SPIRITS TIME INTERNATIONAL, INC. - Quarter Report: 2009 May (Form 10-Q)

sears10q033109.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2009

Commission File Number 333-151300

SEARS OIL AND GAS CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		20-3455830
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

351-B Linden Street

Ft. Collins, Colorado 80524

(970) 224-1189

(Registrant’s address and telephone number, including area code)

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

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 x
(Do not check if a smaller reporting company)

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

Yes x No o

36,800,000 shares of Common Stock, par value $0.001, were outstanding on May 20, 2008.

SEARS OIL & GAS CORPORATION

INDEX

	Page
	Number
PART I - FINANCIAL INFORMATION	4

Item 1 – Financial Statements -Unaudited	4

Balance Sheets	F-3
Statements of Operations	F-4
Statements of Stockholders' Equity (Deficit)	F-5
Statements of Cash Flows	F-6
Notes to Financial Statements	F-7-8

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3 – Quantitative and Qualitative Disclosure About Market Risk	5

Item 4 – Controls and Procedures	6

PART II – OTHER INFORMATION	7

Item 1 - Legal Proceedings	7

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	8

Item 3 - Defaults upon Senior Securities	8

Item 4 – Submission of Matters to a Vote of Security Holders	8

Item 5 - Other Information	8

Item 6 – Exhibits	8

Signatures	9

PART I ― FINANCIAL INFORMATION

Item 1. Financial Statements.

SEARS OIL AND GAS CORPORATION

(A Development Stage Company)

FINANCIAL STATEMENTS

March 31, 2009 and December 31, 2008

F-1

C O N T E N T S

		Page(s)
Balance Sheets		F-3

Statements of Operations		F-4

Statements of Stockholders’ Equity (Deficit)		F-5

Statements of Cash Flows		F-6

Notes to the Financial Statements		F-7-8

F-2

SEARS OIL AND GAS CORPORATION
(A Development Stage Company)
Balance Sheets



ASSETS

	March 31,				December 31,
	2009				2008
		(unaudited)
CURRENT ASSETS

Cash		$	6,432			$	592

Total Current Assets			6,432				592

TOTAL ASSETS		$	6,432			$	592


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable related party		$	15,000			$	-

Total Current Liabilities			15,000				-

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, $0.001 par value, 75,000,000
shares authorized, 36,200,000
shares outstanding			36,200				36,200
Additional paid-in capital			65,800				65,800
Deficit accumulated during the development stage			(110,568	)			(101,408	)

Total Stockholders' Equity (Deficit)			(8,568	)			592
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)		$	6,432			$	592

F-3

SEARS OIL AND GAS CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)



							From Inception
							on September 9,
	For the Three Months						2005 Through
	Ended						March 31,
	2009			2008			2009

REVENUES	$	-		$	-		$	-

OPERATING EXPENSES

General and administrative		9,160			13,580			110,568

Total Operating Expenses		9,160			13,580			110,568

LOSS FROM OPERATIONS		(9,160	)		(13,580	)		(110,568	)

OTHER EXPENSES

Interest expense		-			-			-

LOSS BEFORE INCOME TAXES		(9,160	)		(13,580	)		(110,568	)

Income Tax Expense		-			-			-

NET LOSS	$	(9,160	)	$	(13,580	)	$	(110,568	)

BASIC LOSS PER
COMMON SHARE	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING		36,200,000			33,100,000

F-4

SEARS OIL AND GAS CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)



							Deficit
							Accumulated
					Additional		During the			Total
	Common Stock				Paid-In		Development			Stockholders'
	Shares		Amount		Capital		Stage			Equity

Balance, September 9, 2005		-	$	-	$	-	$	-		$	-

Shares issued for services		30,000,000		30,000		10,000		-			40,000

Net loss since inception
through December 31, 2005		-		-		-		(543	)		(543	)

Balance, December 31, 2005		30,000,000		30,000		10,000		(543	)		39,457

Net loss for the year
ended December 31, 2006		-		-		-		(39,186	)		(39,186	)

Balance, December 31, 2006		30,000,000		30,000		10,000		(39,729	)		271

Common stock issued for
cash at $0.01 per share		1,200,000		1,200		10,800		-			12,000

Common stock issued for
services at $0.01 per share		5,000,000		5,000		45,000		-			50,000

Net loss for the year
ended December 31, 2007		-		-		-		(30,048	)		(30,048	)

Balance, December 31, 2007		36,200,000		36,200		65,800		(69,777	)		32,223

Net loss for the year ended
December 31, 2008		-		-		-		(31,631	)		(31,631	)

Balance, December 31, 2008		36,200,000		36,200		65,800		(101,408	)		592

Net loss for the three months ended
March 31, 2009 (unaudited)		-		-		-		(9,160	)		(9,160	)

Balance, March 31, 2009 (unaudited)		36,200,000	$	36,200	$	65,800	$	(110,568	)	$	(8,568	)

F-5

SEARS OIL AND GAS CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
							From Inception
							on September 9,
	For theThree Months Ended						2005 Through
	March 31,						March 31,
	2009			2008			2009

OPERATING ACTIVITIES

Net loss	$	(9,160	)	$	(13,580	)	$	(110,568	)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operating Activities:
Common stock issued for services		-			-			52,000
Changes in operating assets and liabilities:
Changes in accounts payable		-			-			-

Net Cash Used in
Operating Activities		(9,160	)		(13,580	)		(58,568	)

INVESTING ACTIVITIES		-			-			-

FINANCING ACTIVITIES

Increase in related party payable		15,000			-			15,000
Common stock issued for cash		-			-			50,000

Net Cash Provided by
Financing Activities		15,000			-			65,000

NET DECREASE IN CASH		5,840			(13,580	)		6,432

CASH AT BEGINNING OF PERIOD		592			32,223			-

CASH AT END OF PERIOD	$	6,432		$	18,643		$	6,432


SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION

CASH PAID FOR:

Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-

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

F-6

SEARS OIL & GAS, INC.

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2009 and 2008

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2009 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2008 audited financial statements. The results of operations for the period ended March 31, 2009 and 2008 are not necessarily indicative of the operating results for the full year.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had no revenues and has generated losses from operations.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and to develop a consistent source of revenues. Management’s plans include of investing in and developing all types of businesses related to the entertainment industry.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-7

SEARS OIL & GAS, INC.

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2009 and 2008

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

F-8

Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations.

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing and actual results may differ materially from historical results or our predictions of future results.

General

Sears Oil & Gas Corporation (the “Company”) is a development stage company that was incorporated on June 6, 2007, in the state of Nevada. The Company was organized for the purpose of exploiting the opportunities that exists in the oil and gas sector. The Company has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, Sears Oil & Gas has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations and the Company owns no subsidiaries. The fiscal year end is December 31st. The Company has not had revenues from operations since its inception and/or any interim period in the current fiscal year.

Plan of Operation

As of March 31, 2009, we have $6,432 of cash available. We have $15,000 of current liabilities. From the date of inception (September 9, 2005) to March 31, 2009 the Company has recorded a net loss of $110,568 of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form S-1, and expenses relating to maintaining Reporting Company status with the SEC. In order to survive as a going concern over the Company will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business. Failure to secure additional financing would result in business failure and a complete loss of any investment made into the Company.

The Company filed a registration statement on Form S-1 on July 21, 2008, which was deemed effective on July 25, 2007. The Company receive no funds from this offering. The registration was done for the benefit of the selling shareholders and we continue to fund the expenses associated with maintaining a reporting company status.

In addition, over the course of the next 45 to 60 days, management intends to focus efforts on obtaining a quotation for its common stock on the Over the Counter Bulletin Board (“OTCBB”). Management believes having its common stock quoted on the OTCBB will provide it increased opportunity to raise additional capital for its proposed business development. However, there can be no guarantee or assurance the Company will be successful in filing a Form 211 application and obtaining a quotation. To date there is no public market for the Company’s common stock. There can be no guarantee or assurance that a public market will ever exist for the common stock. Failure to create a market for the Company’s common stock would result in business failure and a complete loss of any investment made into the Company.

Product Research and Development

The Company does not anticipate any costs or expenses to be incurred for product research and development within the next twelve months.

Employees

There are no employees of the Company, excluding the current President and Director, Mr. Sears and the Company does not anticipate hiring any additional employees within the next twelve months.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable

Item 4. Controls and Procedures

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

As of March 31, 2009, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the review of our financial statements as of March 31, 2009 and communicated the matters to our management.

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years.

We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company:

i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Controls.

There were no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

	(a) Exhibits furnished as Exhibits hereto:

Exhibit No.		Description

31.1		Certification of William Sears pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signature

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.

	Sears Oil & Gas Corporation

Date: May 20, 2009	By:	/ s / William Sears
		William Sears
		Chief Financial Officer, Treasurer and Clerk
		( principal financial and accounting officer)

Date: May 20, 2009	By:	/ / s/William Sears
		William Sears
		President and Chief Executive Officer