10-Q 1 precpetromarq.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2010 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 000-53199 PRECISION PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Nevada 71-1029846 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 624 W. Independence Suite 101 A. Shawnee, OK 74804 (Address of principal executive offices) None (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 [ ] 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 [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] SEC 1296 (02-08) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. APPLICABLE ONLY TO CORPORATE ISSUERS: Number of shares outstanding of the registrant's class of common stock as of May 18, 2010: 44,400,000 1 Precision Petroleum Corporation INDEX TO THE FORM 10-Q For the quarterly period ended March 31, 2010 PAGE ---- PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Balance Sheets F-1 Statements of Operations and Comprehensive Income F-2 Statement of Stockholders' Deficit F-3 Statements of Cash Flows F-4 Notes to the Financial Statements F-5 to F-13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 5 ITEM 4. CONTROLS AND PROCEDURES 5 ITEM 4T. 5 PART II OTHER INFORMATION 5 ITEM 1. LEGAL PROCEEDINGS 5 ITEM 1A. RISK FACTORS 5 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 5 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 6 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6 ITEM 5. OTHER INFORMATION 6 ITEM 6. EXHIBITS 6 SIGNATURES 7 2 PRECISION PETROLEUM CORPORATION BALANCE SHEETS

F-1 PRECISION PETROLEUM CORPORATION STATEMENTS OF OPERATIONS (Unaudited)

F-2 PRECISION PETROLEUM CORPORATION STATEMENTS OF STOCKHOLDERS' DEFICIT For the six months ended March 31, 2010 (Unaudited)

F-3 PRECISION PETROLEUM CORPORATION STATEMENTS OF CASH FLOWS (Unaudited)

F-4 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) Note 1 Interim Reporting The accompanying financial statements of Precision Petroleum Corporation have not been audited by independent public accountants. In the opinion of management, the accompanying financial statements reflect all adjustments necessary to present fairly our financial position at March 31, 2010 and our income, stockholder's deficit and cash flows for the six months ended March 31, 2010 and 2009. All such adjustments are of a normal recurring nature. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, these financial statements should be read with the financial statements included in our 2009 Annual Report on Form 10-K. Note 2 Nature and Continuance of Operations Precision Petroleum Corporation (the "Company") was incorporated under the name of "Tidewater Resources, Inc." under the laws of the State of Nevada on February 7, 2007. On October 27, 2008 the Company changed its name to Precision Petroleum Corporation. The Company has established its corporate offices in Shawnee, Oklahoma. The Company is engaged primarily in the acquisition, development, production, exploration for, and the sale of oil, gas and natural gas liquids. All business activities are conducted in Oklahoma and the Company sells its oil and gas to a limited number of domestic purchasers. The Company does not operate the leases they own a working and overriding royalty interests and are invoiced monthly for joint operating costs and receive revenues from third party purchasers of oil and gas chosen by the operators. These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classifications of assets and liabilities should the Company be unable to continue as a going concern. At March 31, 2010, the Company had not yet achieved profitable operations, has an aggregate accumulated deficit and deficit accumulated during development stage of $160,330 and $153,653, F-5 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) respectively, has a working capital deficiency of $1,069,464, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty. Note 3 Summary of Significant Accounting Policies The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates. The financial statements have, in management's opinion, been properly prepared within the framework of the significant accounting policies summarized below: Property and equipment Equipment is recorded at cost. Depreciation is provided using the straight line method. As of March 31, 2010 the Company did not have any property or equipment. F-6 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) Oil and Gas Properties The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost center) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities. Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed annually to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. Future net cash flows from proved reserves using period-end, non-escalated prices and costs are discounted to present value and compared to the carrying value of oil and gas properties. Assets Retirement Obligations The Company recognizes the fair value of a liability for an assets retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. F-7 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. At March 31, 2010, the Company's estimate of asset retirement obligation was not material. Impairment of Long-Lived Assets The Company has adopted FASB Codification Topic 360-10 ("ASC 360-10"), "Property, Plant, and Equipment", which requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Oil and gas properties accounted for using the full cost method of accounting, a method utilized by the Company, are excluded from this requirement, but will continue to be subject to the ceiling test limitations. At March 31, 2010, the depreciation, depletion and amortization charge included $0 related to the ceiling test limitations. Basic and Diluted Loss Per Share Basic loss per share is computed using the weighted average number of shares outstanding defined by FASB Accounting Standards Codification Topic 260, "Earnings Per Share" during the period. Fully diluted earnings (loss) per share are computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company's net income (loss) position at the calculated date. Diluted loss per share has not been provided as it would be anti-dilutive. As of March 31, 2010, the Company did not have any outstanding stock options or warrants. F-8 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) Financial Instruments The carrying value of cash, accounts receivable, other receivable, accounts payable and accrued liabilities, short-term notes payable and due to related party approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Revenue Recognition Revenue from the sale of the oil and gas production is recognized when title passes from the operator of the oil and gas properties to purchasers. Newly Issued Accounting Pronouncements In January 2010, the FASB issued Accounting Standards Update 2010-01, "Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force)". This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010- 01 to have a material effect on the financial position, results of operations or cash flows of the Company. In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This amendment to Topic 932 has improved the reserve estimation and disclosure requirements by (1) updating the reserve estimation requirements for changes in practice and technology that have occurred over the last several decades and (2) expanding the disclosure requirements for equity method investments. This is effective for annual reporting periods ending on or after December 31, 2009. However, an entity that becomes subject to the disclosures because of the change to the definition oil- and gas- producing activities may elect to provide those disclosures in annual periods beginning after December 31, 2009. Early adoption is not permitted. The Company does not expect the provisions of ASU 2010-03 to have a material effect on the financial position, results of operations or cash flows of the Company. F-9 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various Topics-Technical Corrections to SEC Paragraphs. In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-05 (ASU 2010-05), Compensation - Stock Compensation (Topic 718). This standard codifies EITF Topic D-110 Escrowed Share Arrangements and the Presumption of Compensation. In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This amendment to Topic 820 has improved disclosures about fair value measurements on the basis of input received from the users of financial statements. This is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2010-06 to have a material effect on the financial position, results of operations or cash flows of the Company. In February 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-08 (ASU 2010-08), Technical Corrections to Various Topics. This amendment eliminated inconsistencies and outdated provisions and provided the needed clarifications to various topics within Topic 815. The amendments are effective for the first reporting period (including interim periods) beginning after issuance (February 2, 2010), except for certain amendments. The amendments to the guidance on accounting for income taxes in reorganization (Subtopic 852-740) should be applied to reorganizations for which the date of the reorganization is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. For those reorganizations reflected in interim financial statements issued before the amendments in this Update are effective, retrospective application is required. The clarifications of the guidance on the embedded derivates and hedging (Subtopic 815-15) are effective for fiscal years beginning after December 15, 2009, and should be applied to existing contracts (hybrid instruments) containing embedded derivative features at the date of adoption. The Company does not expect the provisions of ASU 2010-08 to have a material effect on the financial position, results of operations or cash flows of the Company. F-10 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) In February 2010, the FASB issued Accounting Standards Update 2010-09 (ASU 2010-09), Subsequent Events (TOPic 855), amending guidance on subsequent events to alleviate potential conflicts between FASB guidance and SEC requirements. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and we adopted these new requirements for the period ended March 31, 2010. The adoption of this guidance did not have a material impact on our financial statements. In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-14 (ASU 2010-14), Accounting for Extractive Activities - Oil and Gas. This amendment makes amendments to paragraph 932- 10-S99-1 due to SEC release No. 33-8995, Modernization of Oil and Gas Reporting. The Company does not expect the provisions of ASU 2010-14 to have a material effect on the financial position, results of operations or cash flows of the Company. The company evaluated all of the other recent accounting pronouncements through ASU 2010-19 and deemed that they were immaterial. Note 4 Oil and Gas Properties a) Effective July 1, 2009, the Company purchased various producing properties located in Garvin County, Pottawatomie County, Nowata County and Seminole County, Oklahoma. The Company utilized short-term financing to acquire these properties. The various net revenue acquired range from .2808% to a 67.97% net revenue interest. In October of 2009, the Company acquired additional working interest in two of the leases. In November of 2009, the Company acquired a 70.10153% working interest in the Thompson #2 well, located in Garvin County, Oklahoma. The Company paid $10,000 down on this well and signed an agreement to pay the balance of $18,634 within 30 days of the agreement. In an agreement dated on December 1, 2009, but made effective January 1, 2010, the Company sold all of its working interest in the Heath lease located in Seminole County, Oklahoma. The sales price for this transaction was $55,000, to be paid on or before one year from the date of the agreement. The Company received a payment in the amount of $4,583 from the purchaser during the quarter ended March 31, 2010. The balance due is $50,417. The amount due is not in default as of March 31, 2010. A gain of $4,398 has been recognized in the financial statements. F-11 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) On February 22, 2010, the Company sold all of its working interest in the Jameson lease, retaining a three percent (3%) overriding royalty interest. The sale price for this transaction was $10,000 and has been paid in full. A loss of $13,900 has been recognized in the financial statements. b) On January 27, 2009, the Company entered into a Participation Agreement with Nitro Petroleum Incorporated ("Nitro"), pursuant to which the Company obtained from Nitro the right to participate in Phase One of Nitro's Powder River Basin Project in Montana. Nitro acquired certain oil and gas leases in the Powder River Basin in Montana pursuant to a Memorandum of Understanding dated January 26, 2009 with REDS, LLC. Pursuant to the terms of the Participation Agreement, Nitro is being carried to the tanks with respect to a 25% working interest in Phase One of the Powder River Basin Project. The Company is acquiring a 37.5% working interest in Phase One of the Powder River Basin Project in exchange for an agreement to pay 50% of the expenses of Phase One of the Powder River Basin Project. Additionally, the Company shall have the right to purchase up to a 37.5% working interest in Phase Two and Phase Three of the Powder River Basin Project upon substantially the same terms as Phase One. Nitro will be the operator of all wells drilled during Phase One of the Powder River Basin Project. The Company has paid $57,500 towards the Participation Agreement with Nitro. The payments have been recorded in the financial statements as participation deposits. Note 5 Notes Payable and Short-Term Financing At March 31, 2010, the Company had a short term note payable to Sierra Growth, Inc., an investment company located in Charlestown, Nevis. This note bears an interest rate of 10% per annum and is due upon demand. If the Holder makes a demand for repayment, the Company must repay the principal balance of this note and accrued and unpaid interest thereon within sixty (60) days. Interest has been accrued in the amount of $37,586 as of March 31, 2010 and has a principal balance of $751,714. At December 31, 2009, the Company had a short term note payable to Global Energy, LLC an oil and gas company located in Shawnee, Oklahoma. This note bears an interest rate of 10% per annum and is payable upon demand. If the Holder makes a demand for repayment, the Company must repay the principal balance of this note and accrued and unpaid interest thereon within sixty (60) days. Interest has been accrued in the amount of $12,113 as of March 31, 2010 and has a principal balance of $242,266. F-12 PRECISION PETROLEUM CORPORATION (A Production Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS MARCH 31, 2010 (Unaudited) The company has also obtained financing from a consultant with a balance of $29,254 (2008, $10,051) and also has received advances of $92,416 (2008, $0) from unrelated third parties. The balances are due on demand and are not interest bearing. However, Generally Accepted Account Principals (GAAP) requires interest expense to be imputed on the outstanding balances of the advances. The Company has accrued interest in the amount of $7,562 for these advances as of March 31, 2010 (2009, $0). Note 6 Related Party Transactions During the three months ended March 31, 2010 and 2009, the Company incurred management fees charged by a director of the Company totaling $3,000 and $0. Note 7 Common Stock As of March 31, 2010 there were 44,400,000 shares of common stock issued and outstanding. Note 8 Subsequent Events The Company has determined that there were no subsequent events that warrant disclosure or recognition in the financial statements. F-13 Management's Discussion and Analysis As used in this Interim Report: (i) the terms "we", "us", "our" and the "Company" mean Precision Petroleum Corporation (ii) "SEC" refers to the Securities and Exchange Commission; (iii) "Exchange Act" refers to the United States Securities Exchange Act of 1934, as amended; and (iv) all dollar amounts refer to United States dollars unless otherwise indicated. The following is a discussion of our plan of operations, results of operations and financial condition as of and for the six months ended March 31, 2010. Liquidity and Capital Resources The Company had a cash balance of $6,282 as of March 31, 2010, compared to cash balance of $12,944 as of September 30, 2009. The Company had a working capital deficiency of $1,069,464 as of March 31, 2010, compared to working capital deficiency of $1,026,250 as of September 30, 2009. The Company will continue to utilize the free labor of its directors and stockholder until such time as funding is sourced from the capital markets. It is anticipated that funding for the next twelve months will be required to maintain the Company. Results of Operations For the six months ended March 31, 2010, the Company had revenue of $100,957 from production of oil and gas, as compared to $0 for the six months ended March 31, 2009. Cost of continued operations for the six months ended March 31, 2010 was $229,137, resulting in a net loss for the period of $128,180. Cost of continued operations for the six months ended March 31, 2009 was $18,211, resulting in a net loss for the period of $19,444. The Company expects to continue to receive revenues from the properties on the Oklahoma properties and the Company expects for these revenues to increase. Planned exploration ventures should increase revenues for the fiscal year ending September 30, 2010. 3 Going Concern The Company has not attained profitable operations and is dependent upon obtaining financing to pursue any extensive acquisitions and exploration activities. For these reasons, the Company's auditors stated in their report on the Company's audited financial statements that they have substantial doubt the Company will be able to continue as a going concern without further financing. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Plan of Operation for the Next Twelve (12) Months The following discussion of our plan of operation, financial condition, results of operations, cash flows and changes in financial position should be read in conjunction with our most recent financial statements and notes appearing elsewhere in this Form 10-Q quarterly report and our Form 10-K/A annual report filed February 22, 2010. Our plan of operations for the current fiscal year is to maintain the current properties we have and recomplete some of the properties that we feel will generate more revenue. During the twelve-month period following the date of our annual report, we anticipate that we will continue generate revenue from our oil leases. However, we anticipate that such revenue will not be sufficient to cover all of our expenses. Accordingly, we will be required to obtain additional financing in order to continue our plan of operations during and beyond the next twelve months. We anticipate that additional funding could be in the form of either debt or equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding to fund our operations. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining financing to fund our operations, there is no assurance that we will obtain the funding necessary to pursue any further exploration of our properties. If we do not obtain additional financing, we may be forced to dispose of operating oil and gas leases located in Oklahoma. 4 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide the information required by this Item. ITEM 4. CONTROLS AND PROCEDURES See Item 4T. ITEM 4T. CONTROLS AND PROCEDURES Disclosure Controls and Procedures As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting during the current quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS As a smaller reporting company, we are not required to provide the information required by this Item. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. 5 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS (a) Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein or incorporated by reference. Exhibit Number Description 3.1 Articles of Incorporation, as Amended* 3.2 Bylaws* 31.1 Section 302 Certification - Chief Executive Officer 31.2 Section 302 Certification - Chief Financial Officer 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer. * Incorporated by reference to our Form S-1 Registration Statement filed on April 24, 2008, SEC File Number 333-149823. 6 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this 19th day of May, 2010. PRECISION PETROLEUM CORPORATION Date: May 19, 2010 By: /s/ Richard Porterfield ------------ ----------------------- Name: Richard Porterfield Title: President (principal executive officer) By: /s/ James Kirby -------------------------------- Name: James Kirby Title: Treasurer (principal financial officer and principal accounting officer) 7

PRECISION PETROLEUM Corp 10-Q