N Range 107 West 6^th Meridian Sublette County, Wyoming Section 8 N2; N2SE; SESE. The annual rent on this property $4,400 and was paid by the seller up to February 1, 2011.

California.

On January 20, 2011 the Company purchased, through its subsidiary Joaquin Basin Resources Inc., a 50% working interest (37% net revenue interest) in a mineral lease on 4,000 acres in Kings and Fresno counties in California. The lease was initially recorded at the cost of issuing 62,000,000 common shares. The agreement also required an issue of 2,076,334 preferred shares.

On November 21, 2011 a portion of the interest in the lease was swapped for a future “carry’ of exploration costs and administration of the lease. Grid’s 50% working interest (37.5% net revenue interest) was reduced to 30% and 14% respectively. The co-lessee, Xploration Inc., is the obligor under the agreement. Future exploration costs include the operating “carry” costs of the lease and drilling costs of the first well, named “First Farmin Well”. The exploration costs were valued and recorded based on the percentage reduction in net revenue interest: $4,825,334. This was a reduction in the value of the Joaquin Basin property.

On January 20, 2011, 2,076,000 shares of convertible preferred stock were issued in concluding the Joaquin Basin purchase agreement. The cost of the issue, $4,152,000, was based on the value of preferred stock as if converted to common stock. $4,152,000 was added to the cost of the Joaquin property, including liabilities assumed in the November 21, 2011 agreement with Xploration Inc. The total value, $7,026,666, was reflected in a volumetric analysis.

Volumetric calculations of the 30% lease (14% net revenue) were conducted by a geologist and valuation determined using a “P10” factor, i.e. a 10% recovery rate, at a value for oil of $100 per barrel, which equated to net revenue of approximately $20,000,000, ($15,800,000 after landowner’s share). The P factor was further reduced by management by approximately 50%, based on company estimates of recoverability, resulting in an approximate value of $7,700,000.

Impairment of the properties from their recorded acquisition values was considered at September 30, 2012. Management considered that there were no changes in circumstances that would warrant impairment from the estimated values indicated by geological reports.

5. ACCOUNTS PAYABLE

Accounts Payable at September 31, 2012 consists of:

Syndication is a consortium of consultants under a contract described in Note 14.

Xploration Inc. is an oil & gas consultant that provided services associated with the purchase of the Joaquin Basin property.

6. NOTES PAYABLE

Current

Asher Enterprises. In May, 2012 the Company entered into a Securities Purchase Agreement with an accredited investor. Asher Enterprises Inc. for the sale of a Convertible Promissory Note in the aggregate principal amount of $53,000. The proceeds of the note are to be used for general working capital purposes. The note bears interest at 8% per annum and matures February 4, 2013. The note is convertible into shares of common stock beginning 180 days from the date of the note at a conversion price of 61% of the average of the lowest three trading prices of Company common stock during the ten trading days of the OTCBB preceding the conversion date. The number of shares issuable upon conversion is proportionately adjusted to reflect any stock dividend, split or similar event.

Between May 8 and September 30, 2012, the investor advanced a further $67,500. $92,600 of the loan was converted to 25,715,010 shares of common stock, reducing the loan to $32,400 as of September 30, 2012.

Special Situation Fund One Note. On March 12, 2012 the Company arranged a debt swap under which an Asher Enterprises note for $40,000 was swapped with Special Situations Fund One with a payment of $21,490.90, for a total $61,490.90. The notes have the same characteristics as the Asher note described above.

Vista Capital Investments. In June, 2012 the Company entered into a Securities Purchase Agreement with an accredited investor, Vista Capital Investments, for the sale of a Convertible Promissory Note in the aggregate principal amount of $25,000. The proceeds of the note are to be used for general working capital purposes. The note bears interest at 8% per annum and matures December 15, 2012.

7. RELATED PARTY TRANSACTIONS

2,500,000 shares were issued to the Company president James Powell on May 23, 2012. pursuant to an employment/consulting agreement

8. PREFERRED STOCK

Preferred stock issue during the second quarter ended September 31, 2012 was as follows:

On April 23, 2012. 80,000 shares of Series A Preferred Stock were converted to 16,000,000 shares of common stock at the conversion ratio of .005 preferred to 1 common, according to the attributes of the preferred stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

On August 14, 2012. 328,000 shares of Series A Preferred Stock were converted to 65,600,000 shares of common stock at the conversion ratio of .005 preferred to 1 common, according to the attributes of the preferred stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

As at September 30, 2012, 10,000,000 Series A preferred shares and 10,000,000 Series B preferred shares of par value $0.001 were authorized, of which 1,557,000 Series A were issued and outstanding, (nil as at March 31, 2012).

9. COMMON STOCK

Common stock issues during the six months ended September 30, 2012 were as follows:

On April 23, 2012, 16,000,000 shares of common stock were issued in an exchange for 80,000 of Series A Preferred Stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

On May 17, 2012, 1,514,101 shares of common stock were issued for consulting valued at the closing price on the day of $0.01 per share. An expense of $15,141 was recorded.

On May 23, 2012, 2,500,000 shares of common stock were issued for consulting pursuant to an employment agreement, valued at the closing price on the day of $0.01. An expense of $25,000 was recorded.

On June 11, 2012, 1,000,000 shares of common stock were issued at the closing price of $0.01 pursuant to a loan agreement with Vista Capital Investments. An expense of $10,000 was recorded.

Between July 12 and September 18, 2012, 25,715,010 shares of common stock were issued in the elimination of debt at the uniform price of $0.01. An expense of $164,550 was recorded.

On August 14, 2012, 65,600,000 shares of common stock were issued in an exchange for 328,000 of Series A Preferred Stock. The stocks exchanged had equal value, resulting in no gain or loss on the transaction.

As at September 30, 2012, 1,500,000,000 shares of common stock of par value $0.001 were authorized, of which 314,273,653 were issued and outstanding, (201,944,542 as at March 31, 2012).

10. INCOME TAXES

The Company had no income tax expense during the reported period due to net operating losses.

A reconciliation of income tax expense to the amount computed at the statutory rates is as follows:

The Company has net operating losses carried forward of approximately $2,165,000 for tax purposes which will expire in 2027 through 2032 if not utilized beforehand. 

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Company Overview

We are focused on the development, exploration and production of oil and gas in North America. Our primary focus is on oil and gas properties with proven undeveloped reserves that are economically attractive but are underserved by major independent oil and gas companies.

SE Jonah Prospect

We had a 100% working interest in the two separate oil and gas leases located near the Jonah Field region, which encompasses an area of premium natural gas reserves within the Greater Green River Basin in the Rocky Mountains area of Wyoming.

In this quarter, we were unsuccessful in retaining the two oil and gas leases in the SE Jonah Prospect. We are currently working with the agencies in charge of the lease prospect in the area to release these properties. It is unclear whether we are able to get the leases back. We hope to have more information in subsequent filings.

We have conducted no exploration work on the properties. If we are able to reclaim the properties, we intend to work with consulting groups to implement the first phase of the devised work program, as set forth below.

Our Chief Geological and Geophysicist Advisor, Robert Murphy, completed an analysis of the report devising a work program to encompass the necessary additional study. Concluding that the SE Jonah acreage can be considered as exploration rather than development/production acreage, the work program consists of eleven elements divided into two phases. The first phase comprises six elements requiring data accumulation and study. The completion of phase one will provide information as to the prospects of finding producible gas and, if so, the predicted range of gas quantity in place. The second phase being contingent on positive results from the first phase includes well test interpretation and investigating development drilling scenarios and production forecasting.

Joaquin Basin Resources, Inc.

We also have a 20% working interest (14% net revenue interest) to explore and develop 4,000 leased acres covering extensions of the Coalinga California oil and gas field in California labeled as the Kreyenhagen Trend acreage. We have been informed by the operator that a request has been submitted to the State of California for an environmental study to determine the evidence of the blunt nose lizard. This study must be conducted twice, once in the fall and once in the spring. We are also informed by the operator that 3 drill sites have been submitted in the permitting process with the State. The operator will provide us with a development plan in Q1 of 2013

Garcia #3 Well

On May 23, 2012, we acquired a ten percent working interest, seven point five percent net revenue interest, from a third party interest holder of the Garcia #3 well (10.0 % WI, 7.5% NRI). For our interest, we paid $300,000 in convertible preferred shares with a conversion rate of .01 per share.

We are subject to the terms and conditions of the operating agreement established by the operator for the Garcia#3 well, Kidd Production Inc, the property developer, Progas Energy Services and the third party vendor we acquired our 10% interest from. We have been repeatedly misinformed by Kidd Production and Progas about the start date for the drilling of the Garcia #3, which is to commence when a drill rig is available and when the operator has determined to move forward with the project.

As a result of the lack of accurate and timely information from Kidd Production and Progas Energy, we have determined to form a subsidiary to act as an operator as a fall back for the Garcia #3 well and any future developments. In July of 2012, we made an application with the Texas Railroad Commission for obtaining an Operator’s License or Railroad Commission P4, in the State of Texas. In August of 2012, we received notification from the Texas Railroad Commission that our wholly owned subsidiary, Grid Petroleum Production, Inc. has been assigned operator number 333845.

In August of 2012, Progas Energy confirmed that a drill rig was on site and commenced drilling on the Garcia #3 well. In late August of 2012, the drill rig reached a depth of over 3,780 feet. The well was then Gamma Ray logged and Percussion Cored with an onsite geologist analyzing and interpreting the logs to determine the commercial viability of the well. Analysis indicated that the well encountered two well developed potentially productive oil sands and six gas-productive sands totaling 104 feet of gas sands and 29 feet of oil sands. The total potentially productive pay in the well totals 133 feet. We intend to target the oil sands and gas sands will be left behind until gas prices rebound.

A summary by geologist, Patrick Robinson, of a few of the potentially productive oil and gas sands found in the Garcia #3 well based on core and log analysis are as follows:

Lower Bardsdall Sand (11' Potential Oil Pay): The top of this 11' thick sand was encountered at 3420' drill depth (-3216' Subsea) in the Garcia #3 well, 8' structurally high to the zone in the Progas Garcia #2 well approximately 1200' to the north which is currently producing 10 bopd. The Lower Bardsdall sand has a good Rwa response on the electric log and 6 cores taken in it analyzed oil with permeability's from 29-107 millidarcies and porosities ranging from 24.1%-27.9%. Unlike the Laughlin and Bardo sands, the Lower Bardsdall has the characteristics of a blanket-sand deposition or at least a much larger sand lens then found in those sands. It is estimated that this sand will have an initial flow rate in the range of 25-35 bopd because of its distance from the Garcia #2 well.

Fair-Woodward Sand: The top of this sand was encountered at 3457' drill depth in the Garcia #3. A core taken at 3462' analyzed water suggesting that this is a separate sand body or lens from the same sand in the Garcia #2 well which analyzed gas.

Bardo Sand (3' Potential Gas Pay; 13' Potential Oil Pay): The top of this sand was encountered at 3520' drill depth in the Garcia #3 well where it is present in the form of 2 lobes. The top lobe is 10' thick and has very good Rwa log response. A core in the top of this zone at 3522' analyzed gas. A core at 3523' was transitional between gas and oil and the remaining cores in this lobe analyzed oil. The permeability's in this lobe analyzed between 51 and 115 millidarcies and the porosities ranged between 25.8%-27.8%. The second lobe is 6' thick and shows good Rwa response on the triple-combo log. Cores in this zone analyzed oil with permeability's ranging from 140-265 millidarcies and porosities from 28.8%-30%.

As discussed above, the fact that the top of the Bardo sand in the Garcia #2 well is 28' structurally lower than in the Garcia #3 where it analyzed gas on cores with no oil indicates that these must be separate reservoirs or sand lens. The same is true for the Guerra #2 well which has an oil/water contact that is higher than could be possible in the Garcia #3 well. This means that we are dealing with a distinct separate sand body in the Bardo in the Garcia #3 well which appears to be oil productive. Because these sands are separate, it is impossible to estimate their sizes without further drilling.

The Bardo sand is oil and gas productive in the Premont Northwest field with the closest production being over 1 mile to the southeast in the Laughlin Felipe Hinojosa #3 well where it produced 9331 barrels of oil, and was abandoned in favor of gas production at that time and never was produced again. The Hinojosa #4 well, drilled by the previous operator was tested by Progas through a re-entry and tested 9 bophr through a u” choke and then flowed through a 1/16" choke for a number of months before a completion attempt failed due to casing failure. On the Seeligson Ranch approximately 2.5 miles to the southeast of the Garcia #2 well, the Bardo sand was a primary producing zone giving up 248,934 barrels of oil in the Mobil Seeligson #6 well alone. This trapping mechanism on this sand is probably a combination of structure and stratigraphic pinch out of intervals within individual sand bodies. It is suggested that this zone be tested first in this well as it could be a very prolific oil producer, possibly flowing oil for some time before it needs to be put on pump.

Caddo Sand (4' Potential Gas Pay and 5' Potential Oil Pay): The top of the Caddo sand was encountered at 3596' drill depth in the Garcia #3 well. The top 9' of this zone exhibits good Rwa response on the electric log and cores taken in this sand analyzed gas in the top 4' and oil for the next 5'. Permeability's in the cores in the top 9' of the Caddo sand ranged from 33-165 millidarcies while porosities ranged from 24.9%-28.4%. This zone will likely be oil productive.

The bottom lobe of the Caddo is 11' thick with excellent Rwa log response. A core was taken in this lobe at 3650' analyzed gas with 49 millidarcies of permeability and 25.3% porosity. Two cores in the top of this zone the Garcia #2 well analyzed gas with lower cores in this zone analyzing water suggesting the possibility that commercial gas could be produced from this lobe of the sand in the structurally higher Garcia #3 well. This zone should be tested before the well is abandoned.

The top of the Caddo sand is primarily oil productive in the Premont Northwest field. The closest productive well from the Caddo sand is the Kibbe Engleking #2A well over a mile to the south. This well produced 3,709 barrels of oil from the Caddo sand. This zone could potentially produce between 5000-20,000 bo in the Garcia" #3 well.

The completion process can take several weeks before reliable production numbers can be disseminated.

We will provide progress updates as they become available regarding the Garcia #3 and other anticipated drilling activity in the near future.

North West Premont Field

In September of 2012, we entered into a letter of intent for the leasing and commercial oil and gas development of a significant prospect in the Northwest Premont area of Texas, not related to any areas of mutual interest previously identified by Progas Services Inc, the current Joint Venture Operator. The terms are still under negotiation concerning this deal. We hope to have further information in subsequent filings.

Results of operations for the three and six months ended September 30, 2012 and 2011, and for the period from Inception (March 31, 2009) to September 30, 2012

We are in the exploration stage. We have not earned any revenues since our inception. We will not be able to earn revenue unless we are able to locate oil and gas potential on our leases and exploit any reserves we may find. There is no assurance that we will be able to accomplish our business plan to produce oil and gas from our leases.

We incurred operating expenses in the amount of $136,310 for the three months ended September 30, 2012, compared with operating expenses of $73,030 for the three months ended September 30, 2011. The increase was primarily attributable to an increase in consulting fees of $82,500 for the three months ended September 30, 2012, compared with consulting fees of only $30,000 for the three months ended September 30, 2011.

We incurred net loss from operations in the amount of $336,066 for the six months ended September 30, 2012, compared with operating expenses of $136,090 for the six months ended September 30, 2011. The increase was primarily attributable to an increase in consulting fees of $210,141 for the six months ended September 30, 2012, compared with consulting fees of only $52,900 for the six months ended September 30, 2011.

We incurred net loss from operations of $1,845,747 for the period from inception (March 31, 2009) to September 30, 2012.

We had other expenses of $164,552 related to the loss on the elimination of convertible notes for the three months ended September 30, 2012, compared with $111,417 for the same period ended 2011.

We incurred a net loss in the amount of $300,862 for the three months ended September 30, 2012, compared with $184,487 for the three months ended September 30, 2011. We incurred a net loss in the amount of $500,616 for the six months ended September 30, 2012, compared with $247,561 for the six months ended September 30, 2011.

We incurred a net loss in the amount of $2,125,658 for the period from commencement of the exploration stage on March 31, 2009 to September 30, 2012.

In September of 2012, we entered into a financing of $2,500,000.00 during the next 5 quarters of 2013. The financing will be available to the company in tranches of $500,000.00 but conditioned upon our stock price and the completion of certain milestones by the company concerning lease acquisition and field development of our oil and gas properties.

We intend to use the proceeds of the initial round of financing to provide for direct drilling and field development, working capital and other expenses.

Liquidity and Capital Resources

We had no current assets as of September 30, 2012. We had current liabilities of $672,576 as of September 30, 2012. We had a working capital deficit of $672,576 as of September 30, 2012.

We used net cash of $301,017 in operating activities for the six months ended September 30, 2012. Our net loss of $336,066 was the main reason for our negative operating cash flow.

We received $440,151 in cash provided by financing activities for the six months ended September 30, 2012, as a result of $60,360 in net proceeds from notes payable, $72,500 in proceeds of loans from stockholders, $257,150 from conversion of notes payable, $10,000 from the issuance of stock to retire debt, and $40,141 in common stock issued to finance services.

In May of 2012, we entered into a Securities Purchase Agreement with an accredited investor for the sale of a Convertible Promissory Note in the aggregate principal amount of $53,000. The proceeds of the note are to be used for general working capital purposes. The note bears interest at 8% per annum and matures February 4, 2013. The note is convertible into shares of common stock beginning 180 days from the date of the note at a conversion price of 61% of the average of the lowest three trading prices our common stock during the ten trading days of the OTCBB preceding the conversion date. The number of shares issuable upon conversion is proportionately adjusted to reflect any stock dividend, split or similar event.

On March 12, 2012 we arranged a debt swap under which a note for $40,000 was swapped with Special Situations Fund One with a payment of $21,490.90, for a total $61,490.90. The notes have the same characteristics as the May 2012 note described above.

In June of 2012, we entered into a Securities Purchase Agreement with an accredited investor for the sale of a Convertible Promissory Note in the aggregate principal amount of $25,000. The proceeds of the note are to be used for general working capital purposes. The note bears interest at 8% per annum and matures December 15, 2012.

In September of 2012, we entered into a financing of $2,500,000.00 during the next 5 quarters of 2013. The financing will be available to the company in tranches of $500,000.00 based upon completion of certain milestones by the company concerning lease acquisition and field development.

The proceeds of the initial round of financing are to provide direct drilling and field development working capital and expenses.

In September of 2012, the Company has entered into a Letter of Intent for the Leasing and Commercial Oil and Gas development of a significant prospect in the Northwest Premont area of Texas, not related to any Areas of Mutual Interest previously Identified by Progas Services Inc, the current Joint Venture Operator.

We anticipate our cash requirements to increase over the course of this year as we will be more active and will incur costs for management and exploration of our oil and gas properties.

We anticipate that we will be dependent, for the immediate future, upon additional investment capital to fund operating expenses. We estimate that we will require additional financing to operate and carry out planned exploration activities over the next twelve months.

In addition to the issues set out above regarding our ability to raise capital, global economies are currently undergoing a period of economic uncertainty related to the tightening of credit markets worldwide. This has resulted in numerous adverse effects, including unprecedented volatility in financial markets and stock prices, slower economic activity, decreased consumer confidence and commodity prices, reduced corporate profits and capital spending, increased unemployment, liquidity concerns and volatile but generally declining energy prices. We anticipate that the current economic conditions and the credit shortage will adversely impact our ability to raise financing.

Off Balance Sheet Arrangements

As of September 30, 2012, there were no off balance sheet arrangements.

Going Concern

We have experienced $2,253,651 in losses since our inception, including:

• $173,275 in the pre-development stage to March 31, 2009
• $123,849 in the development stage in the year ended March 31, 2010
• $834,271 in the exploration stage in the year ended March 31, 2011
• $621,640 in the exploration stage in the year ended March 31, 2012
• $500,616 in the exploration stage in the six months ended September 30, 2012.

We have limited business operations, which raises substantial doubt about our ability to continue as a going concern.  Our ability to meet our commitments as they become payable, including the completion of acquisitions, exploration and development of oil and gas properties and projects, is dependent on our ability to obtain necessary financing or achieving a profitable level of operations.  There are no assurances we will be successful in achieving these goals.

We do not have sufficient cash to fund our desired exploration for the next twelve months. We have arranged financing and intend to draw upon this financing arrangement to fund administration and exploration. This financing may be insufficient to fund expenditures or other cash requirements required to find, develop and exploit oil and gas reserves to the point of profitable operations. There can be no assurance we will be successful in finding oil and gas reserves. We plan to seek additional financing if necessary in a private or public equity offering to secure future funding for operations. There can be no assurance we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

The financial statements do not give effect to adjustments to the amounts and classifications to assets and liabilities that would be necessary should we be unable to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2012. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, James Powell. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2012, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting. 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2012, our disclosure controls and procedures were not effective: (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.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

Our company plans 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 March 31, 2013: (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 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended September 30, 2012 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

From July 12, 2012 to September 18, 2012, the holder of a convertible note converted a total of $92,600 of principal and interest into 25,715,010 shares of our common stock.

On August 14, 2012, Kane Assetts S.A. converted 328,000 shares of our Series A preferred stock into 65,600,000 shares of our common stock.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

**Provided herewith

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.