Exhibit 10.1
 
 
STOCK PURCHASE AGREEMENT

Agreement made this 9th day of January, 2008, between Tidelands Oil & Gas
Corporation (“Seller”) whose address is 1862 West Bitters Road, San Antonio,
Bexar County, Texas 78248, and Bentley Energy Corp. (“Purchaser” or “Buyer”),
whose principal office is at 45 N. E. Loop 410, Suite 495, San Antonio, Bexar
County, Texas 78216.

Whereas

The Seller owns all of the issued and outstanding shares of Sonterra Energy
Corporation, a Texas corporation (the “Company”).

The Seller desires to sell and the Purchaser desires to buy such shares on the
terms herein stated.

NOW, therefore, the parties agree as follows:

1.            Sales of Shares.  The Seller shall sell and transfer to the
Purchaser, and the Purchaser shall purchase and acquire from the Seller, all of
the outstanding capital stock of the Company, consisting of 1,000 of common
shares without par value (the “Shares”) which shares the Seller now owns.

2.            Purchase Price.  The purchase price for all of such shares is
Three Million Dollars ($3,000,000.00) which the Purchaser shall pay to Seller by
certified, bank cashier’s check or wire transfer, as follows:

A.            The sum of $2,925,000.00 at the Closing.

B.            The balance of $75,000.00, payable twelve (12) months after the
Closing Date (as defined below) or forty-five (45) days after the resolution of
all litigation either by final settlement agreement, judgment or the exhaustion
of all appeals, whichever is the first to occur, subject to the offsets as
herein provided.

3.            Closing.  The Closing of the sale shall take place at a location
designated by the parties at 10:00 a.m. on or before January 8, 2008 (the
“Closing Date”).  At the Closing, Seller shall deliver to the Buyer, free and
clear of all encumbrances, certificates for the shares which it is required to
sell in negotiable form, with any requisite transfer stamps attached, and such
other documents, instruments, records and/or items as specified herein, or
otherwise necessary for the continuation of the business operation of the
Company.

It is agreed that for all purposes under this Agreement, time is of the essence.

4.            Pre-Closing Obligations.  The Parties acknowledge that they desire
to close the transaction contemplated by this Agreement with as little
disruption in the business as possible and therefore agree to cooperate as
follows:

A.            Seller shall continue to maintain and service all subdivisions,
customers, and accounts through the Closing Date.

B.            Seller shall maintain all storage tanks used for servicing its
customers with an inventory of propane equal to an average of forty-five percent
(45%) of the cumulative storage tank capacity, but in no event shall the
inventory in any single tank be less than forty percent (40%) on the Closing
Date.

C.            Seller had all customer meters read on or after December 26, 2007
and prior to Closing generated the December billing for all customers. Seller
shall have the right to retain all sums received prior to the Closing Date.
 

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D.            Seller shall cooperate with and assist Buyer in transferring the
telephone services from the offices of Seller to the offices of Buyer.

E.            Buyer shall be responsible for the payment of all propane
inventory charges incurred for delivery of propane from December 10, 2007 until
the Closing Date.

F.            Seller shall cause the Consulting Agreement between the Company
and Jason Jones, dated November 1, 2007, to be terminated effective upon the
payment of the Purchase Price Fee owing pursuant to the terms of said agreement.

5.            Seller’s Representations and Warranties.  The Seller represents,
covenants, and warrants that:

A.            The Company is a corporation duly incorporated and validity
existing under the laws of the State of Texas, and is in good standing in such
State; the Company has filed all returns and with respect to the state and
federal income, franchise, and corporation taxes of the Company, which, to the
knowledge and belief of the Seller, are required to be filed, for and with
respect to all previous years since incorporation up to the present and current
fiscal year which commenced January 1, 2007, except for the U.S. Federal Income
Tax Return for the tax year ended December 31, 2007, which is not yet due; the
Company has fully paid all taxes shown to be due on such returns.

B.            The Shares of the Company are owned by the Seller free and clear
of all liens and encumbrances; the Seller has the unrestricted and unlimited
right and authority to sell, transfer, and deliver such shares; the total
outstanding capital of the Company consists of the Shares; and all such shares
have been fully paid for, duly issued, and are owned by the Seller.
 
C.            The Company is the owner of the following:

1)            The real estate, assets and/or contractual rights more fully
described in Exhibits “A”, “B”, and “C” attached hereto.

(a)            It is understood and agreed that the real property is subject to
the restrictions and limitations of record common to the neighborhood, and
subject to any easements for public utilities, which may be of record.

(b)            The Seller represents that the Company’s title to be good and
transferable , but in the event that the title shall not be found good and
marketable and notice to that effect is given to the Seller within forty-five
(45) days from the date of execution of this Agreement, then the Seller agrees
to use reasonable diligence to make the said title good and transferable, and
shall have a reasonable time to do so, and if after reasonable diligence on its
part said title shall not be made good and transferable within a reasonable
time, the Seller shall return the money this day paid and all monies that may
have been paid to it under this Agreement, and thereupon Purchaser shall be
released from all obligations hereunder.  Or, upon request of the Purchaser,
Seller shall deliver the title in its existing condition.  If no such notice is
given within such forty-five (45) days then for purposes of this Agreement, the
title shall be deemed to be good and transferable.

2)            All of such property is free and clear of any liens, encumbrances
or claims for payment.

D.            All debts and liabilities of the Company are or will be paid and
satisfied prior to or concurrently with the Closing and funding contemplated by
this Agreement, including specifically the debts, obligations, and contractual
arrangements referred to in Exhibit “D” attached hereto, but excluding propane
purchases after December 10, 2007, as described in Exhibit “D.”  In this regard,
Seller shall deliver proof satisfactory to Buyer that the debts, obligations,
and contractual arrangements have been paid or satisfied, or alternatively,
Buyer will issue checks to satisfy the debts, obligations, and contractual
arrangements upon funding of the transaction, and the amount specified in
Paragraph 2.A. shall be reduced by the amounts so paid.  Any debts and
liabilities of the Company not satisfied at Closing, shall be satisfied pursuant
to Paragraph 9 hereof.

E.            There has not been any material adverse change in the assets or
liabilities or financial condition of the Company nor has any contractual
arrangement or obligation, other than those in the usual course of business,
been undertaken since December 10, 2007 except as may be otherwise listed and
provided for in this Agreement; and all wages, salaries, commissions,
indebtedness, and obligations of the Company to shareholders, officers,
directors, employees, and agents of the Company have been or will be discharged
at the Closing, except the debts and obligations referred to in Exhibit “E”
attached hereto, which shall be discharged pursuant to Paragraph 9 hereof.
 

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F.            No actions, suits, or proceedings are pending, or to the knowledge
of the Seller are threatened against or affecting the Company or its property,
except as listed in Exhibit “E” attached hereto.

G.            The profit and loss statement, balance sheet, and other financial
documents supplied by Seller to Buyer in performing its due diligence (attached
hereto as Exhibit “F”), or to be supplied to Buyer are true and correct and
fairly represent the financial condition of the Company, and were prepared in
accordance with generally accepted accounting principals and practice.  In
addition, all representations, statements, and information provided by Seller to
Ruben Jimenez & Associates, P.C. as referenced in the letter dated December 18,
2007 and attached hereto as Exhibit “G” were true and correct at the time made
and are true and correct as of the Closing Date.

6.            Buyer’s Representations and Warranties.  The Buyer represents,
covenants and warrants:

A.            Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Texas.

B.            Buyer is acquiring the Shares for its own account and not with a
view to their distribution or resale.
 
7.            Documents at Closing.  The Seller shall deliver or cause to be
delivered to the Purchaser at the Closing the following:

A.            A certificate from the Secretary of the Company, certified by
Seller, listing all shareholders of the Company and setting forth the number of
shares owned by each and likewise setting forth the names of all officers and
directors of the Company.

B.            The original or a certified copy of the Certificate of
Incorporation of the Company minute books, stock books, and all books, records,
and documents pertaining to the Company and its affairs.

C.            1,000 shares of the capital stock of the Company, duly endorsed by
the Seller to the Purchaser.

D.            The resignation in writing of all of the officers and directors of
the Company to be effective as of the date of the Closing.

E.            Such other documents, instruments, checkbooks, bank account
information, computer passwords, and other items as may be requested and/or
reasonably necessary for a complete and total transfer of ownership and control
of the Company, including but not limited to any signed corporate resolutions
for financial institutions as may be requested by Buyer.

F.            All books, records, files, documents, agreements, financial
records, checkbooks, account records, accounts receivables, vehicle titles, and
such other tangible things used, referenced necessary or required for conducting
the business affairs of Sonterra Energy Corporation.

8.            Covenants of the Parties:

A.            Following the Closing Date, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Company in its
possession with respect to periods prior to the Closing Date and the right to
make copies and extracts therefrom, to the extent that such access may be
required by the requesting party in connection with (i) the preparation of tax
returns, (ii) compliance with the requirements of any governmental or regulatory
authority, (iii) the determination or enforcement of the rights and obligations
of any party to this Agreement, (iv) in connection with any actual or threatened
action or proceeding or (v) other reasonable business purposes.  Further each
party agrees following the Closing Date not to destroy or otherwise dispose of
any such books, records and other data unless such party shall first offer in
writing to surrender such books, records and other data to the other party and
such other party shall not agree in writing to take possession thereof during
the ten (10) day period after such offer is made.

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B.            If, in order properly to prepare its tax returns, other documents
or reports required to be filed with governmental or regulatory authorities, or
its financial statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information documents or
records relating to the Company not referred to in paragraph (A) above, and such
information, documents or records are in the possession or control of the other
party, such other party shall use its best efforts to furnish or make available
such information, documents or records (or copies thereof) at the recipient’s
request, cost and expense.  Any information obtained by such party in accordance
with this paragraph shall be held confidential by such party.

9.            Indemnification by Seller.  The Parties agree that two and
one-half percent (2.5%) of the total purchase price, being the sum of
$75,000.00, shall be held back (the “Holdback Fund”) by Purchaser for one (1)
year from the Closing Date or until forty-five (45) days after the pending
litigation matters referenced in Exhibit “D” and “E” are fully resolved by final
settlement agreement or judgment and all appeals have been exhausted or the time
for perfecting a right of appeal has lapsed.  The responsibilities and/or or
liabilities of Seller pursuant to this paragraph and this Agreement shall be
first satisfied through the Holdback Fund.  The Seller shall fully indemnify,
protect, reimburse, and hold harmless the Purchaser and the Company and its
successors from and against any and all damages, liabilities, and claims which
might exist on account of and by reason of failure or default of any of the
covenants, agreements, or warranties of the Seller hereunder, all known or
unknown debts of the Company which are not disclosed or set forth in this
Agreement, any and all amounts which might be claimed, asserted, or established
for as deficiencies in or with respect to federal or state income taxes, or
franchise or other taxes and charges against the Company arising out of or
related to the returns herein represented to have been filed, and the operations
of the Company for or during all fiscal years of the Company, and all such
deficiencies with respect to operations and business of the Company during such
current fiscal year up to the date of the Closing in excess of any amounts which
have otherwise been herein provided for, and the claims and causes of action set
forth on the attached Exhibit “E”.  If any claim for which the Seller shall be
obligated is presented to the Seller, to the Purchaser, or to either of them,
the Seller shall, within ten (10) days after receiving written notice of such
claim, notify the Purchaser in writing whether Seller does or does not have any
objection to the payment of such claim.  The Seller shall not object to the
payment of any such claim unless the Seller shall at the same time inform the
Purchaser in writing that the Seller disputes such claim, in whole or in part,
and shall promptly initiate proper proceedings to contest the same or undertake
the appropriate defense thereof at the Seller’s sole cost and expense in a
manner which will be effective fully to protect Purchaser against any liability
and expense in connection therewith.  If within such ten (10) day notice period
the Seller has no objection to the payment of such claim, the Seller shall be
obligated to pay such claim within five (5) days after the expiration of the ten
(10) day notice period and shall notify Purchaser to pay such claim from the
Holdback Fund.  The failure of the Seller to respond to the notice of claim
within such ten (10) day period shall constitute full authority for Purchaser to
either contest the claim or pay the claim and to obtain a release of the
Company, the Purchaser, and the Seller.  In such event the Purchaser shall be
entitled to pay the claim from the Holdback Fund.  And the Seller shall, in such
event, have no right to contest the validity of the creditor’s claim against the
Company or the Purchaser, as the case may be.  In the event the Seller shall,
within the above-mentioned ten (10) day period, object in writing to the payment
of such claim, and shall promptly initiate proper proceedings to contest the
same or undertake the appropriate defense thereof.  The Purchaser shall not have
the authority to pay such claim as hereinabove provided, unless and until the
claim, in whole or in part, is finally determined to be due and owing, in which
event the Purchaser and the Seller shall be bound by the foregoing provisions
with respect to the payment of claims.  Any monies remaining in the Holdback
Fund shall be paid to Seller as specified herein.
 
10.            Brokerage and Commission.  Both the Purchaser and the Seller
agree that there are no broker’s fees or commissions, or finder’s fees, or
otherwise, due as a result of the consummation of this transaction, save and
except the Purchase Price Fee owed to Jason Jones as more specifically
referenced on Exhibit “D”.  The Purchaser further agrees with the Seller that in
the event there is any brokerage or finder’s fee, or commission due to any other
person, firm, or corporation, then, and in the event of any such claim, the
Purchaser shall defend or pay such claim and hold the Seller harmless in
connection with any liability or responsibilities in connection therewith.

11.            Notices.  All notices permitted or required to be given hereunder
shall be considered to have been properly given if sent by United States mail,
postage prepaid, certified mail, to the Purchaser or the Seller, at the
addresses hereinafter set forth, as follows:

Seller:

Tidelands Oil & Gas Corporation
c/o James B. Smith
1862 West Bitters Road
San Antonio, Texas 78248

Buyer:

Bentley Energy Corp.
c/o Michael R. Ward
45 N. E. Loop 410, Suite 495
San Antonio, Texas 78216

such party may change his or its own address by a notice in writing pursuant
hereto.

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12.            Construction.  This Agreement shall be construed in accordance
with the laws of the State of Texas.

Thus done and executed by the respective parties hereto in the State of Texas on
January 9, 2008.

SELLER:

TIDELANDS OIL & GAS CORPORATION

By:  /s/ James B. Smith                   
                                                                           
        James B. Smith, Its President

BUYER:

BENTLEY ENERGY CORP.

By:  /s/ Michael R. Ward                   
Michael R. Ward, Its President

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ACKNOWLEDGEMENT

STATE OF TEXAS
§
 
§
COUNTY OF BEXAR
§

 

BEFORE ME, the undersigned authority, on this day personally appeared James B.
Smith, President of TIDELANDS OIL & GAS CORPORATION, known to me to be the
person whose name is subscribed to the foregoing instrument, and acknowledged to
me that he executed the same for the purposes and consideration therein
expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 9th day of January, 2008.

/s/ Frances J. Jenkins                               
NOTARY PUBLIC, STATE OF TEXAS
 

 

STATE OF TEXAS
§
 
§
COUNTY OF BEXAR
§

 
BEFORE ME, the undersigned authority, on this day personally appeared Michael R.
Ward, President of BENTLEY ENERGY CORP., known to me to be the person whose name
is subscribed to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 9th day of January, 2008.

/s/ Frances J. Jenkins                              
NOTARY PUBLIC, STATE OF TEXAS

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EXHIBIT “A”

Description of Assets

1.            The propane distribution systems, including the gas mains, yard
lines, meters and storage tanks, serving the following subdivisions in the
Austin, Texas and the Texas Hill Country area:

Arbolago
Austin’s Colony Phase II
Caslano/Riverbend
Cordillera
Costa Bella
The Hills of Lakeway
Jacarandas
Lake Pointe
La Ventana
Lakewinds Estates
Northshore/Hollows
Rob Roy Rim
Senna Hills
Sterling Acres
The Pointe
The Preserves
Avonlea/Ensenada Shores – Unit 4
Lago Vista Retail Center

2.            Guadalupe Valley Telephone Cooperative Independent Contractor
Agreement.
 
3.            The following described motor vehicles and trailers:

a.  
2005 CUST Flatbed Trailer, VIN 1C9WU302155678207

b.  
1987 Ford Flatbed Truck, VIN 1FDNF70HXHVA20432

c.  
1992 GMC Pickup, VIN 1GTGC24K5NE543531

d.  
1994 TEXA Pickup, VIN 17XFP2027R1944726

e.  
2000 Ford Pickup, VIN 1FTNW20L9YEC57991

f.  
2004 Ford Pickup, VIN 1FTSW31P54EG98901

g.  
2005 Ford Pickup, VIN 1FTWW32P55EB44285

h.  
2005 Ford Pickup, VIN 1FTRF12285NA6400

i.  
CASE Rocksaw

j.  
CASE Backhoe

k.  
Air Compressor

l.  
1991 Ford Econoline Van – Not running

4.             Accounts and/or deposit agreement rights with financial
institutions as follows:

a.            Bank of America, Account Number 005741438855

5.             Customer Accounts Receivables.

6.             Any and all other property, equipment, machines, vehicles,
computers and related equipment and/or other tangibles as may be reflected in
the financial statements attached hereto as Exhibit “F”.

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EXHIBIT “B”

Contracts

1.
Lease Agreement dated October 2, 1998, between RTNT, Inc. (predecessor in
interest to Hornsby Bend Utility Company, Inc.), as Landlord, and SuPro Energy
Corporation (predecessor in interest to ONEOK Propane Distribution Company), as
Tenant – Austin’s Colony Phase II Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

2.
Propane Services Agreement, dated September 10, 1998, between Southern Union
Company (predecessor in interest to ONEOK Propane Distribution Company) and HBH
Development – Austin’s Colony Phase II Subdivision, and transferred, assigned,
and conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective
October 1, 2004.

3.
Lease Agreement, dated September 30, 2004, between ONEOK Propane Distribution
Company and Falcon of Lake Travis, Inc. – Costa Bella Subdivision, and
transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

4.
Propane System Agreement, dated March 23, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and Falcon of
Lake Travis, Inc. – Costa Bella Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

5.
Lease Agreement, dated as of October 1, 2004, between ONEOK Propane Distribution
Company and Jacarandas at the Creek Owners’ Association, Inc. – Jacarandas
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

6.
Master Installation Agreement, dated December 12, 2000, between Southern Union
Company (predecessor in interest to ONEOK Propane Distribution Company) and
Jacarandas at the Creek – Chris Milan Property – Jacarandas Subdivision, and
transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

7.
Master Installation Agreement, dated December 31, 2001, between Southern Union
Company (predecessor in interest to ONEOK Propane Distribution Company) and
TEBO, L.P. – Lake Pointe Subdivision, and transferred, assigned, and conveyed to
Seller by Assignment, Conveyance, and Bill of Sale effective October 1, 2004.

8.
Propane System Installation Agreement, dated July 2, 1999, between Southern
Union Company (predecessor in interest to ONEOK Propane Distribution Company)
and La Ventana Driftwood, L.P. – La Ventana Subdivision, and transferred,
assigned, and conveyed to Seller by Assignment, Conveyance, and Bill of Sale
effective October 1, 2004.

9.
Agreement for Installation of Subdivision Propane System, dated September 27,
1999, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and Toll Bros., Inc. – Lakewinds Estates Sections 1, 2 and
3 Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

10.
Tank Site Lease Agreement, dated December 10, 2003, between Mini-Me Management,
Ltd., as Landlord, and ONEOK Propane Distribution Company, as Tenant – Riverbend
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

11.
Agreement for Installation of Subdivision Propane System, dated August 19, 1999,
between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and Lake Austin Land and Cattle, Ltd. – Riverbend
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

 
12.
Agreement for Installation of Subdivision Propane System, dated November 17,
1998, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and Parmer Ridge LTD – Rob Roy Rim Subdivision, and
transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

 

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13.
Propane Service Agreement, dated January 30, 1997, between Southern Union
Company (predecessor in interest to ONEOK Propane Distribution Company) and
Senna Hills Limited – Senna Hills Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

14.
Agreement for Installation of Subdivision Propane System, dated August 19, 1999,
between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and E.P. McCall, Jr. and Keith Schoenfelt – Sterling Acres
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

15.
Agreement for Installation of Subdivision Propane System, dated September 27,
1999, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and The Volente Group of Texas LTD – The Point
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

16.
Agreement for Installation of Subdivision Propane System, dated August 4, 1999,
between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and The Preserve at Cedar Creek Canyon, Inc. – The
Preserve at Barton Creek Subdivision, and transferred, assigned, and conveyed to
Seller by Assignment, Conveyance, and Bill of Sale effective October 1, 2004.

17.
Master Agreement for Services, dated January 1, 2003, between SuPro Energy d/b/a
SUCOPropane (predecessor in interest to ONEOK Propane Distribution Company) and
BNC, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

18.
Self-service Storage Rental Agreement, dated on or about March 1, 2004, between
ONEOK Propane Distribution Company and Byron Lee d/b/a Baronie’s Botels.

19.
Agreement for Installation of Subdivision Propane System, dated February 21,
2000, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and Lakeway 74, Ltd. – The Arbolago Subdivision, Lakeway,
Texas, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

20.
Propane System Agreement – Cordillera Ranch Subdivision, dated August 29, 2005,
between Sonterra Energy Corporation and Cordillera Ranch, Ltd.

21.
First Amendment to the Propane System Agreement – Cordillera Ranch Subdivision,
effective February 2006.

22.
Second Amendment to the Propane System Agreement – Cordillera Ranch Subdivision,
effective 2006.

23.
Agreement for Gas Service System between Sonterra Energy Corporation and Centex
Destinations Properties effective December 19, 2005 for the Hollows at
Northshore.

24.
First Amendment to the Propane System Agreement between Centex Destinations
Properties and Sonterra Energy effective May 2006 for the Bluffs – Phase IB.

25.
Agreement for Installation of Subdivision Propane System, dated January 31,
2001, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and The Hills Property Owners Association – The Hills of
Lakeway Subdivision, and transferred, assigned, and conveyed to Seller by
Assignment, Conveyance, and Bill of Sale effective October 1, 2004.

26.
Community Gas System Installation Agreement – Avonlea Subdivision, dated July
11, 2006, between Sonterra Energy Corp. and Oblate/2673 Partners, Ltd.

27.
First Amendment to The Community Gas System Installation Agreement between
Oblate/2673 Partners, Ltd. and Sonterra Energy Corp., dated June 1, 2007 – Unit
4 of Ensenada Shores at Canyon Lake Subdivision.

28.
Lago Vista Propane System Installation Agreement, dated October 5, 2006, between
Sonterra Energy Corp. and Lago Vista Town Center, L.P. – Lago Vista Town Center.

29.
Independent Contractor Agreement, dated January 31, 2007, between Sonterra
Energy Corp. and Guadalupe Valley Telephone Cooperative.

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EXHIBIT “C”

Real Property

Leases

1.
Lease Agreement, dated October 2, 1998, between RTNT, Inc. (predecessor in
interest to Hornsby Bend Utility Company, Inc.), as Landlord, and SuPro Energy
Company (predecessor in interest to ONEOK Propane Distribution Company), as
Tenant – Austin’s Colony Phase II Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

2.
Leasehold interest under that certain Propane Service Agreement, dated September
10, 1998, between Southern Union Company (predecessor in interest to ONEOK
Propane Distribution Company) and HBH Development – Austin’s Colony Phase II
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

3.
Lease Agreement, dated September 30, 2004, between ONEOK Propane Distribution
Company and Falcon of Lake Travis, Inc. – Costa Bella Subdivision, and
transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

4.
Leasehold interest under that certain Propane Service Agreement, dated March 23,
1999, between Southern Union Company (predecessor in interest to ONEOK Propane
Distribution Company) and Falcon of Lake Travis, Inc. – Costa Bella Subdivision,
and transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

5.
Lease Agreement, dated as of October 1, 2004, between ONEOK Propane Distribution
Company and Jacarandas at the Creek Owners’ Association, Inc. – Jacarandas
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

6.
Leasehold interest under that certain Master Installation Agreement, dated
December 12, 2000, between Southern Union Company (predecessor in interest to
ONEOK Propane Distribution Company) and Jacarandas at the Creek – Chris Milan
Property – Jacarandas Subdivision, and transferred, assigned, and conveyed to
Seller by Assignment, Conveyance, and Bill of Sale effective October 1, 2004.

7.
Leasehold interest under that certain Master Installation Agreement, dated
December 31, 2001, between Southern Union Company (predecessor in interest to
ONEOK Propane Distribution Company) and TEBO, L.P. – Lake Pointe Subdivision,
and transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

8.
Leasehold interest under that certain Master Installation Agreement, dated July
2, 1999, between Southern Union Company (predecessor in interest to ONEOK
Propane Distribution Company) and La Ventana Driftwood, L.P. – La Ventana
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

9.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated September 27, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and Toll Bros.,
Inc. – Lakewinds Estates Sections 1, 2 and 3 Subdivision, and transferred,
assigned, and conveyed to Seller by Assignment, Conveyance, and Bill of Sale
effective October 1, 2004.

10.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated July 9, 1999, between Southern Union Company (predecessor
in interest to ONEOK Propane Distribution Company) and Silvercreek Partners I,
Ltd. – Northshore on Lake Travis Phase I Subdivision, and transferred, assigned,
and conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective
October 1, 2004.

11.
Tank Site Lease Agreement, dated December 10, 2003, between Mini-Me Management,
Ltd., as Landlord, and ONEOK Propane Distribution Company, as Tenant – Riverbend
Subdivision, and transferred, assigned, and conveyed to Seller by Assignment,
Conveyance, and Bill of Sale effective October 1, 2004.

12.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated August 19, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and Lake Austin
Land and Cattle, Ltd. – Riverbend Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

 

--------------------------------------------------------------------------------

 
13.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated November 17, 1998, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and Parmer Ridge
LTD – Rob Roy Rim Subdivision, and transferred, assigned, and conveyed to Seller
by Assignment, Conveyance, and Bill of Sale effective October 1, 2004.

14.
Leasehold interest under that certain Propane Service Agreement, dated January
30, 1997, between Southern Union Company (predecessor in interest to ONEOK
Propane Distribution Company) and Senna Hills Limited – Senna Hills Subdivision,
and transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

15.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated August 19, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and E.P. McCall,
Jr. and Keith Schoenfelt – Sterling Acres Subdivision, and transferred,
assigned, and conveyed to Seller by Assignment, Conveyance, and Bill of Sale
effective October 1, 2004.

16.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated September 17, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and The Volente
Group of Texas LTD – The Pointe Subdivision, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

17.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated August 4, 1999, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and The Preserve
at Cedar Creek Canyon, Inc. – The Preserve at Barton Creek Subdivision, and
transferred, assigned, and conveyed to Seller by Assignment, Conveyance, and
Bill of Sale effective October 1, 2004.

18.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, dated February 21, 2000, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and Lakeway 74,
Ltd. – the Arbolago Subdivision, Lakeway, Texas, and transferred, assigned, and
conveyed to Seller by Assignment, Conveyance, and Bill of Sale effective October
1, 2004.

19.
Leasehold interest under that certain Propane System Agreement – Cordillera
Ranch Subdivision, dated August 29, 2005, between Sonterra Energy Corporation
and Cordillera Ranch, Ltd.

20.
Leasehold interest under that certain Agreement for Gas Service System between
Sonterra Energy Corporation and Centex Destinations Properties effective
December 19, 2005 for the Hollows at Northshore.

21.
First Amendment to the Propane System Agreement between Centex Destinations
Properties and Sonterra Energy effective May 2006 for the Bluffs-Phase IB.

22.
Leasehold interest under that certain Agreement for Installation of Subdivision
Propane System, effective January 31, 2001, between Southern Union Company
(predecessor in interest to ONEOK Propane Distribution Company) and The Hills
Property Owners Association – The Hills of Lakeway Subdivision, and transferred,
assigned, and conveyed to Seller by Assignment, Conveyance, and Bill of Sale
effective October 1, 2004.

23.
Leasehold interest under that certain Community Gas System Installation
Agreement – Avonlea Subdivision, dated July 11, 2006, between Sonterra Energy
Corp. and Oblate/2673 Partners, Ltd.

24.
First Amendment to The Community Gas System Installation Agreement between
Oblate/2673 Partners, Ltd. and Sonterra Energy Corp. dated June 1, 2007 – Unit 4
of Ensenada Shores at Canyon Lake Subdivision.

25.
Leasehold interest under that certain Lago Vista Propane System Installation
Agreement, dated October 5, 2006, between Sonterra Energy Corp. and Lago Vista
Town Center, L.P. – Lago Vista Town Center.

26.
Independent Contractor Agreement, dated January 31, 2007, between Sonterra
Energy and Guadalupe Valley Telephone Cooperative.

27.
Lease Agreement, dated April 4, 2006, between La Ventana Ranch Owners
Association and Sonterra Energy Corp. – La Ventana Subdivision.

--------------------------------------------------------------------------------

Easements and/or Conveyances
 

 
Grantor
Grantee
 
Date
Recording Data
 Subdivision
             
1.
Falcon of Lake Travis, Inc.
SuPro Energy Company (predecessor in interest to ONEOK Propane Distribution
Company)
 
January 4, 2000
Doc #2000010794
Costa Bella
             
2.
Toll Bros., Inc.
SuPro Energy Company (predecessor in interest to ONEOK Propane Distribution
Company)
 
January 25, 2000
 -----
Lakewinds Estates
             
3.
TEBO, L.P.
Sonterra Energy Corporation
 
Filed April 22,  2005
Doc.# 2005069768
Lake Pointe, Travis County
             

--------------------------------------------------------------------------------

EXHIBIT “D”

1.
Cause No. GN500948; styled “Goodson Builders, Ltd. vs. Jim Blackwell, BNC
Engineering, et. al., pending in the 345th Judicial District Court of Travis
County, Texas.  This case involves a claim that Defendant, Toll Brothers
Property, LP sold the Plaintiff property without disclosing a propane
easement.  The Plaintiff sued Sonterra for trespassing through the use of the
easement.  Recently, the Plaintiff came up with a new theory that the tank was
not set back sufficiently pursuant to the Railroad Commission Rules, but
Defendant, Jim Blackwell, has discussed this with the Railroad Commission and
states that the Railroad Commission agrees with him that the setback is
proper.  Once this has been confirmed in writing from Railroad Commission, the
case against Sonterra will be over.

2.
Cause No. GM501625; styled “Senna Hills, Ltd. vs. Sonterra Energy Corp.”,
pending in the 53rd Judicial District Court of Travis County, Texas and
GN501626; styled “HBH Development Co.”, pending in the 98th Judicial District
Court of Travis County, Texas.  Both lawsuits were filed against Sonterra
involving the same claims by Plaintiffs in both cases arising from the same
propane service agreement.  To-date on the Senna Hills matter, Sonterra has
taken the Plaintiff’s expert deposition and is in the process of preparing a
summary judgment to resolve remaining issues.  These separate lawsuits have been
consolidated into one (1) lawsuit for purposes of trial, which has been reset
for the end of March 2008.

3.
Purchase Price Fee equal to two percent (2%) of the purchase price owed to Jason
Jones pursuant to that one certain Consulting Agreement, dated November 1, 2007,
by and between Sonterra Energy Corporation as client and Jason Jones as
consultant.

4.
All sums due, outstanding and owed for legal services provided through the
Closing Date, specifically any and all sums due and owing to the firm of
Strasburger & Price, LLP.

5.
All sums due, outstanding and owed for accounting services provided through the
Closing Date, specifically any and all sums due and owing to Sam Simon.

6.
All other debts, obligations, trade payables and/or other sums incurred, due,
outstanding, and owing as of the Closing Date, save and except propane inventory
and delivery charges incurred from and after December 11, 2007, which costs and
charges shall be paid by Purchaser.

--------------------------------------------------------------------------------

EXHIBIT “E”

Pending Litigation

1.
Cause No. GN500948; styled “Goodson Builders, Ltd. vs. Jim Blackwell, BNC
Engineering, et. al., pending in the 345th Judicial District Court of Travis
County, Texas.  This case involves a claim that Defendant, Toll Brothers
Property, LP sold the Plaintiff property without disclosing a propane
easement.  The Plaintiff sued Sonterra for trespassing through the use of the
easement.  Recently, the Plaintiff came up with a new theory that the tank was
not set back sufficiently pursuant to the Railroad Commission Rules, but
Defendant, Jim Blackwell, has discussed this with the Railroad Commission and
states that the Railroad Commission agrees with him that the setback is
proper.  Once this has been confirmed in writing from Railroad Commission, the
case against Sonterra will be over.

2.
Cause No. GM501625; styled “Senna Hills, Ltd. vs. Sonterra Energy Corp.”,
pending in the 53rd Judicial District Court of Travis County, Texas and
GN501626; styled “HBH Development Co.”, pending in the 98th Judicial District
Court of Travis County, Texas.  Both lawsuits were filed against Sonterra
involving the same claims by Plaintiffs in both cases arising from the same
propane service agreement.  To-date on the Senna Hills matter, Sonterra has
taken the Plaintiff’s expert deposition and is in the process of preparing a
summary judgment to resolve remaining issues.  These separate lawsuits have been
consolidated into one (1) lawsuit for purposes of trial, which has been reset
for the end of March 2008.

--------------------------------------------------------------------------------

 
EXHIBIT “F”

SONTERRA ENERGY CORPORATION
 
FINANCIAL STATEMENTS
 
SEPTEMBER 30, 2007
 
(Unaudited)
 

 
Sonterra Energy Corporation
 
Balance Sheet
 
September 30, 2007
 
(Unaudited)
 
 
 
 
 
ASSETS
 
 
 
 
 
Current Assets
 
 
 
Cash
 
$
17,478
 
Accounts Receivable
 
 
109,384
 
Other Receivables
 
 
14,182
 
Inventory
 
 
102,315
 
Prepaid Expenses
 
 
23,513
 
Total Current Assets
 
 
266,872
 
 
 
 
 
 
Property and Equipment
 
 
 
 
Machinery and Equipment
 
 
67,685
 
Computers & Related Equipment
 
 
34,491
 
Trucks, Autos and Trailers
 
 
126,464
 
Leasehold Improvements
 
 
7,485
 
Office Furniture and Equipment
 
 
9,506
 
Storage Sheds
 
 
7,500
 
Tanks and Lines - Propane Distribution System
 
 
1,939,750
 
Total
 
 
2,192,881
 
Less:  Accumulated Depreciation
 
 
344,994
 
Net Property and Equipment
 
 
1,847,887
 
 
 
 
 
 
Other Assets
 
 
 
 
Deposits
 
 
2,550
 
Goodwill
 
 
358,509
 
Total Other Assets
 
 
361,059
 
 
 
 
 
 
Total Assets
 
$
2,475,818
 

 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY
 
 
 
 
 
 
Current Liabilities
 
 
 
 
Accounts Payable
 
$
184,854
 
Accounts Payable - Other
 
 
237
 
Accrued Expenses Payable
 
 
26,351
 
Payroll Taxes Withheld and Accrued
 
 
56
 
Customer Deposits
 
 
10,350
 
Total Current Liabilities
 
 
221,848
 
 
 
 
 
 
Long-Term Liabilities
 
 
-
 
 
 
 
 
 
Total Liabilities
 
 
221,848
 
 
 
 
 
 
Stockholder's Equity
 
 
 
 
Common Stock
 
 
1,000
 
Additional Paid-in Capital
 
 
2,521,398
 
Accumulated  (Deficit)
 
 
(534,582
)
Net Income - Current Period
 
 
266,154
 
 
 
 
 
 
Total Stockholder's Equity
 
 
2,253,970
 
 
 
 
 
 
Total Liabilities and Stockholder's Equity
 
$
2,475,818
 

 

 

--------------------------------------------------------------------------------

Sonterra Energy Corp.
 
Condensed Statement of Income by Quarter
 
For the Year Ended December 31, 2007
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter
 
 
Quarter
 
 
Quarter
 
 
Nine Mths
 
 
 
Ended
 
 
Ended
 
 
Ended
 
 
Ended
 
 
 
Mar. 31, 2007
 
 
Jun. 30, 2007
 
 
Sep. 30, 2007
 
 
Sep. 30, 2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales
 
$
1,045,776
 
 
$
426,716
 
 
$
366,356
 
 
$
1,838,848
 
Cost of Sales
 
 
561,496
 
 
 
199,361
 
 
 
205,978
 
 
 
966,835
 
Gross Profit
 
 
484,280
 
 
 
227,355
 
 
 
160,378
 
 
 
872,013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Overhead
 
 
73,796
 
 
 
65,385
 
 
 
74,525
 
 
 
213,706
 
Selling, General and Administrative
 
 
98,252
 
 
 
133,115
 
 
 
74,994
 
 
 
306,361
 
Total Expenses
 
 
172,048
 
 
 
198,500
 
 
 
149,519
 
 
 
520,067
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income from Operations
 
 
312,232
 
 
 
28,855
 
 
 
10,859
 
 
 
351,946
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expenses)
 
 
6
 
 
 
6,947
 
 
 
4,755
 
 
 
11,708
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
 
 
312,238
 
 
 
35,802
 
 
 
15,614
 
 
 
363,654
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
 
 
607
 
 
 
872
 
 
 
392
 
 
 
1,871
 
Depreciation
 
 
31,548
 
 
 
32,205
 
 
 
31,876
 
 
 
95,629
 
Total
 
 
32,155
 
 
 
33,077
 
 
 
32,268
 
 
 
97,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
280,083
 
 
$
2,725
 
 
$
(16,654
)
 
$
266,154
 

 
 
 

--------------------------------------------------------------------------------

 
SONTERRA ENERGY CORPORATION
BALANCE SHEET
SEPTEMBER 30, 2007

 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets
 
 
 
 
Bank of Am-Chking-8855
 
$
17,478.17
 
 
Accounts Receivable - CUSI
 
 
109,384.46
 
 
Accts. Rec. CUSI Prpd Dept
 
 
810.00
 
 
Accounts Receivable - Other
 
 
1,867.80
 
 
Employee Advances
 
 
11,503.33
 
 
Inventory - Propane
 
 
102,314.93
 
 
Deposits - W/C Ins
 
 
4,981.00
 
 
Prepaid Expenses
 
 
3,501.77
 
 
Prepaid Insurance
 
 
7,892.33
 
 
Prepaid Rent
 
 
3,750.04
 
 
Prepaid Const. Costs
 
 
3,387.88
 
 
 
 
 
 
 
 
Total Current Assets
 
 
266,871.71
 
 
 
 
 
 
 
Property and Equipment
 
 
 
 
 
Machinery & Equipment
 
 
64,080.45
 
 
Cell Phones & Pagers
 
 
1,228.56
 
 
Computers & Related Equipment
 
 
34,490.42
 
 
Leasehold Improvements
 
 
7,484.92
 
 
Trucks Autos & Trailers
 
 
126,464.38
 
 
Office Furn & Eqp
 
 
7,007.07
 
 
Storage Sheds
 
 
7,500.00
 
 
Tanks, Lines - Prop Dist Sys
 
 
1,939,749.98
 
 
Signs
 
 
3,604.32
 
 
Website
 
 
1,270.29
 
 
Accum. Depr. - Mach & Eqp
 
 
(32,860.75
)
 
Accum. Depr. - Cells & Pagrs
 
 
(624.75
)
 
Accum. Depr. - Comp & Eqp
 
 
(14,438.73
)
 
Accum. Depr. - Leasehold Impr.
 
 
(2,547.27
)
 
Accum. Depr. - Trk Aut & Trl
 
 
(62,043.74
)
 
Accum. Depr. - Off Furn & Eqp
 
 
(3,802.96
)
 
Accum. Depr. - Storage Sheds
 
 
(4,375.00
)
 
Accum. Depr. - Tanks, Lines
 
 
(222,000.50
)
 
Accum. Depr. - Signs
 
 
(1,558.71
)
 
Accum. Depr. - Website
 
 
(741.15
)
 
 
 
 
 
 
 
Total Property and Equipment
 
 
1,847,886.83
 
 
 
 
 
 
 
Other Assets
 
 
 
 
 
Security Deposits
 
 
2,550.00
 
 
Goodwill
 
 
358,509.34
 
 
 
 
 
 
 
 
Total Other Assets
 
 
361,059.34
 
 
 
 
 
 
 
 
Total Assets
 
$
2,475,817.88
 

 
 

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND MEMBERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
Accounts Payable
 
$
184,854.40
 
 
VISA - BOA
 
 
236.98
 
 
Accrued Expense Payable
 
 
2,205.44
 
 
Accrued Salary Payable
 
 
11,241.28
 
 
Accrued PR Tax Accr Sal
 
 
903.95
 
 
Federal Withholding Taxes
 
 
13.96
 
 
FICA/Med Payable
 
 
38.26
 
 
FUTA Payable
 
 
2.00
 
 
TX Unempl Payable
 
 
1.56
 
 
Accrued Cordillera Tap Fees
 
 
12,000.00
 
 
Customer Deposits
 
 
10,350.00
 
 
 
 
 
 
 
 
Total Current Liabilities
 
 
221,847.83
 
 
 
 
 
 
 
Long-Term Liabilities
 
 
 
 
 
 
 
 
 
 
 
Total Long-Term Liabilities
 
 
-
 
 
 
 
 
 
 
 
Total Liabilities
 
 
221,847.83
 
 
 
 
 
 
 
Members' Equity
 
 
 
 
 
Common Stock
 
 
1,000.00
 
 
Addl Paid-in Capital
 
 
2,521,398.06
 
 
Retained Earnings
 
 
(534,582.20
)
 
Net Income
 
 
266,154.19
 
 
 
 
 
 
 
 
Total Members' Equity
 
$
2,253,970.05
 
 
 
 
 
 
 
 
Total Liabilities & Members' Equity
 
$
2,475,817.88
 

 

--------------------------------------------------------------------------------

 
SONTERRA ENERGY CORPORATION
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2007

 
 
Current Quarter
 
 
Year to Date
 
Revenues
 
 
 
 
 
 
Propane Sales - Senna Hills
 
$
26,500.34
 
 
$
182,524.54
 
Propane Sales - Austins Colony
 
 
30,469.06
 
 
 
157,368.96
 
Propane Sales - Costa Bella
 
 
26,398.63
 
 
 
158,476.70
 
Propane Sales - Rob Roy Rim
 
 
4,369.81
 
 
 
26,588.76
 
Propane Sales - La Ventana
 
 
21,029.61
 
 
 
105,414.63
 
Propane Sales - Lake Point
 
 
47,665.52
 
 
 
304,448.81
 
Propane Sales - Lakewinds
 
 
6,711.39
 
 
 
62,602.45
 
Propane Sales - Prsrv @ Barton
 
 
8,942.51
 
 
 
73,798.58
 
Propane Sales - Sterling Acres
 
 
3,573.39
 
 
 
24,080.85
 
Propane Sales - Arbolago
 
 
7,987.63
 
 
 
53,778.93
 
Propane Sales - Jacarandas
 
 
920.88
 
 
 
6,799.92
 
Propane Sales - Hills Lakeway
 
 
3,850.09
 
 
 
32,088.97
 
Propane Sales - Casalano
 
 
4,654.83
 
 
 
23,545.81
 
Propane Sales - The Pointe
 
 
1,095.18
 
 
 
6,881.16
 
Propane Sales - Hollows
 
 
23,057.53
 
 
 
119,123.21
 
Propane Sales - Cordillera
 
 
8,931.48
 
 
 
20,481.35
 
Service Inc. - Senna Hills
 
 
7,259.95
 
 
 
20,707.45
 
Service Inc. - Austins Colony
 
 
12,780.00
 
 
 
38,572.50
 
Service Inc. - Costa Bella
 
 
2,594.23
 
 
 
7,474.23
 
Service Inc. - Rob Roy Rim
 
 
990.00
 
 
 
2,970.00
 
Service Inc. - La Ventana
 
 
4,590.00
 
 
 
13,675.00
 
Service Inc. - Lake Point
 
 
11,360.06
 
 
 
33,455.06
 
Service Inc. - Lakewinds
 
 
2,025.00
 
 
 
6,090.00
 
Service Inc. - Prsrv @ Barton
 
 
1,890.00
 
 
 
5,590.00
 
Service Inc. - Sterling Acres
 
 
945.00
 
 
 
2,850.00
 
Service Inc. - Arbolago
 
 
1,650.00
 
 
 
6,312.50
 
Service Inc. - Jacarandas
 
 
450.00
 
 
 
1,395.00
 
Service Inc. - Hills Lakeway
 
 
1,125.00
 
 
 
3,360.00
 
Service Inc. - Casalano
 
 
630.00
 
 
 
1,665.00
 
Service Inc. - The Pointe
 
 
315.00
 
 
 
892.50
 
Service Inc. -  Hollows
 
 
6,300.00
 
 
 
18,017.28
 
Service Inc. -  Cordillera
 
 
555.00
 
 
 
1,035.00
 
Install Svc. - Senna Hills
 
 
1,900.00
 
 
 
7,877.50
 
Install Svc. - Austins Colony
 
 
700.00
 
 
 
1,735.00
 
Install Svc. - Costa Bella
 
 
385.00
 
 
 
1,215.00
 
Install Svc. - Rob Roy Rim
 
 
50.00
 
 
 
150.00
 
Install Svc. - La Ventana
 
 
200.00
 
 
 
3,712.00
 
Install Svc. - Lake Point
 
 
1,085.00
 
 
 
5,265.00
 
Install Svc. - Lakewinds
 
 
50.00
 
 
 
910.00
 
Install Svc. - Prsrv @ Barton
 
 
0.00
 
 
 
465.00
 
Install Svc. - Sterling Acres
 
 
0.00
 
 
 
50.00
 
Install Svc. - Arbolago
 
 
360.00
 
 
 
2,010.00
 
Install Svc. - Jacarandas
 
 
0.00
 
 
 
125.00
 
Install Svc. - Hills Lakeway
 
 
0.00
 
 
 
50.00
 
Install Svc. - Caslano
 
 
50.00
 
 
 
2,481.00
 
Install Svc. - The Pointe
 
 
200.00
 
 
 
300.00
 
Install Svc. - Hollows
 
 
1,025.00
 
 
 
23,976.50
 
Install Svc. - Cordillera
 
 
200.00
 
 
 
7,077.00
 
Install Svc. - Avonlea
 
 
50.00
 
 
 
183.00
 

 

--------------------------------------------------------------------------------

 
Fin. Chg. Inc. - Senna Hills
 
 
170.00
 
 
 
620.00
 
Fin. Chg. Inc. - Austins Colon
 
 
1,380.00
 
 
 
4,935.00
 
Fin. Chg. Inc. - Costa Bella
 
 
110.00
 
 
 
245.00
 
Fin. Chg. Inc. - Rob Roy Rim
 
 
35.00
 
 
 
155.00
 
Fin. Chg. Inc. - La Ventana
 
 
135.00
 
 
 
485.00
 
Fin. Chg. Inc. - Lake Point
 
 
355.00
 
 
 
1,400.00
 
Fin. Chg. Inc. - Lakewinds
 
 
75.00
 
 
 
210.00
 
Fin. Chg. Inc. - Prsrv @ Barto
 
 
60.00
 
 
 
170.00
 
Fin. Chg. Inc. - Sterling Acre
 
 
50.00
 
 
 
185.00
 
Fin. Chg. Inc. - Arbolago
 
 
70.00
 
 
 
225.00
 
Fin. Chg. Inc. - Jacarandas
 
 
30.00
 
 
 
115.00
 
Fin. Chg. Inc. - Hills Lakeway
 
 
25.00
 
 
 
155.00
 
Fin. Chg. Inc. - Casalano
 
 
30.00
 
 
 
100.00
 
Fin. Chg. Inc. - The Pointe
 
 
15.00
 
 
 
65.00
 
Fin. Chg. Inc. - Hollows
 
 
120.00
 
 
 
370.00
 
Construction Svcs. Income
 
 
2,000.00
 
 
 
0.00
 
Construct. Svcs. - Senna Hills
 
 
3,480.00
 
 
 
33,667.50
 
Construct. Svcs. - Austins Col
 
 
0.00
 
 
 
3,425.00
 
Construct. Svcs. - Costa Bella
 
 
0.00
 
 
 
1,750.00
 
Construct. Svcs. - La Ventana
 
 
(279.00
)
 
 
2,010.00
 
Construct. Svcs. - Lake Point
 
 
3,150.00
 
 
 
6,865.00
 
Construct. Svcs. - Arbolago
 
 
1,400.00
 
 
 
1,400.00
 
Construct. Svcs. - Casalano
 
 
2,381.00
 
 
 
4,762.00
 
Construct. Svcs. - The Pointe
 
 
1,400.00
 
 
 
4,200.00
 
Construct. Svcs. - Hollows
 
 
9,160.00
 
 
 
56,509.50
 
Construct. Svcs. - Cordillera
 
 
3,509.00
 
 
 
16,996.00
 
Construct. Svcs. - Avonlea
 
 
13,000.00
 
 
 
45,216.00
 
Construct. Svcs. - Lago Vista
 
 
0.00
 
 
 
13,817.50
 
Construct. Svcs. - Esp
 
 
29,000.00
 
 
 
29,000.00
 
Sales Allowances
 
 
0.00
 
 
 
(984.14
)
Utility Installation Income
 
 
10,283.46
 
 
 
40,565.94
 
Interest Income
 
 
0.00
 
 
 
27.03
 
Misc. Income
 
 
2,094.75
 
 
 
2,094.75
 
Recover Prior Period Debt
 
 
0.00
 
 
 
38.40
 
Gain - Sale of Assets
 
 
0.00
 
 
 
113.30
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 
371,111.33
 
 
 
1,850,555.93
 

 

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
 
 
 
 
 
 
 
COS:Propane - Senna
 
 
13,272.88
 
 
 
97,970.54
 
COS:Propane - Austin
 
 
9,721.86
 
 
 
88,604.96
 
COS:Propane - Costa Bella
 
 
12,844.98
 
 
 
119,939.17
 
COS:Propane - Rob Roy
 
 
1,382.55
 
 
 
14,580.90
 
COS:Propane - La Ventana
 
 
13,897.50
 
 
 
67,474.83
 
COS:Propane - Lake Pointe
 
 
33,588.88
 
 
 
173,463.70
 
COS:Propane - Lakewinds
 
 
3,948.74
 
 
 
37,758.33
 
COS:Propane - Preserves
 
 
4,099.04
 
 
 
41,602.15
 
COS:Propane - Sterling
 
 
1,980.85
 
 
 
14,817.26
 
COS:Propane - Jacaranda
 
 
0.00
 
 
 
3,141.05
 
COS:Propane - Hills Lake
 
 
1,698.85
 
 
 
19,049.38
 
COS:Propane - Casalano
 
 
2,264.10
 
 
 
13,952.79
 
COS:Propane - Hollows
 
 
9,953.02
 
 
 
64,386.55
 
COS:Propane - Cordillera
 
 
12,821.24
 
 
 
28,086.43
 
COS:Propane - Avonlea
 
 
0.00
 
 
 
930.64
 
COS:Meters & Supplies
 
 
3,426.03
 
 
 
12,480.74
 
COS:Materials
 
 
29,434.31
 
 
 
57,532.74
 
COS:Site Preparation
 
 
657.98
 
 
 
4,469.65
 
COS:Construct. Svcs.
 
 
200.00
 
 
 
1,750.00
 
COS:Engineer/Design
 
 
0.00
 
 
 
4,467.45
 
COS:Depreciation Exp
 
 
19,141.81
 
 
 
57,425.43
 
COS:Insurance - W/C
 
 
1,036.06
 
 
 
5,638.12
 
COS:Sal. & Wages-Hourly
 
 
49,416.70
 
 
 
103,822.11
 
COS:Sal. & Wages-Salary
 
 
(15,684.53
)
 
 
0.00
 
COS:P/R Tax - FICA/Med
 
 
2,483.63
 
 
 
7,638.25
 
COS:P/R Tax - FUTA
 
 
66.20
 
 
 
402.39
 
COS:P/R Tax - TX Unemp
 
 
0.00
 
 
 
364.96
 
Inventory Adj. (Propane)
 
 
13,467.07
 
 
 
(18,284.93
)
GCTV COS:Materials
 
 
0.00
 
 
 
794.83
 
 
 
 
 
 
 
 
 
 
Total Cost of Sales
 
 
225,119.75
 
 
 
1,024,260.42
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
 
145,991.58
 
 
 
826,295.51
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Computer Supplies - Oper
 
 
9.00
 
 
 
83.69
 
Cust. Comm. Svcs. - Oper.
 
 
353.16
 
 
 
1,104.22
 
Depreciation Exp - Oper
 
 
10,049.68
 
 
 
30,149.06
 
Empl. Benefits - Retire - Oper
 
 
0.00
 
 
 
1.71
 
Equipment Rental - Oper.
 
 
2,357.03
 
 
 
7,079.84
 
Insurance - Med/Life - Oper
 
 
9,198.44
 
 
 
15,627.65
 
Insurance - Casualty - Oper
 
 
15,504.20
 
 
 
46,583.00
 
Insurance - W/C - Oper
 
 
(1,183.74
)
 
 
813.65
 
Insurance - Auto - Oper
 
 
1,595.49
 
 
 
4,786.47
 
Management Fee - Oper
 
 
0.00
 
 
 
100.00
 
Meals & Ent. - Oper
 
 
1,184.58
 
 
 
2,443.47
 
Meters & Supplies - Oper
 
 
55.78
 
 
 
353.73
 
Meter Reading - Oper
 
 
1,224.86
 
 
 
3,885.71
 
Misc. Exp. - Oper.
 
 
0.00
 
 
 
358.65
 
Office Supplies - Oper
 
 
91.54
 
 
 
1,024.90
 
Payroll - Oper - Salary
 
 
10,587.50
 
 
 
36,575.00
 
P/R Tax - FICA/Med - Oper
 
 
749.33
 
 
 
2,606.04
 
P/R Tax - FUTA - Oper
 
 
0.00
 
 
 
56.00
 
P/R Tax - TX Unempl - Oper
 
 
0.00
 
 
 
56.24
 

 

--------------------------------------------------------------------------------

 
Rent Expense - Oper.
 
 
8,183.29
 
 
 
19,905.29
 
Repairs & Main - Oper
 
 
3,165.41
 
 
 
7,450.30
 
Repairs & Main - Auto
 
 
3,569.14
 
 
 
8,791.17
 
Safety & Env Compliance - Oper
 
 
0.00
 
 
 
1,486.71
 
Sm. Tools & Supp. - Oper.
 
 
486.27
 
 
 
2,893.96
 
Tank Monitoring - Oper
 
 
956.25
 
 
 
2,231.25
 
Telephone - Oper - Debba
 
 
97.47
 
 
 
264.49
 
Telephone-Oper-Dripping
 
 
303.31
 
 
 
568.64
 
Telephone - Cellular - Oper
 
 
3,049.35
 
 
 
8,205.86
 
Telephone-SA Office
 
 
1,391.42
 
 
 
4,152.62
 
Travel-Mileage/Veh - Oper
 
 
12,774.82
 
 
 
32,718.55
 
Travel - Lodging - Oper
 
 
1,491.59
 
 
 
1,592.90
 
Travel - Meals & Ent - Oper
 
 
468.62
 
 
 
624.41
 
Uniforms
 
 
777.64
 
 
 
2,262.62
 
Waste & Sewer - Oper
 
 
169.13
 
 
 
672.76
 
Repairs & Main - GCTV
 
 
76.50
 
 
 
426.50
 
Supplies - Oper - GCTV
 
 
0.00
 
 
 
80.62
 
Travel-Sales-Other
 
 
0.00
 
 
 
5.40
 
Bank Service Charges
 
 
4,390.42
 
 
 
11,582.26
 
Collection Expense
 
 
239.82
 
 
 
491.44
 
Commissions and Fees
 
 
61.80
 
 
 
71.80
 
Computer & Internet Fees
 
 
664.97
 
 
 
1,824.18
 
Computer Repairs & Supplies
 
 
357.55
 
 
 
357.55
 
Empl. Drug Test Saf & Comp
 
 
0.00
 
 
 
203.00
 
Depreciation Exp - G&A
 
 
2,685.09
 
 
 
8,055.23
 
Dues & Subscriptions
 
 
445.00
 
 
 
445.00
 
Electricity - Office - SA
 
 
0.00
 
 
 
180.31
 
Electricity-Dripping
 
 
216.30
 
 
 
216.30
 
Empl. Benefits - Retirement
 
 
21.73
 
 
 
27.33
 
Franchise Fee
 
 
2,790.74
 
 
 
8,423.60
 
Insurance - Med/Life
 
 
1,992.30
 
 
 
3,089.48
 
Insurance - W/C - G&A
 
 
176.32
 
 
 
58.20
 
Interest Expense
 
 
391.89
 
 
 
1,870.92
 
Legal Fees & Costs
 
 
9,031.03
 
 
 
93,627.59
 
Licenses, Taxes & Fees
 
 
350.00
 
 
 
1,467.35
 
Merchant Fees
 
 
2,264.30
 
 
 
11,010.24
 
Meals & Entertainment
 
 
77.25
 
 
 
2,209.88
 
Office Expense
 
 
49.63
 
 
 
69.07
 
Office Supplies Expense
 
 
1,059.74
 
 
 
2,539.57
 
Payroll - Gen & Adm
 
 
26,996.40
 
 
 
77,910.00
 
Employee Stock Bonus
 
 
0.00
 
 
 
26,500.00
 
Payroll Process. Exp.
 
 
516.52
 
 
 
1,871.39
 
P/R Tax - FICA/Med
 
 
2,059.92
 
 
 
5,941.68
 
P/R Tax - FUTA
 
 
24.00
 
 
 
115.81
 
P/R Tax - TX Unempl - Gen
 
 
22.32
 
 
 
106.93
 
Postage & Exp. Shipping
 
 
1,517.00
 
 
 
5,654.96
 
Rent Expense
 
 
9,900.00
 
 
 
29,700.00
 
Repairs & Main - Autos
 
 
52.66
 
 
 
450.83
 
Security Expense
 
 
0.00
 
 
 
887.50
 
Storage Rental
 
 
450.00
 
 
 
1,227.05
 
Taxes - Other
 
 
0.00
 
 
 
3,013.00
 
Taxes - Penalty
 
 
100.00
 
 
 
2,381.70
 
Tax Prep Fee
 
 
3,013.00
 
 
 
3,013.00
 
Telephone-River Bend
 
 
(95.82
)
 
 
0.00
 
Telephones-Cell Phones
 
 
364.52
 
 
 
1,243.61
 
Travel-Mileage/Vehicles
 
 
1,708.11
 
 
 
3,944.16
 
Travel-Meals & Entertainment
 
 
0.00
 
 
 
322.32
 
Travel-Other
 
 
14.00
 
 
 
14.00
 
 
 
 
 
 
 
 
 
 
Total Expenses
 
 
162,645.57
 
 
 
560,141.32
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
(16,653.99
)
 
$
266,154.19
 

 
 

--------------------------------------------------------------------------------

 
 
SONTERRA ENERGY CORPORATION
BALANCE SHEET
JUNE30, 2007

 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets
 
 
 
 
Bank of Am-Chking-8855
 
$
41,499.49
 
 
Accounts Receivable - CUSI
 
 
126,961.77
 
 
Accts. Rec. CUSI Prpd Dept
 
 
150.00
 
 
Accounts Receivable - Other
 
 
11,840.61
 
 
Accts Rec - Cord Tap Fees
 
 
2,000.00
 
 
Employee Advances
 
 
10,753.33
 
 
Inter-Co. Ln - TOGC
 
 
2,911,279.14
 
 
Inventory - Propane
 
 
115,782.00
 
 
Deposits - W/C Ins
 
 
4,981.00
 
 
Prepaid Expenses
 
 
6,642.92
 
 
Prepaid Insurance
 
 
28,141.74
 
 
Prepaid Rent
 
 
4,083.33
 
 
Prepaid Interest
 
 
395.10
 
 
Prepaid Const. Costs
 
 
1,709.64
 
 
 
 
 
 
 
 
Total Current Assets
 
 
3,266,220.07
 
 
 
 
 
 
 
Property and Equipment
 
 
 
 
 
Machinery & Equipment
 
 
64,080.45
 
 
Cell Phones & Pagers
 
 
1,228.56
 
 
Computers & Related Equipment
 
 
34,490.42
 
 
Leasehold Improvements
 
 
7,484.92
 
 
Trucks Autos & Trailers
 
 
126,464.38
 
 
Office Furn & Eqp
 
 
7,007.07
 
 
Storage Sheds
 
 
7,500.00
 
 
Tanks, Lines - Prop Dist Sys
 
 
1,913,162.78
 
 
Signs
 
 
3,604.32
 
 
Website
 
 
1,270.29
 
 
Accum. Depr. - Mach & Eqp
 
 
(29,689.50
)
 
Accum. Depr. - Cells & Pagrs
 
 
(563.32
)
 
Accum. Depr. - Comp & Eqp
 
 
(12,645.58
)
 
Accum. Depr. - Leasehold Impr.
 
 
(2,173.03
)
 
Accum. Depr. - Trk Aut & Trl
 
 
(55,720.52
)
 
Accum. Depr. - Off Furn & Eqp
 
 
(3,452.61
)
 
Accum. Depr. - Storage Sheds
 
 
(4,000.00
)
 
Accum. Depr. - Tanks, Lines
 
 
(202,858.69
)
 
Accum. Depr. - Signs
 
 
(1,378.50
)
 
Accum. Depr. - Website
 
 
(635.23
)
 
 
 
 
 
 
 
Total Property and Equipment
 
 
1,853,176.21
 
 
 
 
 
 
 
Other Assets
 
 
 
 
 
Security Deposits
 
 
2,500.00
 
 
Goodwill
 
 
358,509.34
 
 
 
 
 
 
 
 
Total Other Assets
 
 
361,009.34
 
 
 
 
 
 
 
 
Total Assets
 
$
5,480,405.62
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND MEMBERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
Accounts Payable
 
$
139,549.87
 
 
AP - Other
 
 
350.20
 
 
VISA - BOA
 
 
372.42
 
 
Accrued Expense Payable
 
 
2,415.33
 
 
Accrued Salary Payable
 
 
14,602.16
 
 
Accrued PR Tax Accr Sal
 
 
1,161.06
 
 
Federal Withholding Taxes
 
 
13.96
 
 
FICA/Med Payable
 
 
38.26
 
 
FUTA Payable
 
 
2.00
 
 
TX Unempl Payable
 
 
1.56
 
 
Inter Co Ln - TOGC
 
 
509,590.03
 
 
Accrued Cordillera Tap Fees
 
 
12,000.00
 
 
Customer Deposits
 
 
9,150.00
 
 
N/P - SWBC/Prog
 
 
1,162.20
 
 
 
 
 
 
 
 
Total Current Liabilities
 
 
690,409.05
 
 
 
 
 
 
 
Long-Term Liabilities
 
 
 
 
 
 
 
 
 
 
 
Total Long-Term Liabilities
 
 
0.00
 
 
 
 
 
 
 
 
Total Liabilities
 
 
690,409.05
 
 
 
 
 
 
 
Members' Equity
 
 
 
 
 
Common Stock
 
 
1,000.00
 
 
Addl Paid-in Capital
 
 
5,040,770.59
 
 
Retained Earnings
 
 
(534,582.20
)
 
Net Income
 
 
282,808.18
 
 
 
 
 
 
 
 
Total Members' Equity
 
 
4,789,996.57
 
 
 
 
 
 
 
 
Total Liabilities & Members' Equity
 
 
5,480,405.62
 

 

--------------------------------------------------------------------------------

 
SONTERRA ENERGY CORPORATION
INCOME STATEMENT
FOR THE SIX MONTHS ENDING JUNE30, 2007

 
 
Current Quarter
 
 
Year to Date
 
Revenues
 
 
 
 
 
 
Propane Sales - Senna Hills
 
$
37,352.70
 
 
$
156,024.20
 
Propane Sales - Austins Colony
 
 
35,073.50
 
 
 
126,899.90
 
Propane Sales - Costa Bella
 
 
36,730.52
 
 
 
132,078.07
 
Propane Sales - Rob Roy Rim
 
 
5,100.05
 
 
 
22,218.95
 
Propane Sales - La Ventana
 
 
24,279.55
 
 
 
84,385.02
 
Propane Sales - Lake Point
 
 
64,476.96
 
 
 
256,783.29
 
Propane Sales - Lakewinds
 
 
10,571.32
 
 
 
55,891.06
 
Propane Sales - Prsrv @ Barton
 
 
13,890.63
 
 
 
64,856.07
 
Propane Sales - Sterling Acres
 
 
5,022.00
 
 
 
20,507.46
 
Propane Sales - Arbolago
 
 
12,915.32
 
 
 
45,791.30
 
Propane Sales - Jacarandas
 
 
1,372.20
 
 
 
5,879.04
 
Propane Sales - Hills Lakeway
 
 
5,696.31
 
 
 
28,238.88
 
Propane Sales - Casalano
 
 
5,101.24
 
 
 
18,890.98
 
Propane Sales - The Pointe
 
 
1,601.07
 
 
 
5,785.98
 
Propane Sales - Hollows
 
 
27,877.88
 
 
 
96,065.68
 
Propane Sales - Cordillera
 
 
3,823.91
 
 
 
11,549.87
 
Service Inc. - Senna Hills
 
 
6,922.50
 
 
 
13,447.50
 
Service Inc. - Austins Colony
 
 
12,712.50
 
 
 
25,792.50
 
Service Inc. - Costa Bella
 
 
2,410.00
 
 
 
4,880.00
 
Service Inc. - Rob Roy Rim
 
 
990.00
 
 
 
1,980.00
 
Service Inc. - La Ventana
 
 
4,545.00
 
 
 
9,085.00
 
Service Inc. - Lake Point
 
 
11,160.00
 
 
 
22,095.00
 
Service Inc. - Lakewinds
 
 
2,025.00
 
 
 
4,065.00
 
Service Inc. - Prsrv @ Barton
 
 
1,825.00
 
 
 
3,700.00
 
Service Inc. - Sterling Acres
 
 
960.00
 
 
 
1,905.00
 
Service Inc. - Arbolago
 
 
1,657.50
 
 
 
4,662.50
 
Service Inc. - Jacarandas
 
 
450.00
 
 
 
945.00
 
Service Inc. - Hills Lakeway
 
 
1,155.00
 
 
 
2,235.00
 
Service Inc. - Casalano
 
 
510.00
 
 
 
1,035.00
 
Service Inc. - The Pointe
 
 
285.00
 
 
 
577.50
 
Service Inc. -  Hollows
 
 
6,122.50
 
 
 
11,717.28
 
Service Inc. -  Cordillera
 
 
165.00
 
 
 
480.00
 
Install Svc. - Senna Hills
 
 
1,500.00
 
 
 
5,977.50
 
Install Svc. - Austins Colony
 
 
550.00
 
 
 
1,035.00
 
Install Svc. - Costa Bella
 
 
520.00
 
 
 
830.00
 
Install Svc. - Rob Roy Rim
 
 
50.00
 
 
 
100.00
 
Install Svc. - La Ventana
 
 
200.00
 
 
 
3,512.00
 
Install Svc. - Lake Point
 
 
1,555.00
 
 
 
4,180.00
 
Install Svc. - Lakewinds
 
 
50.00
 
 
 
860.00
 
Install Svc. - Prsrv @ Barton
 
 
175.00
 
 
 
465.00
 
Install Svc. - Sterling Acres
 
 
50.00
 
 
 
50.00
 
Install Svc. - Arbolago
 
 
250.00
 
 
 
1,650.00
 
Install Svc. - Jacarandas
 
 
50.00
 
 
 
125.00
 
Install Svc. - Hills Lakeway
 
 
0.00
 
 
 
50.00
 
Install Svc. - Caslano
 
 
0.00
 
 
 
2,431.00
 
Install Svc. - The Pointe
 
 
50.00
 
 
 
100.00
 
Install Svc. - Hollows
 
 
700.00
 
 
 
22,951.50
 
Install Svc. - Cordillera
 
 
250.00
 
 
 
6,877.00
 
Install Svc. - Avonlea
 
 
0.00
 
 
 
133.00
 

 

--------------------------------------------------------------------------------

 
Fin. Chg. Inc. - Senna Hills
 
 
240.00
 
 
 
450.00
 
Fin. Chg. Inc. - Austins Colon
 
 
1,710.00
 
 
 
3,555.00
 
Fin. Chg. Inc. - Costa Bella
 
 
60.00
 
 
 
135.00
 
Fin. Chg. Inc. - Rob Roy Rim
 
 
60.00
 
 
 
120.00
 
Fin. Chg. Inc. - La Ventana
 
 
215.00
 
 
 
350.00
 
Fin. Chg. Inc. - Lake Point
 
 
490.00
 
 
 
1,045.00
 
Fin. Chg. Inc. - Lakewinds
 
 
70.00
 
 
 
135.00
 
Fin. Chg. Inc. - Prsrv @ Barto
 
 
40.00
 
 
 
110.00
 
Fin. Chg. Inc. - Sterling Acre
 
 
65.00
 
 
 
135.00
 
Fin. Chg. Inc. - Arbolago
 
 
60.00
 
 
 
155.00
 
Fin. Chg. Inc. - Jacarandas
 
 
35.00
 
 
 
85.00
 
Fin. Chg. Inc. - Hills Lakeway
 
 
60.00
 
 
 
130.00
 
Fin. Chg. Inc. - Casalano
 
 
40.00
 
 
 
70.00
 
Fin. Chg. Inc. - The Pointe
 
 
15.00
 
 
 
50.00
 
Fin. Chg. Inc. - Hollows
 
 
130.00
 
 
 
250.00
 
Construction Svcs. Income
 
 
(2,000.00
)
 
 
(2,000.00
)
Construct. Svcs. - Senna Hills
 
 
16,687.50
 
 
 
30,187.50
 
Construct. Svcs. - Austins Col
 
 
3,425.00
 
 
 
3,425.00
 
Construct. Svcs. - Costa Bella
 
 
1,750.00
 
 
 
1,750.00
 
Construct. Svcs. - La Ventana
 
 
1,289.00
 
 
 
2,289.00
 
Construct. Svcs. - Lake Point
 
 
4,200.00
 
 
 
3,715.00
 
Construct. Svcs. - Casalano
 
 
0.00
 
 
 
2,381.00
 
Construct. Svcs. - The Pointe
 
 
2,800.00
 
 
 
2,800.00
 
Construct. Svcs. - Hollows
 
 
19,899.50
 
 
 
47,349.50
 
Construct. Svcs. - Cordillera
 
 
7,166.00
 
 
 
13,487.00
 
Construct. Svcs. - Avonlea
 
 
2,216.00
 
 
 
32,216.00
 
Construct. Svcs. - Lago Vista
 
 
0.00
 
 
 
13,817.50
 
Sales Allowances
 
 
(140.76
)
 
 
(984.14
)
Utility Installation Income
 
 
22,178.11
 
 
 
30,282.48
 
Interest Income
 
 
20.57
 
 
 
27.03
 
Recover Prior Period Debt
 
 
38.40
 
 
 
38.40
 
Gain - Sale of Assets
 
 
113.30
 
 
 
113.30
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 
433,662.78
 
 
 
1,479,444.60
 
 
 
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
 
 
 
 
 
 
 
COS:Propane
 
 
(527,951.17
)
 
 
0.00
 
COS:Propane - Senna
 
 
84,697.66
 
 
 
84,697.66
 
COS:Propane - Austin
 
 
78,883.10
 
 
 
78,883.10
 
COS:Propane - Costa Bella
 
 
107,094.19
 
 
 
107,094.19
 
COS:Propane - Rob Roy
 
 
13,198.35
 
 
 
13,198.35
 
COS:Propane - La Ventana
 
 
53,577.33
 
 
 
53,577.33
 
COS:Propane - Lake Pointe
 
 
139,874.82
 
 
 
139,874.82
 
COS:Propane - Lakewinds
 
 
33,809.59
 
 
 
33,809.59
 
COS:Propane - Preserves
 
 
37,503.11
 
 
 
37,503.11
 
COS:Propane - Sterling
 
 
12,836.41
 
 
 
12,836.41
 
COS:Propane - Jacaranda
 
 
3,141.05
 
 
 
3,141.05
 
COS:Propane - Hills Lake
 
 
17,350.53
 
 
 
17,350.53
 
COS:Propane - Casalano
 
 
11,688.69
 
 
 
11,688.69
 
COS:Propane - Hollows
 
 
54,433.53
 
 
 
54,433.53
 
COS:Propane - Cordillera
 
 
15,265.19
 
 
 
15,265.19
 
COS:Propane - Avonlea
 
 
930.64
 
 
 
930.64
 
COS:Meters & Supplies
 
 
4,426.65
 
 
 
9,054.71
 
COS:Materials
 
 
9,588.28
 
 
 
28,098.43
 
COS:Site Preparation
 
 
2,112.01
 
 
 
3,811.67
 
COS:Construct. Svcs.
 
 
0.00
 
 
 
1,550.00
 
COS:Engineer/Design
 
 
1,768.89
 
 
 
4,467.45
 
COS:Depreciation Exp
 
 
19,207.44
 
 
 
38,283.62
 
COS:Insurance - W/C
 
 
2,716.77
 
 
 
4,602.06
 
COS:Sal. & Wages-Hourly
 
 
27,690.65
 
 
 
54,405.41
 
COS:Sal. & Wages-Salary
 
 
7,746.14
 
 
 
15,684.53
 
COS:P/R Tax - FICA/Med
 
 
2,613.97
 
 
 
5,154.62
 
COS:P/R Tax - FUTA
 
 
(199.13
)
 
 
336.19
 
COS:P/R Tax - TX Unemp
 
 
360.50
 
 
 
364.96
 
Inventory Adj. (Propane)
 
 
3,696.00
 
 
 
(31,752.00
)
GCTV COS:Materials
 
 
507.64
 
 
 
794.83
 
 
 
 
 
 
 
 
 
 
Total Cost of Sales
 
 
218,568.83
 
 
 
799,140.67
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
 
215,093.95
 
 
 
680,303.93
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Computer Supplies - Oper
 
 
0.00
 
 
 
74.69
 
Cust. Comm. Svcs. - Oper.
 
 
375.53
 
 
 
751.06
 
Depreciation Exp - Oper
 
 
10,408.44
 
 
 
20,099.38
 
Empl. Benefits - Retire - Oper
 
 
1.71
 
 
 
1.71
 
Equipment Rental - Oper.
 
 
1,476.87
 
 
 
4,722.81
 
Insurance - Med/Life - Oper
 
 
1,193.82
 
 
 
6,429.21
 
Insurance - Casualty - Oper
 
 
15,522.09
 
 
 
31,078.80
 
Insurance - W/C - Oper
 
 
895.71
 
 
 
1,997.39
 
Insurance - Auto - Oper
 
 
1,595.49
 
 
 
3,190.98
 
Management Fee - Oper
 
 
0.00
 
 
 
100.00
 
Meals & Ent. - Oper
 
 
533.88
 
 
 
1,258.89
 
Meters & Supplies - Oper
 
 
83.05
 
 
 
297.95
 
Meter Reading - Oper
 
 
642.09
 
 
 
2,660.85
 
Misc. Exp. - Oper.
 
 
358.65
 
 
 
358.65
 
Office Supplies - Oper
 
 
445.44
 
 
 
933.36
 
Payroll - Oper - Salary
 
 
12,512.50
 
 
 
25,987.50
 
P/R Tax - FICA/Med - Oper
 
 
896.60
 
 
 
1,856.71
 
P/R Tax - FUTA - Oper
 
 
0.01
 
 
 
56.00
 
P/R Tax - TX Unempl - Oper
 
 
(3.17
)
 
 
56.24
 

 
 

--------------------------------------------------------------------------------

 
Rent Expense - Oper.
 
 
5,935.00
 
 
 
11,722.00
 
Repairs & Main - Oper
 
 
1,560.20
 
 
 
4,284.89
 
Repairs & Main - Auto
 
 
3,000.16
 
 
 
5,222.03
 
Safety & Env Compliance - Oper
 
 
0.00
 
 
 
1,486.71
 
Sm. Tools & Supp. - Oper.
 
 
783.96
 
 
 
2,407.69
 
Tank Monitoring - Oper
 
 
956.25
 
 
 
1,275.00
 
Telephone - Oper - Debba
 
 
65.72
 
 
 
167.02
 
Telephone-Oper-Dripping
 
 
131.94
 
 
 
265.33
 
Telephone - Cellular - Oper
 
 
3,241.89
 
 
 
5,156.51
 
Telephone-SA Office
 
 
1,372.56
 
 
 
2,761.20
 
Travel-Mileage/Veh - Oper
 
 
10,667.87
 
 
 
19,943.73
 
Travel - Lodging - Oper
 
 
0.00
 
 
 
101.31
 
Travel - Meals & Ent - Oper
 
 
35.82
 
 
 
155.79
 
Uniforms
 
 
766.35
 
 
 
1,484.98
 
Waste & Sewer - Oper
 
 
337.47
 
 
 
503.63
 
Repairs & Main - GCTV
 
 
0.00
 
 
 
350.00
 
Supplies - Oper - GCTV
 
 
0.00
 
 
 
80.62
 
Travel-Sales-Other
 
 
5.40
 
 
 
5.40
 
Bank Service Charges
 
 
6,910.42
 
 
 
7,191.84
 
Collection Expense
 
 
251.62
 
 
 
251.62
 
Commissions and Fees
 
 
10.00
 
 
 
10.00
 
Computer & Internet Fees
 
 
479.75
 
 
 
1,159.21
 
Empl. Drug Test Saf & Comp
 
 
0.00
 
 
 
203.00
 
Depreciation Exp - G&A
 
 
2,589.04
 
 
 
5,370.14
 
Electricity - Office - SA
 
 
(17.37
)
 
 
180.31
 
Empl. Benefits - Retirement
 
 
5.60
 
 
 
5.60
 
Franchise Fee
 
 
5,632.86
 
 
 
5,632.86
 
Insurance - Med/Life
 
 
492.16
 
 
 
1,097.18
 
Insurance - W/C - G&A
 
 
10.52
 
 
 
(118.12
)
Interest Expense
 
 
872.28
 
 
 
1,479.03
 
Legal Fees & Costs
 
 
65,834.34
 
 
 
84,596.56
 
Licenses, Taxes & Fees
 
 
831.71
 
 
 
1,117.35
 
Merchant Fees
 
 
3,000.11
 
 
 
8,745.94
 
Meals & Entertainment
 
 
321.30
 
 
 
2,132.63
 
Office Expense
 
 
0.00
 
 
 
19.44
 
Office Supplies Expense
 
 
362.88
 
 
 
1,479.83
 
Payroll - Gen & Adm
 
 
27,000.00
 
 
 
50,913.60
 
Employee Stock Bonus
 
 
0.00
 
 
 
26,500.00
 
Payroll Process. Exp.
 
 
660.93
 
 
 
1,354.87
 
P/R Tax - FICA/Med
 
 
2,059.98
 
 
 
3,881.76
 
P/R Tax - FUTA
 
 
24.00
 
 
 
91.81
 
P/R Tax - TX Unempl - Gen
 
 
18.90
 
 
 
84.61
 
Postage & Exp. Shipping
 
 
2,274.66
 
 
 
4,137.96
 
Rent Expense
 
 
9,900.00
 
 
 
19,800.00
 
Repairs & Main - Autos
 
 
24.59
 
 
 
398.17
 
Security Expense
 
 
887.50
 
 
 
887.50
 
Storage Rental
 
 
450.00
 
 
 
777.05
 
Taxes - Other
 
 
3,013.00
 
 
 
3,013.00
 
Taxes - Penalty
 
 
2,281.70
 
 
 
2,281.70
 
Telephone-River Bend
 
 
47.34
 
 
 
95.82
 
Telephones-Cell Phones
 
 
(1,179.52
)
 
 
879.09
 
Travel-Mileage/Vehicles
 
 
1,415.23
 
 
 
2,236.05
 
Travel-Meals & Entertainment
 
 
104.44
 
 
 
322.32
 
 
 
 
 
 
 
 
 
 
Total Expenses
 
 
212,369.27
 
 
 
397,495.75
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
2,724.68
 
 
$
282,808.18
 

 

--------------------------------------------------------------------------------

 
EXHIBIT “G”
 
 
 
TIDELANDS OIL AND GAS CORPORATION
1862 W. Bitters, Building 1
San Antonio, Texas 78248
Phone: 1-866-764-8642                                          Fax:
210-764-2809                      

--------------------------------------------------------------------------------

 
December 18, 2007
 
 
Ruben Jimenez & Associates, P.C.
11503 Jones Maltsberger, Suite #284
San Antonio, TX 78216
 
In connection with your engagement to apply agreed-upon procedures to the
financial information of Sonterra Energy Corporation, a wholly owned subsidiary
of Tidelands Oil and Gas Corporation, provided to you as of September 30, 2007
and other selected information subsequent to that date, we confirm, to the best
of our knowledge and belief, the following representations made to you during
your engagement.
 
1.
We have communicated to you of all information, including events occurring
subsequent to September 30, 2007, of which we are aware that may contradict the
balances shown on financial statements as of September 30, 2007.
   
2.
We are responsible for selecting the criteria and for determining that such
criteria are appropriate for our purposes.
   
3. 
We have responded fully to all inquiries made to us by you during the
engagement.
   
4.
We prepared all balance sheet account reconciliations and provided all
documentation and other financial information relevant to your engagement.
   
5.
Your report is intended solely for the information and use of Bentley Oil and
Gas Corporation and is not intended to be and should not be used by anyone other
than those specified parties.
   
6.
We made available to you all legal invoices involving Sonterra Energy
Corporation and other parties.
   
7. 
Your report is intended solely for the information and use of Bentley Oil and
Gas Corporation in the exercise of Mr. Michael Ward’s right of first refusal and
is not intended to be and should not be used by anyone other than those
specified parties.
   

 
Mr. James B. Smith
 
Signature:/s/ James B. Smith
Title: CEO
 
 

--------------------------------------------------------------------------------