10-Q 1 form10q033105.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2005 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to -------------------- -------------------- Commission file number 000-29541 BRONCO ENERGY FUND, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEVADA 86-0972709 (STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION ORGANIZATION) NO.) 2920 N. SWAN ROAD, SUITE 206, TUCSON, AZ 85712 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (866) 305-0485 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 an accelerated filer (as defined by Rule 12b-2 of the Act). Yes |_| No |X| BRONCO ENERGY FUND, INC. THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS HISTORICAL INFORMATION AND FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN THIS FORM 10-Q PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT MAY CAUSE BRONCO ENERGY FUND, INC.'S (THE "COMPANY'S") ACTUAL RESULTS TO DIFFER FROM FUTURE PERFORMANCE SUGGESTED HEREIN.

2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. 3 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) STATEMENTS OF OPERATIONS (UNAUDITED)

The accompanying notes are an integral part of these financial statements. 4 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY SINCE JUNE 19, 1997 (INCEPTION) TO DECEMBER 31, 2004 (UNAUDITED)

The accompanying notes are an integral part of these financial statements. 5 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) STATEMENTS OF CASH FLOWS (UNAUDITED)

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None The accompanying notes are an integral part of these financial statements. 6 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004 (UNAUDITED) NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN On December 21, 2004 the Company filed a Form N-54A, Notification with the Securities and Exchange Commission electing to become a Business Development Company pursuant to Sections 55 through 65 of the Investment Company Act of 1940. Bronco has been in the developmental stage since inception and its operations to date have been limited to issuing shares and other organizational matters. At March 31, 2005, the Company has no investments. Bronco will attempt to locate and negotiate with eligible portfolio companies for Bronco to invest in, lend funds to, acquire an interest in and/or possibly manage. Bronco intends to offer managerial assistance to eligible portfolio companies in which it invests. As a business development company, Bronco will be able to raise money to acquire interests in small private business, as well as larger companies. The accompanying financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations. Several conditions and events cast doubt about the Company's ability to continue as a "going concern." The Company has incurred net losses of approximately $81,388 for the three months ended March 31, 2005 and $109,500, $300 and $300 for the year ended December 31, 2004, 2003 and 2002 respectively, has a liquidity problem, and requires additional financing in order to finance its business activities on an ongoing basis. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. The Company's future capital requirements will depend on numerous factors including, but not limited to, continued progress in finding a merger candidate and the pursuit of business opportunities. These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a "going concern". While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the "going concern" assumption used in preparing these financial statements, there can be no assurance that these actions will be successful. If the Company were unable to continue as a "going concern," then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used. NATURE OF BUSINESS The Company has no products or services as of March 31, 2005. The Company was organized as a vehicle to seek merger or acquisition candidates. The Company intended to acquire interests in various business opportunities, which in the opinion of management would provide a profit to the Company. On December 16, 2004 the Company filed a notification under Form N54a with the United States Securities and Exchange Commission ("SEC") indicating its election to be regulated as a business development company ("a BDC") under the Investment Company Act of 1940. In connection with this election, the Company has adopted corporate resolutions and intends to operate as a closed-end management investment company. 7 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004 (UNAUDITED) (Continued) NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (CONTINUED) ORGANIZATION AND BASIS OF PRESENTATION The Company was incorporated under the laws of the State of Nevada on June 19, 1997. The Company ceased all operating activities during the period from June 19, 1997 to October 20, 1999 and was considered dormant. Since October 20, 1999, the Company is in the development stage, and has not commenced planned principal operations. NOTE 2 - SUMMARY OF ACCOUNTING POLICIES This summary of accounting policies for Bronco Energy Fund, Inc. (a development stage company) is presented to assist in understanding the Company's financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. PERVASIVENESS OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles required 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. CONCENTRATION OF CREDIT RISK The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. LOSS PER SHARE The reconciliations of the numerators and denominators of the basic loss per share computations are as follows:

8 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004 (UNAUDITED) (Continued) NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) LOSS PER SHARE (CONTINUED) The effect of outstanding common stock equivalents would be anti-dilutive for March 31, 2005 and 2004 and are thus not considered. At March 31, 2005 there are 4,900,000 outstanding common stock equivalents. At March 31, 2004 there are no common stock equivalents outstanding. NOTE 3 - INCOME TAXES As of March 31, 2005, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $191,888 that may be offset against future taxable income through 2025. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. NOTE 4 - DEVELOPMENT STAGE COMPANY The Company has not begun principal operations and as is common with a development stage company, the Company has had recurring losses during its development stage. 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. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses. NOTE 5 - COMMITMENTS As of March 31, 2005 substantially all activities of the Company have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities. Commencing on January 1, 2005, the Company entered into employment agreements with Dan Baker, Jim Marshall and Kevin Sherlock, the President, Treasurer and Secretary, in the amounts of $60,000 $36,000 and 36,000, respectively. The officer salaries are contingent on the Company having the cash flow and/or cash reserves to meet the Company's operating expenses. 9 BRONCO ENERGY FUND, INC. AND SUBSIDIARIES (formerly known as Green Clover Luck Corporation) (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004 (UNAUDITED) (Continued) NOTE 6 - COMMON STOCK On February 8, 2005 notes payable in the amount of $250,000 were converted into 5,000,000 shares of common stock under the 1-E exemption. During January and February, 2005 the Company issued 5,200,000 shares of common stock to officers and directors at the rate of $.001. On January 24, 2005, the Company filed an offering to sell common stock equal to $5,000,000 under Regulation E promulgated under the Securities Act of 1933 at prices between $.05 and $5.00 per share. The offering became effective on February 8, 2005. As of March 31, 2005 the Company had sold 76,000 shares at $.50 per share. During January and February the Company granted 5,200,000 stock options to Board of Directors exercisable at $.01. During February and March, 2005, director's options for 900,000 common shares were exercised at $.01 NOTE 7 - SUBSEQUENT EVENTS On April 21, 2005, Bronco Coal Company of Utah, a wholly owned subsidiary of the Company, purchased the Columbia Coal Mine ("Columbia") located in Books Cliff, near Price Utah. The estimated reserves of metallurgical coal at the mine are in excess of 100 million tons. The mine has been out of operation since 1966 and will require significant renovation and improvement to meet current standards and achieve operating efficiency. The Company does not expect significant production operations at the mine until the first quarter of 2006. The cost of Columbia was $16,300,632, for which the sellers took back a note for $15, 203,647 of which $888,393 is due before the end of June 2005, and on the 2nd, 3rd and 4th anniversaries of the purchase payments of $4,264,297, $5,906,231 and $4,144,726, respectively, plus interest imputed at 8% per annum are due. The Company has secured a $3,000,000 line of credit, of which $900,000 was applied to the purchase down payment and the balance will be drawn over the next 5 months to meet the June purchase payment and to fund some of the engineering studies, licensing and improvement costs necessary put the mine in operating condition. The line of credit bears interest at a rate of 8% per annum and is due April 21, 2006. In conjunction with the purchase, Bronco Coal Company of Utah agreed to pay the sellers a mineral royalty of 2.25% of all sales from the mine. Additionally, the Company agreed to sell the lender 157,020 shares of its common stock at $0.001 per share. The current sales price of the stock at the time of the transaction was $.50 per share. The difference reflects an addition to paid in capital of $78,353. The lender exercised this option with the initial funding of the loan. The following proforma balance sheet reflects the acquisitions of the Columbia property as if it had occurred at March 31, 2005. The property has not been in production since 1966, therefore, no results of operations have been as if it had been in operation during the three months ended March 31, 2005 are presented. 10

11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THREE-MONTH PERIOD ENDED MARCH 31, 2005 AS COMPARED TO THE SIMILAR PERIOD IN 2004 LIQUIDITY AND CAPITAL RESOURCES We have conducted limited operations to date. We have been organized to provide investors with the opportunity to participate, with a modest amount in venture capital, in investments that are generally not available to the public and that typically require substantially larger financial commitments. In addition, we will provide professional management and administration that might otherwise be unavailable to investors if they were to engage directly in venture capital investing. At March 31, 2005, the Company held $40,431 in assets as compared to $0 in assets at December 31, 2004. Cash and cash equivalents from inception to date have been insufficient to provide the operating capital necessary to operate the Company. The necessary capital to operate the Company was initially provided by the principals and founders of the Company in the form of both debt and capital stock issuances as set forth in the financial statements incorporated herein. In order to raise capital, the Company, on January 24, 2005, filed a Form 1-E with the SEC, proposing to sell up to $5,000,000 of its common stock at prices between $0.05 and $5.00. Pursuant to the 1-E exemption, the Company, through March 31, 2005, converted outstanding promissory notes in the amount of $250,000 for 5,000,000 shares of common stock at the price of $0.05, and sold a total of 76,000 shares of common stock at the price of $0.50 to 14 purchasers. In summary, there has been an absence of liquidity and capital resources to operate the Company self-sufficiently. Such inadequacy will continue until the Company is able to raise additional funds pursuant to the filed 1-E exemption, or by securing funding partners. The Company believes that its liquidity and capital resources are adequate to satisfy its current operational needs as well as its investment objectives. RESULTS OF OPERATIONS INVESTMENT INCOME AND EXPENSES For the three months ended March 31, 2005, the Company had no investment income, and operating expenses of $81,388, resulting in a net loss of ($81,388). For the three months ended March 31, 2004, the Company had no investment income, and operating expenses of $300, resulting in a net loss of ($300). The increase in expenses for the three months ended March 31, 2005 over the same period in 2004 resulted from the Company commencing its primary operations. The expenses consist of consulting expenses in the amount of $5,000 and general and administrative expense of $76,388. The general and administrative expense consisted primarily of accrued wages, director fees and expense, and general business expenses. NET ASSETS The Company's net assets (liabilities) were $(39,506), excess of liabilities over net assets, or a net liability value per share of $(0.003) at March 31, 2005. This represents a slight change from net assets of $0, at December 31, 2005. This decrease in net asset (liability) value per share resulted primarily from the proceeds of the sale of stock pursuant to the Company's 1-E offering exemption offset by operating costs during the period. APPLICATION OF CRITICAL ACCOUNTING POLICIES The Company's Valuation and Audit Committees, consisting of the independent Directors of the Company, will make certain critical accounting estimates with respect to the valuation of private portfolio investments. As the Company has only commenced limited investing activities, the Company has no portfolio investments at March 31, 2005. 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. EQUITY PRICE RISK The Company anticipates that a majority of its investment portfolio will consist of securities in private companies and private investment funds, which are not publicly traded. These investments would be recorded at fair value as determined by the Investment Advisers in accordance with valuation guidelines adopted by the Board of Directors. This method of valuation does not result in increases or decreases in the fair value of these securities in response to changes in market prices. Thus, these securities would not be subject to equity price risk normally associated with public equity markets, except that to the extent that the private investment funds hold underlying public securities, the Company is indirectly exposed to equity price risk associated with the public markets. Thus, there is no exposure to equity price risk, estimated as the potential loss in fair value due to a hypothetical 10% decrease in quoted market prices. At March 31, 2005, the Company held no publicly traded equity securities. ITEM 4. CONTROLS AND PROCEDURES. (a) Evaluation of Disclosure Controls and Procedures. As of March 31, 2005 (the end of the period covered by this report), the Company's principal executive officers and principal financial officer evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such evaluation, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company was made known to them by others within those entities. (b) Changes in Internal Controls. There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the Company's last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. USE OF PROCEEDS During the three months ended March 31, 2005, we received a total of $288,000 in proceeds from the sale of shares of commons stock being offered by the Company pursuant to the Form 1-E filed January 24, 2005 with the SEC, proposing to sell up to $5,000,000 of its common stock at prices between $0.05 and $5.00. Pursuant to the 1-E exemption, the Company, through March 31, 2005, converted outstanding promissory notes in the amount of $250,000 for 5,000,000 shares of common stock at the price of $0.05. Additionally, the Company sold a total of 76,000 shares of common stock at the price of $0.50 to 14 purchasers, netting the Company $38,000. The directors also exercised options to purchase 900,000 shares of common stock for an exercise price of $9,000. We used the net proceeds from this offering as follows: Retirement of debt $250,000 Deposits on Columbia Mine Purchase and other deposits 17,147 Operating and administrative expenses 6,569 Working capital (cash) 23,284 --------- $297,000 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS. 31.1 Certification of 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 Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (B) REPORTS ON FORM 8-K. (1) On February 10, 2005, the Company filed a Current Report on Form 8-K to report under Item 5.02 appointment of additional Directors. (2) On February 14, 2005, the Company filed a Current Report on Form 8-K to report under Item 5.02 appointment of additional Directors. (3) On May 4, 2005, the Company filed a Current Report on Form 8-K to report under Item 4.01 that Robison, Hill & Co had resigned as the Company's certifying accountant, and that Epstein, Weber & Conover, P.L.C. was appointed the Company's certifying accountant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRONCO ENERGY FUND, INC. Date: May 13 2005 BY: /s/ Dan Baker --------------------------------------------------- Dan Baker Chief Executive Officer/principal executive officer Date: May 13 2005 BY: /s/ James Marshall --------------------------------------------------- James Marshall Chief Financial Officer/principal financial officer 14

BRONCO ENERGY FUND, INC. 10-Q