Hero Technologies Inc. - Quarter Report: 2015 March (Form 10-Q)

henc_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

———————

FORM 10-Q

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þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

¨ TRANSITION REPORT PURSUANT TO 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-52419

HOLLOMAN ENERGY CORPORATION

(Exact Name of Issuer as Specified in Its Charter)

Nevada		77-0643398
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

333 North Sam Houston Parkway East, Suite 600, Houston, Texas 77060

(Address of Issuer's Principal Executive Offices) (Zip Code)

Issuer’s telephone number: (281) 260-0193

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 þ 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 þ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Class of Stock		No. Shares Outstanding		Date
Common		112,577,625		May 15, 2015

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HOLLOMAN ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31, 2015			December 31, 2014
	(Unaudited)
ASSETS

ASSETS
Cash	$	18,233		$	50,883
Other receivable		41,175			2,884
Prepaid expenses		13,374			15,180
Current Assets		72,782			68,947

Oil and gas properties, full cost method, unproven		16,234,119			16,227,485
Total Assets	$	16,306,901		$	16,296,432


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Accounts payable and accrued liabilities	$	267,026		$	237,122
Current Liabilities		267,026			237,122

Deferred tax liability		4,045,259			4,314,420
Total Liabilities		4,312,285			4,551,542

STOCKHOLDERS' EQUITY
Authorized:
10,000,000 preferred shares, par value $0.001 per share
150,000,000 common shares, par value $0.001 per share
Issued and outstanding :
112,077,625 common shares (111,952,623 at December 31, 2014)		112,078			111,874
Additional paid in capital		26,290,901			26,256,682
Accumulated other comprehensive income (loss)		2,883			(94	)
Accumulated deficit		(14,411,246	)		(14,623,572	)
Total Stockholders' Equity		11,994,616			11,744,890

Total Liabilities and Stockholders' Equity	$	16,306,901		$	16,296,432

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

HOLLOMAN ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	3 Months Ended March 31,
	2015			2014

CONTINUING OPERATIONS
Expenses
Consulting	$	-		$	22,523
Foreign exchange (gain) loss		(268,465	)		203,012
Management and director's fees		19,423			16,650
Office, travel and general		29,541			28,075
Professional fees		6,980			3,867

Total Expenses		212,521			(274,127	)

Other expense
Interest expense		(195	)		(5,513	)
Income (Loss) from Continuing Operations		212,326			(279,640	)

NET INCOME (LOSS) BEFORE TAXES		212,326			(279,640	)
Income tax expense		-			-
NET INCOME (LOSS)	$	212,326		$	(279,640	)
Foreign currency translation (net of tax of $0)		2,977			(3,988	)
COMPREHENSIVE INCOME (LOSS)	$	215,303		$	(283,628	)

BASIC AND DILUTED NETINCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE	$	0.00		$	(0.00	)

BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE	$	0.00		$	(0.00	)

WEIGHTED AVERAGE NUMBER OF BASIC AND DILUTED COMMON SHARES OUTSTANDING		111,954,012			110,433,855

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

HOLLOMAN ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2015			2014

OPERATING ACTIVITIES
Net income (loss)	$	212,326		$	(279,640	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Unrealized foreign exchange gain		(266,183	)		198,998
Changes in working capital items:
Other receivable		(38,291	)		(53	)
Prepaid expenses		1,806			(642	)
Accounts payable and accrued liabilities		57,692			60,613
Cash used in operating activities		(32,650	)		(20,724	)

CHANGE IN CASH		(32,650	)		(20,724	)
CASH, BEGINNING		50,883			23,260

CASH, ENDING	$	18,233		$	2,536


SUPPLEMENTAL DISCLOSURE:
Cash paid for interest	$	195		$	10,612

NON-CASH INVESTING ACTIVITIES:
Increase in accrued capital expenditures in oil and gas properties	$	6,634		$	15,923

NON-CASH FINANCING ACTIVITIES:
Shares issued for management fees	$	19,423		$	-
Shares issued for services	$	15,000		$	15,000
ORRI issued for conversion of debt	$	-		$	940,000

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

HOLLOMAN ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

Unaudited Interim Consolidated Financial Statements

The unaudited interim consolidated financial statements of Holloman Energy Corporation (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC. The unaudited interim consolidated financial statements should be read in conjunction with those

consolidated financial statements and footnotes included in the Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

Recent Accounting Pronouncements

In June 2014, the FASB issued Accounting Standards Update 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation (ASU 2014-10), which eliminates the concept of a development stage entity (DSE) from U.S. GAAP. This change rescinds certain financial reporting requirements that have historically applied to DSEs and is intended to result in cost-savings for affected entities. ASU 2014-10 is effective for public entities for annual reporting periods beginning after December 15, 2014 and interim periods therein.

The Company adopted ASU 2014-10 on January 1, 2015, and has applied its guidance in the preparation of these unaudited interim consolidated financial statements. The application of ASU 2014-10 resulted in the removal of 1) inception-to-date information in the statements of operations and cash flows, 2) labels on the financial statements indicating the Company’s exploration stage status, 3) certain historic disclosures describing exploration stage activities in which the Company has been engaged. The Company does not believe, however, that the removal of this information will have a material effect on its unaudited interim consolidated financial statements or the related footnote disclosures thereto.

Risks and Uncertainties

Holloman Energy Corporation is a business that has not commenced planned principal operations. The Company is an oil and gas exploration and production company with assets in the Cooper/Eromanga basin in South Australia. The Company’s activities since inception have consisted of entering into a farm-in agreement with Terra Nova, which has acquired all seismic acquisition and drilling work associated with two Petroleum Exploration Licenses, PEL 112 and PEL 444.

Holloman Energy Corporation is a business whose planned principal operations are the exploration and production of oil and gas in South Australia. The Company has participated in the drilling of one well on PEL 112 that was unsuccessful.

During fiscal year 2014, the seismic data pertaining to PEL 112 and PEL 444 was reinterpreted to better reflect the formations on the licenses and resulted in the identification of eight possible drilling sites. The Company plans to raise additional capital to support the completion of those wells if they are anticipated to be productive.

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional capital to complete the Company’s possible productive wells.

2. OIL AND GAS PROPERTIES

At March 31, 2015, the Company holds a 48.5003% working interest in two onshore Petroleum Exploration Licenses (PELs) in Australia. PEL 112 is comprised of 1,086 square kilometers (268,356 gross acres, 130,155 net acres), and PEL 444 is comprised of 2,358 square kilometers (582,674 gross acres, 282,601 net acres). Both licenses are located on the southwestern flank of the Cooper Basin in the State of South Australia. All of the Company’s oil and gas properties are unproven. As such, the costs capitalized in connection with those properties are not currently subject to depletion.

3. SUBSEQUENT EVENTS

On April 13, 2015, the Company sold 500,000 shares of common stock to a wholly-owned subsidiary of Holloman Corporation, to certain directors and officers of the Company, and to three non-affiliated persons. The shares were sold at a price of $0.20 each. Proceeds from the private placement totaled $100,000. The entire $100,000 was paid in cash.

FORWARD LOOKING STATEMENTS

The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain a historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our latest Form 10-K, filed with the U.S. Securities Exchange Commission (“SEC”) on March 31, 2015, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included as part of this report and our Form 10-K, for the year ended December 31, 2014 filed with the SEC on March 31, 2015.

We were incorporated on May 14, 2004 in Nevada. Between May 2004 and May 2007 we were relatively inactive. In May 2007, we directed our focus to the acquisition, exploration, and development of oil and gas properties. We are currently controlled by Holloman Corporation, a Texas corporation involved in the engineering and construction of pipelines and mid-stream gas processing facilities.

All of our exploration and development efforts are concentrated in Australia. We currently hold working interests in two onshore Petroleum Exploration Licenses (PELs) located on the southwestern flank of the Cooper Basin in the State of South Australia.

The Department of Primary Industries and Resources of South Australia reports that the Cooper Basin has sourced over 158 million barrels of oil, 5 trillion cubic feet of gas and 155 million equivalent barrels of LPG and condensate. It has in excess of 120,000 kilometers of 2-D seismic data and more than 1,970 wells in more than 103 oil and 165 gas fields. From January 2002 through December 2012, 195 exploration wells and 85 appraisal/development wells have been drilled in the Cooper Basin. Most wells have targeted oil, however both oil and gas have been discovered. Hydrocarbons were found in 89 of these wells (46% technical success rate) and 76 of these wells were cased and suspended as future producers (39% commercial success rate). Our management believes that Australia provides a stable regulatory, tax and business environment in the oil and gas sector.

Effective May 11, 2012, we entered into a definitive Oil and Gas Farm-In Agreement with Terra Nova Energy Ltd., and its wholly owned subsidiary Terra Nova Resources Inc. (“Terra Nova”), which provides Terra Nova the right to earn up to a 55% undivided working interest in our Australian licenses in exchange for undertaking certain exploration obligations (the “Terra Nova Farm-In Agreement”).

On July 23, 2013, we participated in drilling the Wolfman #1 exploration well on PEL 112. The Wolfman #1 did not encounter oil or gas. The proposed drilling of the second well is to take place prior to January 11, 2016.

As of May 15, 2015 we did not have any proven oil or gas reserves and we did not have any revenue.

Our Australian assets

Onshore licenses – Cooper Basin

We currently hold working interests in PEL 112 and PEL 444 in Australia. Both licenses are located onshore on the southwestern flank of the Cooper Basin in the State of South Australia. Our oil and gas properties are unproven. We are obligated to pay royalties of 4.53% on our revenues generated by operations on these licenses.

PEL 112 is comprised of 1,086 square kilometers (268,356 gross acres, 130,155 net acres), and PEL 444 is comprised of 2,358 square kilometers (582,674 gross acres, 282,601 net acres). We originally held a 66.667% working interest in both licenses. In connection with the Terra Nova Farm-In Agreement, Terra Nova has earned a 25.8333% working interest in PEL 112 and PEL 444. We contributed 18.1667% of working interest earned. As a result, we now hold a residual working interest of 48.5003% in each license (see further details below).

During November 2013, we applied for our final five-year renewal of PEL 112. On December 18, 2013, the Government of South Australia accepted our application and offered to renew PEL 112 in accordance with our suggested terms. In connection with that renewal, we identified and relinquished one-third of the original acreage covered by PEL 112. The remaining license acreage contains all areas over which 2D and 3D seismic has been acquired, and all existing leads and prospects. We believe the acreage we relinquished was non-prospective. On March 12, 2014, the Government of South Australia finalized its renewal of PEL 112. As a result, we now hold a 48.5003% working interest in PEL 112 until January 10, 2019.

On February 17, 2015, the Government of South Australia granted a six month extension on License PEL 444. This extends the drilling commitment from July 11, 2015 to January 11, 2016.

On February 23, 2015, Terra Nova sold a 5.1666% working interest to Perseville Investing Inc. in PEL 112 and PEL 444 for a total of $3,000,000 to be used towards the drilling of two wells on PEL 444 proposed for this year.

As a result of the assignments, at March 31, 2015, the working interest held in PEL 112 and PEL 444 by the Company is 48.5003%, Perseville Investing Inc. 30.833% and Terra Nova 20.6667%

To maintain our exploration rights in the Cooper/Eromanga Basin, the Australian Government requires that we fulfill the following minimum work commitments:

License	Description of Minimum Work Obligation	Date of Required Completion
PEL 444	Drill one well	January 11, 2016

PEL 112	Geological and geophysical studies	January 10, 2016
PEL 112	Acquire 50 square kilometers – 3D seismic	January 10, 2017
PEL 112	Geological and geophysical studies	January 10, 2018
PEL 112	Drill one well	January 10, 2019

The farm-in agreement through which we hold our working interests in PEL 112 and PEL 444 also obligates us to fulfill the drilling commitment set forth in the licenses. Under Australian law, we are entitled to apply for one additional 5-year term on PEL 444.

Our oil and gas farm-in agreements and exploration activity

Cooper Basin farm-in agreements

Effective May 11, 2012, we entered the Terra Nova Farm-In Agreement with Terra Nova, Chelsea Oil & Gas Ltd., formerly Australian-Canadian Oil Royalties Ltd. (“ACOR”) and Eli Sakhai (“Sakhai”) on PELs 112 and 444. The Terra Nova Farm-In Agreement provides terms under which Terra Nova may earn a 55% undivided working interest in PEL 112 and PEL 444 (the “Farm-In Interest”).

To earn the entire Farm-In Interest, Terra Nova is required to fund exploration and development expenditures (the “Earning Obligations”) totaling at least AUD$13,700,000 (USD$13,098,000) including:

●

AUD$4,700,000 (USD$4,968,000) which was paid and used in the completion of a seismic acquisition program sufficient to meet the minimum seismic acquisition requirements, and interpretation of the acquired data for PEL 112 and PEL 444 (earning a 20% working interest in each license upon completion of the seismic obligations);

●

AUD$4,500,000 (USD$4,670,000) which was placed in escrow on November 1, 2012 to secure Terra Nova’s obligation to sole fund the dry-hole costs of an initial three (3) well drilling program on either PEL 112 or PEL 444, provided that at least one well is drilled on each license (earning a working interest of 5.833% per well in each license upon completion, totaling a working interest of 17.5%); and

●

AUD$4,500,000 (USD$3,460,000) to be placed in escrow on or before 45 days following completion or abandonment of the third well in the initial well program, for use in funding the first AUD$4,500,000 in dry-hole costs of an optional three (3) well drilling program on either PEL 112 or PEL 444, provided that at least one well is drilled on each license (earning a working interest of 5.833% per well in each license upon completion, totaling a working interest of 17.5%).

Terra Nova acts as contract operator with respect to all seismic acquisition and drilling work contemplated by the Terra Nova Farm-In Agreement.

Effective May 29, 2013, the Terra Nova Farm-In Agreement was amended such that of the AUD$4,500,000 (USD$4,670,000) placed in escrow for the Initial Well Program, AUD$500,000 (USD$482,250) was used to pay costs incurred in the PEL 444 seismic program. Costs incurred in relation to the seismic earning obligations in excess of AUD$5,200,000 (USD$4,857,000), have been borne by Terra Nova, ACOR, Sakhai and us in accordance with our/their working interest percentages calculated as though Terra Nova had successfully completed its Earning Obligations and earned the entire Farm-In Interest.

In the event Terra Nova elects to complete the second well drilled in connection with the initial three well drilling program, Terra Nova shall pay 50% of the completion costs and we will pay the other 50% of the completion costs. In the event Terra Nova elects to complete the third well drilled in connection with the initial three well drilling program, or any well drilled in connection with the optional three well drilling program, Terra Nova shall pay 50% of the completion costs, and we, ACOR and Sakhai shall pay the other 50% of the completion costs in accordance with our working interest at the effective date of the Terra Nova Farm-In Agreement.

In the event any well drilled in connection with either the initial or optional drilling programs is commercially viable, and Terra Nova elects to complete such well, Terra Nova is entitled to a preferential recovery of one hundred percent of the costs it has paid to drill and test that successful well. Terra Nova is entitled to 80% of production from that successful well until either that successful well has ceased production or Terra Nova has received net revenue equal to the reimbursable costs it has incurred.

Terra Nova earns the Farm-In Interest in stages based upon successful completion of specific Earning Obligations. In each instance, we, ACOR and Sakhai will each contribute a portion of the working interest earned by Terra Nova. In the event Terra Nova earns the entire Farm-In Interest, the Company, and other interest holders will transfer to Terra Nova the following working interest percentages in both PEL 112 and PEL 444:

(a)	We will contribute an undivided 38.556% working interest in both PEL 112 and PEL 444 (resulting in a residual working interest position of 28.111% in each license); and
(b)	Other interest holders will contribute an undivided 16.444% working interest in both PEL 112 and PEL 444;

The Terra Nova Farm-In Agreement may be terminated by any party upon the occurrence of an uncured breach of any material term. Terra Nova may terminate the Agreement any time before it has earned the Farm-In Interest upon providing written notice of such termination.

On October 7, 2014, the Company and Sakhai agreed to the assignment of ACOR’s 12.8332% interest to Perseville Investing Inc. Perseville Investing Inc. assumes all obligations related to the working interest in PEL 112 and PEL 444 previously held by ACOR.

On November 30, 2014, we agreed to the assignment of Sakhai’s 12.8332% interest to Perseville Investing Inc. Perseville Investing Inc. assumes all obligations related to the working interest in PEL 112 and PEL 444 previously held by Sakhai.

As a result of the assignments, at March 31, 2015, the working interest held in PEL 112 and PEL 444 by the Company is 48.5003%, Perseville Investing Inc. 30.833% and Terra Nova 20.6667%

Cooper Basin exploration activity

Our Cooper Basin exploration plan includes the acquisition of 3D seismic data on PEL 112 and PEL 444, and the drilling, completion and equipping of six (6) wells shared across both licenses. Current estimates indicate the costs to perform this work could be AUD$37.5 million (USD$33 million). Of this amount, approximately AUD$10.9 million (USD$10.0 million) has already been expended.

PEL 112

Acquisition of 127 square kilometers of 3D seismic data on PEL 112 (the “Mulka Survey”) was completed in late September 2012. The Mulka Survey fulfilled our minimum work requirements for PEL 112 License Year Four. Geokinetics (Australia) Pty. Ltd. undertook the Mulka Survey on the northern boundary of PEL 112 under the direction of Terra Nova. During February 2013, we received copies of the Mulka Survey data and interpretation from Terra Nova. As a result, Terra Nova completed its seismic Earning Obligation with respect to PEL 112, and earned an undivided 20% working interest in that license. We, ACOR and Sakhai each contributed the following portion of the working interest earned to Terra Nova:

(a)	We contributed an undivided 13.3334% working interest in PEL 112;
(b)	ACOR contributed an undivided 3.3333% working interest in PEL 112; and
(c)	Sakhai contributed an undivided 3.3333% working interest in PEL 112.

On July 17, 2013, the Government of South Australia finalized and registered the transfer of the 20% working interest earned by Terra Nova in PEL 112.

Seven drilling targets were identified as a result of the final interpretation of the Mulka Survey data. We believe our primary drilling targets are similar geologically to producing structures observed in existing oil pools (including the Butlers, Perlubie and Parsons fields) located to the north of PEL 112 on the Cooper Basin’s western-flank. Seismic interpretation indicates that all primary targets display 4-way structural closures.

Work Area Clearance (“WAC”) on PEL 112 access roads and drill site locations began April 20, 2013 and was completed on April 22, 2013. WAC is the process by which anthropologists and representatives of Australia’s Native Title Holders review exploration sites to insure planned activity does not harm the cultural integrity of the land to be explored.

On July 23, 2013, Terra Nova spudded the Wolfman #1 exploration well on PEL 112. The well’s primary oil objective, the Namur Sandstone, was encountered at approximately 1,197 meters (3,927 feet) on August 6, 2013. Drilling continued to its secondary targets in the Birkhead formation and Hutton sandstones. Wolfman #1 reached Total Depth of 1,703 meters (5,587 feet), on August 7, 2013. No oil shows were observed in the primary and secondary oil objectives, and the well was plugged and abandoned. The entire cost of the well was paid by Terra Nova in accordance with the terms of the Terra Nova Farm-In Agreement.

The drilling of Wolfman #1 fulfilled our minimum work requirement for PEL 112 License Year Five. 3D Sesimic data has been acquired on only 11.7% (31,382 of 268,356 gross acres) of the land comprising PEL 112. We believe significant potential remains for future seismic to identify migration trends and additional prospects on PEL 112 during the next exploration term.

Upon completion of Wolfman #1, Terra Nova earned an additional undivided 5.8333% working interest in PEL 112. We, ACOR and Sakhai each contributed the following portion of the working interest earned to Terra Nova:

(a)	We contributed an undivided 4.833% working interest in PEL 112 resulting in a residual working interest position of 48.5003% in that license;
(b)	ACOR contributed an undivided 0.5000% working interest in PEL 112; and
(c)	Sakhai contributed an undivided 0.5000% working interest in PEL 112.

On December 20, 2013, the Government of South Australia registered the transfer of the 5.8333% working interest earned by Terra Nova in PEL 112.

PEL 444

Acquisition of 80 square kilometers of 3D seismic data on PEL 444 (the “Wingman Survey”) began May 28, 2013 and was completed July 2, 2013. The Wingman Survey was conducted over a portion of PEL 444 that lies within the "Western Margin" of the Cooper Basin, which is generally considered highly prospective. This trend is being actively drilled by adjacent licensees including Senex Energy and Beach Energy.

During February 2014, Terra Nova finalized its interpretation of the Wingman Survey data and earned a 25.8333% working interest in PEL 444. The working interest earned by Terra Nova was comprised of a 20% interest resulting from the completion of the Wingman Survey and a 5.8333% interest granted in connection with Terra Nova’s completion of the Wolfman #1 well. The Company, ACOR and Sakhai each contributed a portion of the working interest earned by Terra Nova as follows:

(a)	The Company contributed an undivided 18.1667% working interest in PEL 444 resulting in a residual working interest position of 48.5003% in that license;

(b)	ACOR contributed an undivided 3.8333% working interest in PEL 444; and

(c)	Sakhai contributed an undivided 3.8333% working interest in PEL 444.

On May 7, 2014, the Government of South Australia registered the transfer of the 25.8333% working interest earned by Terra Nova in PEL 444.

Initial data processing of the Wingman Survey was completed in February 2014. The data has since been analyzed and as many as nine prospects and leads have been mapped. The targets are all associated with the Birkhead Formation (“Birkhead”) which is the main producer in the Charo-Snatcher field and located approximately 21 km South-East of the Wingman Survey. To further de-risk the already mapped prospects and leads in PEL 444, it was decided to re-process the data with the primary objective of relative amplitude preservation with the broadest possible bandwidth necessary for AVO - mapping techniques. Based on the reprocessed data completed September 2014, the targeted drilling locations have been mapped at various stratigraphic levels such as Birkhead, Namur and Hutton. These will be assessed in conjunction with the analogies from the adjacent Charo Field. The sites of the first two wells to be drilled are Baikal#1: latitude 27°13' 41.9"S; longtitude 139° 46' 01.7"E and Maverick #2: latitude 27°12' 58.0"S; longtitude 139° 49' 25.1"E .

Terra Nova has signed a letter of intent in October 2014 with Hunt Energy and Mineral Pty. with regard to a drilling service agreement. On February 17, 2015, the Government of South Australia granted a six month extension on License PEL 444. This extends the drilling commitment from July 11, 2015 to January 11, 2016.

Other

Results of Operations

Our combined consulting, management and professional fees for the three months ended March 31, 2015, decreased by approximately $17,000 or 39% (from $43,040 to $26,403) when compared to the same period during the prior fiscal year. This decrease relates to a reduction in management fees incurred. The change in office, travel and administrative expenses for the three month period ended March 31, 2015 was immaterial ($1K).

During the three months ended March 31, 2015 and 2014, we incurred interest expense of $195 and $5,513, respectively. This decline in interest expense results from the repayment of our note payable in the amount of $1,000,000 ($940,000 of which was outstanding at the time of payment) during mid-February 2014.

The Australian dollar decreased from 0.816 to 0.769, and increased from 0.887 to 0.925 US dollars during the three month period ended March 31, 2015 and 2014, respectively. As a result, we recognized a foreign exchange gain of approximately $268,000 and a loss of $203,000, respectively, during those periods. Substantially all of our non-cash foreign exchange gains and losses relate to the measurement of US dollars required to settle deferred taxes payable to the Australian Government in connection with our acquisition and ongoing investment in PEL 112 and PEL 444.

Financial Condition, Liquidity and Capital Resources

Our operations to date have been financed from the sale of our securities, loans from unrelated third parties and advances from Holloman Corporation, our current and former officers, directors and their affiliates. We regularly review the market to identify opportunities for capital formation.

Effective October 1, 2010, we executed an administrative services agreement with our controlling shareholder. Under this agreement, fees of $5,000 per month are payable to Holloman Corporation covering; office and meeting space, supplies, utilities, office equipment, network access and other administrative facilities costs. These fees are payable quarterly in shares of our restricted common stock at the closing price of the stock on the last trading-day of the applicable monthly billing period. This administrative services agreement can be terminated by either party with 30-days’ notice. During the three months ended March 31, 2015, we paid administrative fees totaling $15,000, using 54,479 shares of our common stock at approximate weighted average prices of $0.275 per share. Proceeds from this administrative service agreement have been assigned to a wholly owned subsidiary of Holloman Corporation.

On December 18, 2014, in order to conserve cash, the Board of Directors consented to pay all outstanding and future management fees incurred by Holloman Corporation using the same basis as the administrative agreement. During the three months ended March 31, 2015, the Company incurred management fees totaling $19,422 and issued 70,523 shares of its common stock at an approximate weighted average price of $0.275.

Other than the obligations associated with our oil and gas concessions in Australia, which include a formal authorization for expenditure in the amount of $150,000 relating to the potential residual portion of seismic exploration expenditures, we had no material future contractual obligations as of March 31, 2015.

The oil and gas industry is cyclical in nature and tends to reflect general economic conditions. The US and other world economies are recovering from a recession which continues to inhibit investment liquidity. Though oil prices have generally stabilized, the pattern of historic price fluctuations has resulted in additional uncertainty in capital markets. Our access to capital, as well as that of our partners and contractors, may be limited due to tightened credit markets. In addition, the results of our operations will be significantly impacted by a variety of trends and factors including; (i) our exploration success and the marketability of future production, if any, (ii) increasing competition from larger companies, (iii) future fluctuations in the prices of oil and gas, and (iv) our ability to maintain or increase oil and gas production through exploration and development activities.

We believe our plan of operations may require up to $10.0 million for exploration costs and administrative expenses over the twelve-month period ending August 31, 2016. We anticipate that our working interest partners will bear up to $7.7 million and that we may bear up to $2.3 million of that amount. We are attempting to raise investment capital to cover our portion of anticipated costs.

If we are unable to raise the financing we need, our business plan may fail and our stockholders could lose their investment. If we are unable to perform in accordance with the work programs required by our licenses, the Australian government could cancel our exploration rights. There can be no assurance that we will be successful in raising the capital we require, or that if capital is offered, it will be subject to terms we consider acceptable. Investors should be aware that even in the event we are able to raise the funds we require, there can be no assurance that we will succeed in our drilling or production plans and we may never be profitable.

As of May 15, 2015 we did not have any off balance sheet arrangements.

As of May 15, 2015 we did not have any proven oil or gas reserves and we did not have any revenues.

Critical Accounting Policies and Estimates

Measurement Uncertainty

The process of preparing financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, actual results may differ from estimated amounts. Our estimates and assumptions are based on current facts, historical experience and various other factors we believe to be reasonable under the circumstances. The most significant estimates with regard to the unaudited consolidated financial statements included with this report relate to carrying values of oil and gas properties, determination of fair values of stock based transactions, and deferred income tax rates and timing of the reversal of income tax differences.

These estimates and assumptions are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the periods in which they become known.

Petroleum and Natural Gas Properties

We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs, including direct internal costs, are capitalized to the full cost pool. When we commence production from established proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Costs of unproved properties are not amortized until the proved reserves associated with the projects can be determined or until impairment occurs. If an assessment of such properties indicates that properties are impaired, the amount of impairment is added to the capitalized cost base to be amortized.

The capitalized costs included in the full cost pool are subject to a "ceiling test", (based on the average of 12 month, first-day-of-the-month pricing), which limits such costs to the aggregate of the (i) estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions, (ii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, (iii) the cost of properties not being amortized, less (iv) income tax effects related to differences between the book and tax basis of the cost of properties not being amortized and the cost or estimated fair value of unproved properties included in the costs being amortized. At March 31, 2015, all of our oil and gas interests were classified as unproven properties and were not being amortized.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Fair Value Measurements

Our valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of these techniques requires significant judgment and is primarily dependent upon the characteristics of the asset or liability, the principal (or most advantageous) market in which participants would transact for the asset or liability and the quality and availability of inputs. Inputs to valuation techniques are classified as either observable or unobservable within the following hierarchy:

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Level 1 — quoted prices in active markets for identical assets or liabilities.

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Level 2 — inputs other than quoted prices that are observable for an asset or liability. These include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

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Level 3 — unobservable inputs that reflect our own expectations about the assumptions that market participants would use in measuring the fair value of an asset or liability.

We consider all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents. We are exposed to a concentration of credit risk with respect to our cash deposits. We place cash deposits with highly rated financial institutions in the United States and Australia. At times, cash balances held in financial institutions may be in excess of insured limits. We believe the financial institutions are financially strong and the risk of loss is minimal. We have not experienced any losses with respect to the related risks and do not believe our exposure to such risks is more than normal.

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, other receivables, accounts payable, accrued liabilities and demand notes payable approximates their carrying value due to their short-term nature.

Stock Based Compensation

We record compensation expense for stock based payments using the fair value method. The fair value of stock options granted to directors and employees is determined using the Black-Scholes option valuation model at the time of grant. Fair value for common shares issued for goods or services rendered by non-employees is measured based on the fair value of the goods and services received. Share-based compensation is expensed with a corresponding increase to share capital. Upon the exercise of the stock options, the consideration paid is recorded as an increase in share capital.

Foreign Currency Translation

Our functional and reporting currency, and that of our Australian subsidiary, is the United States dollar. The financial statements of our Canadian subsidiary (which is relatively inactive) are translated to United States dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Foreign currency financial statements of our Australian subsidiary use period end rates for monetary assets and liabilities, historical rates for historical cost balances, and average rates for expenses. If material, translation gains and losses are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian and Australian dollars. As of March 31, 2015, we have not entered into derivative instruments to offset the impact of foreign currency fluctuations.

Other Comprehensive Income (Loss)

We report and display comprehensive income or loss and its components in our consolidated financial statements. For the three month period ended March 31, 2015, the only components of comprehensive income or loss were foreign currency translation adjustments.

Income Taxes

We follow the asset and liability method of accounting for future income taxes. Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases. In addition, the future benefits of income tax assets, including unused tax losses, are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.

Earnings per share

We present both basic and diluted earnings (loss) per share (EPS) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all potential dilutive common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Diluted EPS figures are equal to those of basic EPS for each period since we had no securities outstanding during those periods in which we generated net loss that were potentially dilutive.

See Note 1 to the accompanying unaudited consolidated financial statements for a discussion of recent accounting pronouncements.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of March 31, 2015, our disclosure controls and procedures were effective.

Change in Internal Control over Financial Reporting

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

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

On March 31, 2015, we issued 54,479 shares of our common stock, at an average price of $0.275 per share, in connection with the conversion of $15,000 in administrative service fees payable and we issued 70,523 shares of our common stock at an average price of $0.275 per share, in connection with the conversion of $19,422 in management fees payable to a wholly owned subsidiary of our controlling shareholder, Holloman Corporation.

On April 13, 2015, we sold 500,000 shares of common stock to a wholly-owned subsidiary of Holloman Corporation, to certain directors and officers, and to three non-affiliated persons. The shares were priced at $0.20 each. Proceeds from the private placement totaled $100,000. The entire $100,000 was paid in cash.

We relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 with respect to the issuance and sale of the shares listed above. The persons who acquired these securities were sophisticated investors who were provided full information regarding our business and operations. There was no general solicitation in connection with the offer, sale or issuance of these securities. The persons acquired these shares for their own accounts. The shares cannot be sold unless pursuant to an effective registration statement or an exemption from registration. No commissions were paid to any person in connection with the issuance or sale of these securities.

ITEM 6. EXHIBITS

Exhibit Number		Description of Exhibit
3.1		Articles of Incorporation(1)
3.2		Corporate Bylaws(1)
10.1		Share Exchange Agreement between Endeavor Energy Corporation, First Endeavor Holdings Inc. and Endeavor Canada Corporation(2)
10.2		Agreement between Endeavor Energy Corporation and Holloman Petroleum Pty. Ltd. for the purchase of assets and exchange of shares(3)
10.3		Option Agreement between Holloman Energy Corporation and Cameron King for an exchange of shares of Endeavor Canada Corporation(4)
10.4		Notice of Option Exercise relating to the Option Agreement between Holloman Energy Corporation and Cameron King for an exchange of shares of Endeavor Canada Corporation(4)
10.5		Farm Out Commitment Agreement between Holloman Energy Corporation and Holloman Oil & Gas, Ltd.(4)
10.6		Brandenburg Oil & Gas Farm-In Agreement, Petroleum Exploration Licenses 112 and 444 dated July 29, 2011(6)
10.7		Terra Nova Oil & Gas Farm-In Agreement, PELs 112 and 444, and Letter Agreement – Transaction Cost Sharing (7)
10.8		Assignment of Overriding Royalty Interests in PEL 112 to LPD Investments Limited (8)
10.9		Assignment of Overriding Royalty Interests in PEL 444 to LPD Investments Limited (8)
14.1		Code of Ethics for Principal Executive and Senior Financial Officers(5)
21.1		As of March 31, 2014 our subsidiaries were:
		First Endeavor Holdings Inc. (100% Owned) Alberta corporation
		Holloman Petroleum Pty. Ltd. (100% Owned) Australian corporation
		Endeavor Exploration Pty. Ltd. (100% Owned) Australian corporation
		All subsidiaries conduct business under their own names
31.1		Rule 13a-14(a) Certifications
31.2		Rule 13a-14(a) Certifications
32		Section 1350 Certifications

101. INS		XBRL Instance Document
101. SCH		XBRL Schema Document
101. CAL		XBRL Calculation Linkbase Document
101. DEF		XBRL Taxonomy Extension Definition Linkbase Document
101. LAB		XBRL Label Linkbase Document
101. PRE		XBRL Presentation Linkbase Document

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(1)	Previously filed with our Form SB-2 on September 26, 2005 and incorporated by reference.
(2)	Previously filed with our Form 8-K on August 9, 2007 and incorporated by reference.

(3)	Previously filed with our Form 8-K on November 29, 2007 and incorporated by reference.
(4)	Previously filed with our Form 10-KSB on April 15, 2008 and incorporated by reference.

(5)	Previously filed with our Form 10-KSB/A on April 26, 2007 and incorporated by reference.
(6)	Previously filed with our Form 8-K on August 4, 2011 and incorporated by reference.
(7)	Previously filed with our Form 10-Q on May 15, 2012 and incorporated by reference.
(8)	Previously filed with our Form 10-Q on May 15, 2013 and incorporated by reference.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOLLOMAN ENERGY CORPORATION

Date: May 15, 2015	By:	/s/ Mark Stevenson
		Mark Stevenson, Principal Executive Officer

Date: May 15, 2015	By:	/s/ Gina Serkasevich
		Gina Serkasevich, Principal Financial and Accounting Officer