UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 2008
[ ] Transition report under Section 13 or 15(d) of the
Exchange Act
For the transition period from __________ to __________
Commission File Number 0-131224
Dynamic
Natural Resources, Inc.
|
(Exact
Name of Small Business Issuer as Specified in Its Charter)
|
NEVADA
|
20-4028175
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(IRS
Employer Identification No.)
|
78
South Street Suite 202
Wrentham, MA 02093
|
(Address
of Principal Executive Offices)
|
(508)
463 6290
|
(Issuer's
Telephone Number, Including Area Code)
|
N/A
|
(Former
Name, Former Address and Former Fiscal Year, If changed since
Last Report)
|
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large
accelerated filer [ ] Accelerated filer [ ]
Non-accelerated
filer [ ] (Do not check if a smaller reporting company) Smaller
reporting company [X]
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date.
As
of September 30, 2008 there were outstanding 3,084,034 shares of
common stock, par value $0.001, and no shares of preferred stock.
Dynamic Natural Resources, Inc.
FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 2008
TABLE OF CONTENTS
PART
I
|
|
Item 1.
Financial Statements
|
|
Balance
Sheets as of September
30, 2008 and December 31, 2007
|
F-2
|
Statements
of
Operations for
the Three and Nine Months Ended September 30, 2008 and 2007
|
F-3
|
Stat
ements
of Cash Flows for the Nine Months Ended September 30, 2008 and
2007
|
F-4
|
Notes
to Financial Statements
|
F-5
|
Item 2.
Management’s Discussion and Analysis or Plan of Operation
|
1
|
Item 3.
Controls and procedures
|
3
|
PART
II
|
|
Item 1.
Legal Proceedings
|
4
|
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds
|
4
|
Item 3.
Defaults Upon Senior Securities
|
4
|
Item 4.
Submission of Matters to a Vote of Security Holders
|
4
|
Item 5.
Other Information
|
4
|
Item 6.
Exhibits
|
5
|
Page F-1
Dynamic
Natural Resources, Inc.
Balance Sheet
September
30, 2008 and December 31, 2007
|
|
2008
|
2007
|
ASSETS
|
Current Assets:
|
|
|
Cash
|
$1,027
|
$31
|
Accounts receivable
|
-
|
-
|
Note Receivable - Related Party
|
-
|
3,880
|
Other Current Assets
|
_
|
905
|
Total Current Assets
|
1,027
|
4,816
|
|
|
|
Property and Equipment, net
|
1,495
|
8,998
|
|
|
|
|
|
|
Other Assets:
|
|
|
Oil and gas
Properties
Net
of
|
|
|
Accumulated Amortization
|
150,000
|
337,707
|
Total other assets
|
150,000
|
337,707
|
|
|
|
Total Assets
|
$152,522
|
$351,521
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
Current Liabilities:
|
|
|
Accounts payable
|
$8,154
|
$12,169
|
Loan from officer
|
6,000
|
-
|
Total Current Liabilities
|
14,154
|
12,169
|
|
|
|
Long term Liabilities
|
|
|
Notes Payable
|
13,020
|
12,604
|
Total Liabilities
|
27,174
|
24,773
|
|
|
|
Stockholders' Equity:
|
|
|
Common
stock at $0.001 par value; 10,000,000 shares authoriz
ed;
issued and outstanding: September 30, 2008 - 3,084,034 shares;
December 31, 2007 – 26,497,000
Shares - Note F
|
3,084
|
2,649
|
Additional paid-in capital
|
956,716
|
932,850
|
Accumulated deficit
|
(834,452)
|
(608,751)
|
Stockholders’ Equity
|
125,348
|
326,748
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
$152,522
|
$351,521
|
See
accompanying notes
Page F-2
Dynamic Natural
Resources, Inc.
|
Statement of
Operations
|
For
the Three and Nine
Months Ended June 30, 2008 and 2007
|
|
Three Months
Ended
|
Nine
Months Ended
|
|
September
30
|
September
30
|
|
2008
|
2007
|
2008
|
2007
|
|
|
|
|
|
Revenue
|
$1,215
|
|
$23,019
|
$1,164
|
Cost of Revenue
|
|
|
|
26,900
|
Gross Profit
|
$1,215
|
|
$23,019
|
(25,736)
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
General and Administrative
|
12,053
|
24,833
|
52,730
|
32,350
|
Professional Fees
|
4,914
|
2,058
|
15,926
|
5,515
|
Miscellaneous Expense
|
-
|
-
|
-
|
526
|
Total Operating Expenses
|
16,967
|
26,891
|
68,656
|
38,391
|
|
|
|
|
|
Other Income (Expense):
|
(180,063)
|
243
|
(180,063)
|
(365,610)
|
|
|
|
|
|
Net Income (Loss)
|
($195,815)
|
($26,648)
|
($225,700)
|
($429,737)
|
|
|
|
|
|
Basic and diluted loss per share
|
($0.06)
|
($0.00)
|
($0.07)
|
($0.01)
|
|
|
|
|
|
Weighted average number of common
shares outstanding
|
3,084,034
|
25,840,000
|
3,084,034
|
35,465,714
|
See accompanying notes
Page F-3
Dynamic Natural Resources, Inc.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2008 AND 2007
|
2008
|
2007
|
Net loss
|
($225,700)
|
($429,737)
|
Adjustments to reconcile net loss
to net cash flows from operating activities:
|
-
|
1
|
Depreciation
|
(100)
|
-
|
Changes in operating assets and
liabilities
|
3,581
|
|
Notes Receiveable, Related Party
|
6,000
|
17,622
|
Prepaid and other assets
|
305
|
(610)
|
Accounts Payable
|
(4,015)
|
12,094
|
Total adjustments
|
5,771
|
29,106
|
|
|
|
Net cash flows from operating
activities
|
(39,866)
|
(400,630)
|
|
|
|
Cash Flows From Investing
Activities
|
|
|
Purchases
of property and equipment
Security
Deposit
|
600
|
(9,172)
(600)
|
Purchase and/or investment in oil
and gas properties
|
180,063
|
255,854
|
Net cash flows from investing
activities
|
180,663
|
246,082
|
|
|
|
Cash Flows From Financing
Activities
|
|
|
Proceeds from sale of stock and
working interests
|
39,950
|
112,500
|
Note Payable
|
312
|
|
Proceeds from shareholder loans
|
|
12,500
|
Net cash provided by financing
activities
|
40,262
|
125,000
|
|
|
|
Net Change in Cash
|
996
|
(29,548)
|
|
|
|
Cash, Beginning of the Period
|
31
|
44,149
|
|
|
|
Cash, End of the Period
|
$1,027
|
$14,601
|
See accompanying notes
Page F-4
DYNAMIC NATURAL RESOURCES, INC.
NOTES TO FINANCIAL STATEMETS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2008
Note
A - Nature of Operations and Basis of Presentation
Nature
of Operations
Dynamic
Natural Resources, Inc. was incorporated in the State of Nevada on
November 29, 2005. Formerly Value Consulting, Inc., the Company
changed its name to Dynamic Natural Resources in September, 2007.
Dynamic Natural Resources was created to pursue an interest in the
burgeoning oil and gas market. Dynamic Natural Resources
Inc. is pursuing oil producing assets in the Illinois basin.
Our
principal executive office is located at 78 South Street Wrentham,
MA, 02093, and our telephone number is 508-463-6290. We currently
have two employees, both officers of the Company, and work primarily
through independent contractors to operate and manage our lease
interests. Our common stock is traded on the OTCBB under the ticker
symbol “DYNI”. Our website address is
www.dynamicnaturalresources.com.
Certain
terms that are commonly used in the oil and gas industry, including
terms that define our rights and obligations with respect to our
properties, are defined in the “Glossary of Certain Oil and Gas
Terms” of this Form 10-Q.
Basis
of Presentation
The
accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America for interim financial information and with
the instructions incorporated in Regulation S-B, Item 310(b) of the
Securities and Exchange Commission. Accordingly, they do not include
all the information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements. The financial statements are unaudited, but in
the opinion of management, all adjustments (consisting of normal
recurring adjustments and accruals) considered necessary for a fair
presentation of the Company's financial position, results of
operations and cash flows for the nine months ended September 30,
2008 have been included.
These
statements are not necessarily indicative of the results to be
expected for the full fiscal year. These statements should be read in
conjunction with the financial statements and notes thereto included
in the Company's Form 10-KSB for the year ended December 31, 2007 as
filed with the Securities and Exchange Commission.
Use
of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the 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. Actual results could differ from those
estimates.
Page F-5
Accounts Receivable
The
Company’s trade accounts receivable result from the sale of its
services, The Company uses the allowance method to account for
uncollectible accounts. Bad debt expense for the nine months ended
September 30, 2008 and 2007 was $0.
Concentration
of Credit Risk
The
Companys’ trade accounts receivable result from the sale of oil
and gas to customers. In order to minimize the risk of loss from
these companies, credit limits, ongoing credit evaluation of its
customers, and account monitoring procedures are utilized. Collateral
is not generally required. Management analyzes historical bad debt,
customer concentrations, customer credit-worthiness, and current
economic trends.
The Company is obligated to pay the salaries,
wages, related benefit costs, and expenses of its employees and
consultants. Accordingly, the Company's ability to collect amounts
due from customers could be affected by economic fluctuations in its
markets or these industries.
Financial
Instruments
Dynamic
Natural Resources, Inc. estimates that the fair value of all
financial instruments at September 30, 2008, do not differ materially
from the aggregate carrying value of its financial instruments
recorded in the accompanying balance sheets.
Property
and Equipment
Property
and equipment are recorded at historical cost and include
expenditures, which substantially increase the useful lives of
existing property and equipment. Maintenance and repairs are charged
to operations when incurred.
Depreciation
of property and equipment is computed primarily using the
straight-line method based on estimated useful lives (furniture and
fixtures, 6 to 7 years, office equipment 5 to 7 years, and computers
and software, 3 to 5 years). Depreciation for income tax purposes is
computed principally using the straight line method and estimated
useful lives.
Oil
and Gas Properties
The
Company follows the full cost method of accounting for its oil and
gas operations. Under this method, costs incurred in the acquisition,
exploration and development of oil and gas properties are capitalized
in one cost center, including certain internal costs directly
associated with such activities. Proceeds from the sale of oil and
gas properties are credited to the cost center with no gain or loss
recognized unless such sale would significantly alter the
relationship between capitalized costs and proved oil and gas
reserves.
If
capitalized costs, less related accumulated amortization and deferred
income taxes, exceed the “full cost ceiling” the excess
is expensed in the period such excess occurs. The “full cost
ceiling” is determined based on the present value of estimated
future net revenues attributable to proved reserves, using current
product prices and operating costs at the balance sheet date plus the
lower of cost and fair value of unproved properties within the cost
center.
Costs
of oil and gas properties are amortized using the unit-of-production
method based upon estimated proven oil and gas reserves starting when
proved reserves have been established. The significant unproven
properties are excluded from the costs subject to depletion.
Page F-6
As of September 30, 2008 The
Company reduced it’s estimate of proven oil and gas reserves by
$180,063.
Advertising
Cost
Advertising
costs, except for costs associated with direct-response advertising,
are charged to operations when incurred. The costs of direct-response
advertising are capitalized and amortized over the period during
which future benefits are expected to be received. The company did
not have direct-response advertising costs during the nine months
ended September 30, 2008 and 2007.
Accounting
for Stock-based Compensation
The
Companys’ accounts for and reports its stock-based employee
compensation arrangements in accordance with the provisions of
Financial Accounting Standards NO, 123 (revised 2004)
Share-Based
Payment
(“SFAS
No. 123R”) which requires the compensation cost related to
share-based payments, such as stock options and employee stock
purchase plans, be recognized in the financial statements based on
the grant-date fair value of the award. During 2008 or 2007, the
company did not grant any stock options which would require a
calculation as prescribed by SFAS No. 123R
Income
Taxes
Dynamic
records its federal and state income tax liability in accordance with
Statement of Financial Accounting Standards Statement No. 109
"Accounting for Income Taxes". Deferred taxes are provided
for differences between the basis of assets and liabilities for
financial statements and income tax purposes, using current tax
rates. Deferred tax assets represent the expected benefits from net
operating losses carried forward and general business credits that
are available to offset future income taxes.
Loss
Per Share
Net
loss per share is computed based upon the weighted average number of
outstanding shares of the Company’s common stock for each
period presented.
Note
A - Nature of Operations and Basis of Presentation (Continued)
Recent
Accounting Pronouncements
In
February 2006, the FASB issued SFAS No. 155, Accounting for Certain
Hybrid Financial Instruments-an amendment of FASB Statements No. 133
and 140. This statement resolves issues addressed in FAS No. 133
Implementation Issue No. D1, Application of Statement 133 to
Beneficial Interest in Securitized Financial Assets. SFAS No. 155:
(a) permits fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would
require bifurcation; (b) clarifies which interest-only strips and
principal-only strips are not subject to the requirements of SFAS No.
133; (c) establishes a requirement to evaluate beneficial interests
in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments
that contain an embedded derivative requiring bifurcation; (d)
clarifies that concentrations of credit risk in the form of
subordination are not embedded derivatives; and, (e) eliminates
restrictions on a qualifying special-purpose entity's ability to hold
passive derivative financial instruments that pertain to beneficial
interests that are or contain a derivative financial instrument. SFAS
No. 155 also requires presentation within the financial statements
that identifies those hybrid financial instruments for which the fair
value election has been applied and information on the income
statement impact of the changes in fair value of those instruments.
Page F-7
Company is required to apply SFAS No. 155 to all
financial instruments acquired, issued or subject to a remeasurement
event beginning January 1, 2007. The Company does not expect the
adoption of SFAS No. 155 to have a material impact on the Company's
financial statements.
Furthermore,
public entities are required to measure liabilities incurred to
employees in share-based payment transactions at fair value as well
as estimate the number of instruments for which the requisite service
is expected to be rendered. Any incremental compensation cost for a
modification of the terms or conditions of an award is measured by
comparing the fair values before and after the modification. The
Company has yet to determine the effect SFAS No. 123R may have on its
financial statements, if any.
Note
B - Income Taxes
For
income tax purposes Dynamic had $15,752 of net operating losses for
the three months ended September 30, 2008, which can be used to
offset future federal and state taxable income. No income tax benefit
has been recorded in the accompanying financial statements since the
recoverability of such assets is not reasonably assured through known
future revenue sources.
Note
C- Related Party Transactions
Effective October 8, 2008, Dynamic Natural Resources
Inc., a Nevada corporation (the “Company”) acquired
Universal Tracking Solutions, Inc., a Nevada corporation (“UTS”)
in a transaction in which UTS was merged with a subsidiary of the
Company created for this purpose. The former shareholders of UTS
exchanged 100% of their UTS common stock for a collective 50%
ownership stake in the Company. UTS also appointed two persons to the
Company’s board of directors. The transaction has been approved
by the majority shareholders of the Company and by UTS’
shareholders. The result of the share exchange is that UTS became a
wholly-owned subsidiary of the Company, and the Company now has a
total of five directors.
Note
D - Cash Flow Supplemental Information
Interest
expense during the three months ended September 30, 2008 amounted to
$104.00.
During
the quarter ended September 30, 2008 the company sold working
interest shares for $39,950.
Note
E - Other Assets
Other
Assets consists of oil and gas properties.
Note
F - Stockholders’ Equity
Issuance
of Common Stock
On
April 1, 2008, the Company entered into a term sheet with Universal
Tracking Solutions, Inc. (“UTS”), a Nevada corporation of
which the Company holds a 31% stake, to acquire all outstanding
shares and to merge UTS with a newly created subsidiary.
The
Company issued 40,000,000 shares to shareholders of record as of
September 15, 2006. The stock issuance was meant to compensate the
affected shareholders for the Company’s announced distribution
in September 2006 of its 4,000,000 shares of UTS. The UTS
distribution was never consummated. However, the Company will own UTS
if the current reverse-merger transaction with UTS is consummated,
and the 2006 shareholders will hold an aggregate of 4,000,000
post-reverse split shares in the Company, the same amount of shares
that they would have owned in UTS if the distribution had been
consummated.
Page F-8
The
Company also agreed to effect a 1:10 reverse-split of its common
stock. The reverse-split was effected on April 16, 2008, at which
time 30,840,340 shares became 3,084,034 shares.
Common
Stock Warrants
As
of September 30, 2008 there were no stock warrants issued or
outstanding.
Note
G - Commitments and Contingencies
Operating
Leases
Dynamic
currently has no lease obligations.
Litigation
As
of September 30, 2008, Dynamic did not have any outstanding legal
issues outside of the ordinary course of business.
Note
H - Subsequent Events
Effective October 8, 2008, Dynamic
Natural Resources Inc., a Nevada corporation (the “Company”)
acquired Universal Tracking Solutions, Inc., a Nevada corporation
(“UTS”) in a transaction in which UTS was merged with a
subsidiary of the Company created for this purpose. The former
shareholders of UTS exchanged 100% of their UTS common stock for a
collective 50% ownership stake in the Company. UTS also appointed two
persons to the Company’s board of directors. The transaction
has been approved by the majority shareholders of the Company and by
UTS’ shareholders. The result of the share exchange is that UTS
became a wholly-owned subsidiary of the Company, and the Company now
has a total of five directors.
Effective October 31, 2008,
Dynamic Natural Resources Inc., a Nevada corporation (the “Company”)
changed the name of the company to Universal Tracking Solutions,
Inc., a Nevada corporation (“UTS”). The change has been
approved by the majority shareholders of the Company and by UTS’
shareholders.
Following
is pro forma consolidated condensed financial information giving
effect to the above transaction:
Page F-9
DYNAMIC NATURAL RESOURCES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
September 30, 2008
|
|
DYNI
|
|
|
UTS
|
|
|
ADJ
DEBIT/CRE
|
|
|
PRO FORMA
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,027
|
|
|
$
|
20,921
|
|
|
|
|
|
$
|
21,948
|
|
Accounts
Receivable
|
|
|
-
|
|
|
|
104,350
|
|
|
|
|
|
|
104,350
|
|
Other
Current Assets
|
|
|
-
|
|
|
|
38,485
|
|
|
|
|
|
|
38,485
|
|
Total
Current Assets
|
|
|
1,027
|
|
|
|
163,756
|
|
|
|
|
|
|
164,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
& Equipment Net
|
|
|
1,495
|
|
|
|
1,262
|
|
|
|
|
|
|
2,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and Gas Properties Net of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Amortization
|
|
|
150,000
|
|
|
|
78,792
|
|
|
|
|
|
|
228,792
|
|
Total
other Assets
|
|
|
150,000
|
|
|
|
78,792
|
|
|
|
|
|
|
228,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
152,522
|
|
|
$
|
243,810
|
|
|
|
|
|
$
|
396,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& STOCKHOLDERS EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current Liabilities:
Note payable related party
|
|
$
|
6,000
|
|
|
$
|
20,000
|
|
|
|
|
|
$
|
26,000
|
|
Accounts
Payable
|
|
|
8,154
|
|
|
|
71,840
|
|
|
|
|
|
|
79,994
|
|
Accrued
Liabilities
|
|
|
|
|
|
|
101,314
|
|
|
|
|
|
|
101,314
|
|
Total
Current Liabilities
|
|
|
14,154
|
|
|
|
193,154
|
|
|
|
|
|
|
207,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
Term Liabilities
|
|
|
13,020
|
|
|
|
96,005
|
|
|
|
|
|
|
109,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
27,174
|
|
|
|
289,159
|
|
|
|
|
|
|
316,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders
Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock at $0.0001 par value;
100,000,000 shares authorized; issued and
outstanding:
14,166,533 shares
|
|
|
3,084
|
|
|
|
1,111
|
|
|
|
(2,778
|
)
|
|
|
1,417
|
|
Additional
paid-in capital
|
|
|
956,716
|
|
|
|
466,819
|
|
|
|
2,778
|
|
|
|
1,426,313
|
|
Accumulated
deficit
|
|
|
(834,452
|
)
|
|
|
(513,279
|
)
|
|
|
|
|
|
|
(1,347,731)
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity (Deficit)
|
|
|
125,348
|
|
|
|
(45,349
|
)
|
|
|
|
|
|
|
79,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
152,522
|
|
|
$
|
243,810
|
|
|
|
|
|
|
$
|
396,332
|
|
Page F-10
DYNAMIC NATURAL RESOURCES, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
For the nine months ended September 30, 2008
|
|
DYNI
|
|
|
UTS
|
|
ADJ
DEBIT/CRE
|
|
PRO FORMA
|
|
Revenue
|
|
$
|
23,019
|
|
|
$
|
971,694
|
|
|
|
$
|
994,713
|
|
Cost
of Revenue
|
|
|
-
|
|
|
|
606,806
|
|
|
|
|
606,806
|
|
Gross
Profit
|
|
|
23,019
|
|
|
|
364,888
|
|
|
|
|
387,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and Administrative
|
|
|
52,730
|
|
|
|
368,947
|
|
|
|
|
421,677
|
|
Professional
Fees
|
|
|
15,926
|
|
|
|
-
|
|
|
|
|
15,926
|
|
Total
operating Expenses
|
|
|
68,656
|
|
|
|
368,947
|
|
|
|
|
437,603
|
|
Other
Income (expense)
|
|
|
(180,063
|
)
|
|
|
5
|
|
|
|
|
(180,058
|
)
|
Net
Income (Loss)
|
|
$
|
(225,700
|
)
|
|
$
|
(4,054
|
)
|
|
|
$
|
(229,754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted net
Income (loss) per share
|
|
$
|
(0.07
|
)
|
|
$
|
0.00
|
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Shares used in Calculation
Basic
and Diluted Net income (loss) Per share
|
|
|
3,084,034
|
|
|
|
11,082,500
|
|
|
|
|
14,166,534
|
|
Page F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company
Strategy
At
the present time, we do not plan to finance our oil and gas
acquisitions and drilling activities solely through our own
resources. Consequently, we identify prospects or production to
acquire and drill prospects, and seek other industry investors who
are willing to participate in these activities with us. We frequently
retain a promotional interest in these prospects, but generally we
finance a portion (and sometimes a significant portion) of the
acquisition and drilling costs.
The
following is a description of our oil and gas exploration and
production assets and activities:
The
Earhardt Lease -
In
September of 2007 the company acquired a 97% working interest in an
oil lease located in Illinois. The lease, called the “Earhardt
Lease” is situated on 80 acres of land, located in Edwards
County. There are currently 2 wells on the lease. These wells will be
put back online by reworking as necessary, and installing pumping
units on the existing wells. No production has been generated by the
lease to date.
The
White Lease -
The
company acquired a total of 74% working interest in an oil lease
located in Illinois. The lease, called the “White Lease”
is situated on 40 acres of land, located in Edwards County. There is
currently 1 well on the lease. This well was put back online by
reworking the well as necessary, and rehabbing the pumping unit. The
well produced about 120 barrels of oil when a subsequent problem shut
the well down. In the near the well will return to production.
The
Kelsey Pierce, School and Weber Leases -
In
August of 2007 the company acquired working interests in other oil
leases located in Illinois. The leases, called the “Kelsey
Pierce Lease”, “Weber Lease” and the “School
Lease” are in Edwards County. There are currently 7 wells on
the leases. Three of the wells have been put back online by reworking
the wells as necessary, and rehabbing the pumping units as needed.
The
Hinderlighter Lease -
In
December of 2007 the Company acquired 100 percent working interest in
the Hinderlighter lease. This lease has two wells located on it that
were drilled in the early 1990’s. The lease consists of 80
acres located in Edwards County, IL. The operator controls 1/8
carried interest, and the landowner hold 3/16 carried interest. The
company has sold 30 percent of it’s interest in the lease for
capital.
The
Anderson Lease -
In
April of 2008 the Company acquired 85 percent working interest in the
Anderson lease. This lease has one well located on it The lease
consists of 40 acres located in Edwards County, IL.
The
Jack Kelsey Lease -
In
April of 2008 the Company acquired 100 percent working interest in
the Jack Kelsey lease. This lease has one well located on it .
The
Childcraft Lease -
In
July of 2008 the Company acquired 100 percent working interest in the
Childcraft lease. This lease has three wells located on it.
Cautionary
Statement Regarding Forward-looking Information
This
report and other reports, as well as other written and oral
statements made or released by us, may contain forward-looking
statements. Forward-looking statements are statements that describe,
or that are based on, our current expectations, estimates,
projections and beliefs. Forward-looking statements are based on
assumptions made by us, and on information currently available to us.
Forward-looking statements describe our expectations today of what we
believe is most likely to occur or may be reasonably achievable in
the future, but such statements do not predict or assure any future
occurrence and may turn out to be wrong. You can identify
forward-looking statements by the fact that they do not relate
strictly to historical or current facts. The words "believe,"
"anticipate," "intend," "expect,"
"estimate," "project", "predict",
"hope", "should", and "may", other
words and expressions that have similar meanings, and variations of
such words and expressions, among others, usually are intended to
help identify forward-looking statements.
Page 1
Forward-looking
statements are subject to both known and unknown risks and
uncertainties and can be affected by inaccurate assumptions we might
make. Risks, uncertainties and inaccurate assumptions could cause
actual results to differ materially from historical results or those
currently anticipated. Consequently, no forward-looking statement can
be guaranteed. The potential risks and uncertainties that could
affect forward looking statements include, but are not limited to the
ability to raise needed financing, increased competition, extent of
the market demand for and supply of goods and services of the types
provided by the Company, governmental regulation, performance of
information systems, and the ability of the Company to hire, train
and retain qualified employees. In addition, other risks,
uncertainties, assumptions, and factors that could affect the
Company's results and prospects have been and may further be
described in the Company's prior and future filings with the
Securities and Exchange Commission and other written and oral
statements made or released by the Company.
We
caution you not to place undue reliance on any forward-looking
statements, which speak only as of the date of this document. The
information contained in this report is current only as of its date,
and we assume no obligation to update any forward-looking statements.
The
financial information set forth in the following discussion should be
read in conjunction with, and qualified in its entirety by, the
Company's unaudited consolidated financial statements and notes
included herein. The results described below are not necessarily
indicative of the results to be expected in any future period.
Certain statements in this discussion and analysis, including
statements regarding our strategy, financial performance and revenue
sources, are forward-looking information based on current
expectations and entail various risks and uncertainties that could
cause actual results to differ materially from those expressed in the
forward-looking statements. Readers are referred to our Audited
Financials included on Form 10-KSB for the fiscal year ended December
31, 2006.
Results
of Operations
THREE
MONTHS ENDED September 30, 2008
Our
net loss for three months ended September 30, 2008 was $195,815,
compared to a net loss of $26,648 for the three months ended
September 30, 2007. A discussion of our results of operations is as
follows:
Revenues
for the three months ended September 30, 2008 was $1,215 compared to
$0 for the three months ended June 30, 2007. Immaterial revenues have
been generated since inception.
Operating
expenses were $16,967 for the three months ended September 30, 2008,
compared to $26,891 for the three months ended September 30, 2007.
This expense is attributable to various administrative and
professional fees.
No
provision for income taxes have been reflected or recorded on these
financial statements. We incurred a net loss of $195,815 for the
three months ended September 30, 2008 as a result of the matters
discussed above. Losses to date may be used to offset future taxable
income, assuming the Company becomes profitable.
Liquidity
and Capital Resources
Through
September 30, 2008 the Company has incurred losses and has been
dependent upon the financial support of stockholders, management and
other parties.
Management
has successfully obtained additional financial resources, which the
Company believes will support operations until profitability can be
achieved. These financial resources include financing from both
related and non-related third parties, as discussed in the footnotes
to the financial statements. There can be no assurance that
management will be successful in these efforts. The financial
statements do not reflect any adjustments that may arise as a result
of this uncertainty.
Page 2
We
expect our operating expenses to continue to increase as we attempt
to build our brand and expand our oil and gas properties. We hope our
expenses will be funded from operations and short-term investments
from officers, shareholders or others; however, our operations may
not provide such funds and we may not be able obtain short-term loans
from officers, shareholders or others. Our officers and shareholders
are under no obligation to provide additional loans to the company.
ITEM
3. CONTROLS AND PROCEDURES
Evaluation
of disclosure controls and procedures
Dynamic
Natural Resources Inc maintains disclosure controls and procedures
that are designed to ensure that information required to be disclosed
in the company’s Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated
and communicated to the company’s management including its
Chief Executive Officer and Chief Financial Officer , as appropriate,
to allow timely decisions regarding required disclosure based closely
on the definition of “disclosure controls and procedures”
in Rule 13a-14c. In designing and evaluating the disclosure controls
and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply judgment
in evaluating the cost-benefit relationship of possible controls and
procedures. Also the company has investments in certain
unconsolidated entities. As the Company does not control or manage
these entities, its disclosure controls and procedures with respect
to such entities are necessarily substantially more limited than
those it maintains with respect to itself.
The
Company carried out an evaluation, under the supervision and with the
participation of the Company’s management, including the
Company’s Chief Executive Officer and the Company’s Chief
Financial Officer, if the effectiveness of the design and operation
of the Company’s disclosure controls and procedures as of the
end of the period covered by this report. Based in the foregoing, The
Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures
were effective.
Changes
in internal control over Financial Reporting
Management
of the Company has evaluated, with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, changes in the
Company’s internal controls over financial reporting (as
defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during
the second quarter of 2008.
There
have been no changes to the Company’s internal control over
financial reporting that occurred since the beginning of the
Company’s third quarter of 2008 that have materially affected,
or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
Page 3
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
The
Company is subject to legal proceedings and claims, which arise in
the ordinary course of its business. Dynamic Natural Resources Inc.
is not currently involved with any legal proceedings and is not aware
of any threatened actions.
ITEM
2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
There
were no unregistered sales of securities for the three months ended
September 30, 2008.
ITEM
3. DEFAULT UPON SENIOR SECURITIES
There
were no defaults on senior securities for the three months ended
September 30, 2008.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On
April 1, 2008 a majority of the shareholders, did adopt resolutions,
after consideration of the merits, to acquire all outstanding shares
and to merge Universal tracking Solutions, Inc. (“UTS”).
See Item 5 below for further detail.
ITEM
5. OTHER INFORMATION
On
April 1, 2008, the Company entered into a term sheet with Universal
Tracking Solutions, Inc. (“UTS”), a Nevada corporation of
which the Company holds a 31% stake, to acquire all outstanding
shares and to merge UTS with a newly created subsidiary. The term
sheet was approved by a majority of the Company’s shareholders.
The
Company issued 40,000,000 shares to shareholders of record as of
September 15, 2006. The stock issuance was meant to compensate the
affected shareholders for the Company’s announced distribution
in September 2006 of its 4,000,000 shares of UTS. The UTS
distribution was never consummated. However, the Company will own UTS
if the current reverse-merger transaction with UTS is consummated,
and the 2006 shareholders will hold an aggregate of 4,000,000
post-reverse split shares in the Company, the same amount of shares
that they would have owned in UTS if the distribution had been
consummated.
The
Company also agreed to effect a 1:10 reverse-split of its common
stock. The reverse-split was effected on April 16, 2008.
Effective October 8, 2008, Dynamic Natural Resources
Inc., a Nevada corporation (the “Company”) acquired
Universal Tracking Solutions, Inc., a Nevada corporation (“UTS”)
in a transaction in which UTS was merged with a subsidiary of the
Company created for this purpose. The former shareholders of UTS
exchanged 100% of their UTS common stock for a collective 50%
ownership stake in the Company. UTS also appointed two persons to the
Company’s board of directors. The transaction has been approved
by the majority shareholders of the Company and by UTS’
shareholders. The result of the share exchange is that UTS became a
wholly-owned subsidiary of the Company, and the Company now has a
total of five directors.
Effective October 31, 2008,
Dynamic Natural Resources Inc., a Nevada corporation (the “Company”)
changed the name of the company to Universal Tracking Solutions,
Inc., a Nevada corporation (“UTS”). The change has been
approved by the majority shareholders of the Company and by UTS’
shareholders.
Page 4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits
31.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
(b)
Reports of Form 8-K
Reports
were filed on Form 8-K in October of 2008.
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
Dynamic
Natural Resouces Inc.
|
Dated:
11/10/2008
|
/s/
Scott Masse
|
|
By:
Scott Masse Chief Executive Officer
|
|
|
Dated:
11/10/2008
|
/
s/
Gerald L. Schiano
|
|
By:
Gerald L. Schiano
Chief Financial Officer
|
Page 5
Exhibit 31.1
CERTIFICATION OF THE CHIEF
EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Scott Masse, certify that:
1.
|
|
I have
reviewed this quarterly report on Form 10-Q of Dynamic Natural
Resources, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the small business issuer as of,
and for, the periods presented in this report;
|
4.
|
|
The small business issuer’s other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the small business issuer and have:
|
|
a)
|
|
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the small business issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
|
|
b)
|
|
Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
|
Evaluated the effectiveness of the small business
issuer’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
d)
|
|
Disclosed in this report any changes in the small
business issuer’s internal control over financial reporting
that occurred during the small business issuer’s most recent
fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the small business issuer’s
internal control over financial reporting.
|
5.
|
|
The small business issuer’s other certifying
officers and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the small
business issuer’s auditors and the audit committee of the
small business issuer’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
|
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
small business issuer’s ability to record, process,
summarize and report financial information; and
|
|
b)
|
|
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
small business issuer’s internal control over financial
reporting.
|
Date:
November
10, 2008
|
|
/s/
Scott Masse
|
|
|
Scott
Masse
|
|
|
Chief
Executive Officer
|
Exhibit 31.2
CERTIFICATION OF THE CHIEF
EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Gerald Schiano, certify that:
1.
|
|
I have
reviewed this quarterly report on Form 10-Q of Dynamic Natural
Resources, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the small business issuer as of,
and for, the periods presented in this report;
|
4.
|
|
The small business issuer’s other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the small business issuer and have:
|
|
a)
|
|
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the small business issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
|
|
b)
|
|
Designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
|
Evaluated the effectiveness of the small business
issuer’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
d)
|
|
Disclosed in this report any changes in the small
business issuer’s internal control over financial reporting
that occurred during the small business issuer’s most recent
fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the small business issuer’s
internal control over financial reporting.
|
5.
|
|
The small business issuer’s other certifying
officers and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the small
business issuer’s auditors and the audit committee of the
small business issuer’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
|
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
small business issuer’s ability to record, process,
summarize and report financial information; and
|
|
b)
|
|
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
small business issuer’s internal control over financial
reporting.
|
Date:
November 10, 2008
|
|
/s/
Gerald Schiano
|
|
|
Gerald
Schiano
|
|
|
Chief
Financial Officer
|
Exhibit 32.1
CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
The undersigned, Scott Masse, the
Chief Executive Officer of Dynamic Natural Resources, Inc. (the
“Company”), individually, has executed this Certification
in connection with the filing with the Securities and Exchange
Commission of the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2008 (the “Report”).
The
undersigned hereby certifies that:
|
1.
|
|
The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
|
|
|
2.
|
|
The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company as of September 30, 2007
(the last day of the period covered by this Report).
|
IN WITNESS WHEREOF, the
undersigned have executed this Certification as of this 10
th
day of November, 2008.
|
|
/s/
Scott Masse
|
|
|
Scott
Masse,
|
|
|
Chief
Executive Officer
|
|
|
November
10, 2008
|
Exhibit 32.2
CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
The undersigned, Gerald Schiano,
the Chief Financial Officer of Dynamic Natural Resources, Inc. (the
“Company”), individually, has executed this Certification
in connection with the filing with the Securities and Exchange
Commission of the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2008 (the “Report”).
The
undersigned hereby certifies that:
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1.
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The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company as of September 30, 2007
(the last day of the period covered by this Report).
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IN WITNESS WHEREOF, the
undersigned have executed this Certification as of this 10
th
day of November 2008.
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/s/
Gerald Schiano
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Gerald
Schiano,
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Chief
Financial Officer
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November
10, 2008
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