| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

** **                | ** **                                                                                |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                   | **FORM 10-Q**

** **                                                                 | ** ** | ** ** |
| (Mark One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                   | ** **                                                                                | ** ** | ** ** |
| x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly  period ended March 31, 2010

** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                   | OR

** **                                                                            | ** ** | ** ** |
| o  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 333-141993**

** **                                         | ** ** | ** ** |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                   | **PETROCORP INC.**

(Name of small  business issuer in its charter)                       | ** ** | ** ** |
| **Delaware**

** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** **                                                                                                   | **20-5134664**

** **                                                                |
| (State or other jurisdiction of 

incorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (I.R.S. Employer  Identification No.)                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **1065 Dobbs Ferry Road**

**White Plains, New York  10607**

(Address of principal  executive offices) | ** **                                                                                |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                   |  

**(914) 674-4373**

(Issuer's telephone  number, including area code)

** ** | ** ** | ** ** |
|  

Indicate by check mark whether  the issuer (1) filed all reports required to be filed by Section 13 or 15(d)  of the Exchange Act during the past 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.  Yesx  Noo

 

Indicate by check mark whether the registrant is a large  accelerated filer, an accelerated filer, a non-accelerated filer or a smaller  reporting company filer.  See the definitions of “large accelerated filer,” “accelerated  filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

          Large accelerated filero  Accelerated filero  Non-accelerated Filero   Smaller reporting companyx

 

Indicate by check mark whether the registrant is a shell  company (as defined in Rule 12b-2 of the Exchange Act).  Yeso  Nox |
| State the number of shares  outstanding of each of the issuer’s classes of common equity, as of the  latest practicable date: 22,680,000 shares of common stock, par value $.0001  per share, as of April 30, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                              |                                                                                           |  |  |  |  |  |

** **

** **

----

** **

 

**PETROCORP INC.**

**REPORT ON FORM 10-Q**

 

 

**CONTENTS**

 

| PART I – FINANCIAL INFORMATION                                             |   | 3  |
|---------------------------------------------------------------------------------|--------|----|
| Item 1 – Financial Statements                                              |   | 3  |
| Item 2 – Management’s  Discussion and Analysis or Plan of Operation   |   | 8  |
| Item  3 – Quantitative and Qualitative Disclosures About Market Risk       |   | 11 |
| Item  4T – Controls and Procedures                                         |   | 11 |
| PART II – OTHER INFORMATION                                                |   | 14 |
| Item 1 – Legal Proceedings                                                 |   | 14 |
| Item 2 – Unregistered Sales of  Equity Securities and Use of Proceeds      |   | 14 |
| Item  3 – Defaults Upon Senior Securities                                  |   | 14 |
|    Item  4 – Submission of Matters to a Vote of Security Holders |   | 14 |
| Item 5 – Other Information                                                 |   | 14 |
| Item 6 – Exhibits                                                          |   | 14 |

 

 

 

----

 

 

**PART I – FINANCIAL INFORMATION**

##  

## Item 1 – Financial Statements

** **

** **

| **PETROCORP INC.**                                                        |
|---------------------------------------------------------------------------|
| **(An Exploration Stage Company)**                                        |
| **Consolidated Balance Sheets**                                           |
|                                                                      |   |   |   |   |   |   |
| **ASSETS**                                                                |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   March 31, |   | December 31, |
|                                                                      |   | 2010 |   | 2009 |
|                                                                      |   | (Unaudited) |   |   |   |
| Current assets:                                                           |   |   |   |   |   |   |
| Cash                                                                      |   | $ |        27,437 |   | $ |        38,510 |
| Revenue  receivables                                                      |   |   |         4,203 |   |   |        24,474 |
| Marketable  securities                                                    |   |   |      245,000 |   |   |      250,000 |
| Total  current assets                                                     |   |   |      276,640 |   |   |      312,984 |
|                                                                      |   |   |   |   |   |   |
| Oil and gas properties  (successful efforts method):                      |   |   |   |   |   |   |
| Unproved  acreage                                                         |   |   |   1,228,365 |   |   |   1,228,365 |
|  Less  depletion, depreciation and amortization                      |   |   |      (33,750) |   |   |      (26,250) |
|                                                                      |   |   |   1,194,615 |   |   |   1,202,115 |
|                                                                      |   |   |   |   |   |   |
| Total assets                                                              |   | $ |   1,471,255 |   | $ |   1,515,099 |
| ** **                                                                |   |   |   |   |   |   |
| ** **                                                                |   |   |   |   |   |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                             |
| ** **                                                                |   |   |   |   |   |   |
| ** **                                                                |   |   |   |   |   |   |
| Current liabilities:                                                      |   |   |   |   |   |   |
| Accrued  expenses                                                         |   | $ |        25,000 |   | $ |        33,298 |
| Notes  payable to majority stockholder                                    |   |   |   1,099,975 |   |   |   1,099,975 |
| Total  current liabilities                                                |   |   |   1,124,975 |   |   |   1,133,273 |
|                                                                      |   |   |   |   |   |   |
| Stockholders’ equity:                                                |   |   |   |   |   |   |
| Preferred  stock; $.0001 par value; 1,000,000 shares                      |   |   |   |   |   |   |
| authorized;  none issued or outstanding                                   |   |   |                - |   |   |                - |
| Common  stock; $.0001 par value; 100,000,000 shares                       |   |   |   |   |   |   |
| authorized;  22,680,000 shares issued and outstanding                     |   |   |         2,268 |   |   |         2,268 |
| Additional  paid-in capital                                               |   |   |   2,098,252 |   |   |   2,051,752 |
| Deficit  accumulated during the exploration stage                         |   |   |  (1,754,240) |   |   |  (1,672,194) |
|                                                                      |   |   |      346,280 |   |   |      381,826 |
| ** **                                                                |   |   |   |   |   |   |
| Total liabilities and  stockholders’ equity                          |   | $ |   1,471,255 |   | $ |   1,515,099 |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |
| * See accompanying notes to the consolidated  financial statements.* |
|  3                                                                   |

** **

** **

----

** **

 

| **PETROCORP INC.**                                                                  |
|-------------------------------------------------------------------------------------|
| **(An Exploration Stage Company)**                                                  |
| **Consolidated Statements of Operations**                                           |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   | June 19, 2006 |
|                                                                                |   |   |   |   |  (inception) to |
|                                                                                |   |   | Three Months Ended March 31, |   | March 31, |
|                                                                                |   |   | 2010 |   | 2009 |   | 2010 |
|                                                                                |   |   | (Unaudited) |   | (Unaudited) |   | (Unaudited) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Revenues  earned during the exploration stage                                       |   |   |  $ |        30,910 |   |  $ |         4,285 |   |  $ |      126,022 |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Cost  of revenues during the exploration stage:                                     |   |   |   |   |   |   |   |   |   |   |
| Oil  and gas operating costs                                                        |   |   |   |        22,560 |   |   |        16,905 |   |   |      126,057 |
| Exploration  costs                                                                  |   |   |   |         5,920 |   |   |         7,872 |   |   |      108,263 |
| Depletion,  depreciation and amortization                                           |   |   |   |         7,500 |   |   |         3,750 |   |   |        33,750 |
| Production  taxes                                                                   |   |   |   |         2,225 |   |   |            309 |   |   |         9,073 |
|       Total cost of  revenues during the exploration stage |   |   |   |        38,205 |   |   |        28,836 |   |   |      277,143 |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Gross profit (loss)                                                                 |   |   |   |        (7,295) |   |   |      (24,551) |   |   |    (151,121) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                 |   |   |   |   |   |   |   |   |   |   |
| Salary  - president and majority stockholder                                        |   |   |   |        30,000 |   |   |        30,000 |   |   |      270,000 |
| Professional  fees - chief financial officer and secretary                          |   |   |   |        25,500 |   |   |        15,800 |   |   |      228,206 |
| Professional  fees                                                                  |   |   |   |         6,000 |   |   |        10,657 |   |   |      198,342 |
| General  and administrative expenses                                                |   |   |   |         6,782 |   |   |         7,997 |   |   |      134,601 |
| Impairment  charges                                                                 |   |   |   |                - |   |     |        50,867 |   |     |      656,742 |
|       Total operating  expenses                            |   |   |     |        68,282 |   |     |      115,321 |   |     |   1,487,891 |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Loss  from operations                                                               |   |   |   |      (75,577) |   |   |    (139,872) |   |   |  (1,639,012) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Other  (income) expenses:                                                           |   |   |   |   |   |   |   |   |   |   |
| Gain  from sale of marketable securities                                            |   |   |   |      (10,030) |   |   |                - |   |   |      (10,030) |
| Interest  income                                                                    |   |   |   |              (1) |   |   |          (468) |   |   |        (2,446) |
| Interest  expense                                                                   |   |   |   |                - |   |   |                - |   |   |            359 |
| Interest  expense - related parties                                                 |   |   |    |        16,500 |   |     |        11,101 |   |     |      125,745 |
|       Total other (income)  expense, net                   |   |   |     |         6,469 |   |     |        10,633 |   |     |      113,628 |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Loss  before income taxes                                                           |   |   |   |      (82,046) |   |   |    (150,505) |   |   |  (1,752,640) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Provision  for income taxes                                                         |   |   |   |                - |   |   |                - |   |   |         1,600 |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Net  loss                                                                           |   |   |  $ |      (82,046) |   |  $ |    (150,505) |   |  $ |  (1,754,240) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Net  loss per common share -                                                        |   |   |   |   |   |   |   |   |   |   |
| basic  and diluted                                                                  |   |   | $ | (0.00) |   | $ | (0.01) |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| Weighted common shares  outstanding -                                               |   |   |   |   |   |   |   |   |   |   |
| basic  and diluted                                                                  |   |   |   | 22,680,000 |   |   | 22,680,000 |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |
| * See accompanying notes to the consolidated  financial statements.*           |
|  4                                                                             |

 
 

**PETROCORP INC.**

**(An Exploration Stage Company)**

**Consolidated Statement of Stockholder's Equity  (Deficit)**

**For the Period from June 19, 2006 (inception)  through March 31, 2010**

**(Unaudited)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

Total

 

 

 

 

 

 

 

Additional

 

Accumulated

 

Stockholders'

 

 

Common Stock

 

Paid-in

 

during the

 

Equity

 

 

Shares

 

 

Amount

 

Capital

 

Exploration Stage

 

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 19, 2006  (inception)

 

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Common stock issued for  cash

 

20,000,000 

 

 

2,000 

 

 

(1,900)

 

 

 

 

 

100 

   Common stock issued for  cash

 

600,000 

 

 

60 

 

 

29,940 

 

 

 

 

 

30,000 

   Net loss

 

 

 

 

 

 

 

 

 

 

(27,397)

 

 

(27,397)

Balance, December 31, 2006

 

20,600,000 

 

 

2,060 

 

 

28,040 

 

 

(27,397)

 

 

2,703 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Common stock issued for  cash

 

480,000 

 

 

48 

 

 

23,952 

 

 

 

 

 

24,000 

   Capital contribution 

 

 

 

 

 

 

 

3,000 

 

 

 

 

 

3,000 

   Common stock issued for  cash 

 

800,000 

 

 

80 

 

 

499,920 

 

 

 

 

 

500,000 

   Interest contribution 

 

 

 

 

 

 

 

6,076 

 

 

 

 

 

6,076 

   Net loss

 

 

 

 

 

 

 

 

 

 

(61,124)

 

 

(61,124)

Balance, December 31, 2007

 

21,880,000 

 

 

2,188 

 

 

560,988 

 

 

(88,521)

 

 

474,655 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Common stock issued for  cash 

 

800,000 

 

 

80 

 

 

999,920 

 

 

 

 

 

1,000,000 

   Salary contribution 

 

 

 

 

 

 

 

120,000 

 

 

 

 

 

120,000 

   Interest contribution 

 

 

 

 

 

 

 

30,274 

 

 

 

 

 

30,274 

   Net loss

 

 

 

 

 

 

 

 

 

 

(346,414)

 

 

(346,414)

Balance, December 31, 2008

 

22,680,000 

 

 

2,268 

 

 

1,711,182 

 

 

(434,935)

 

 

1,278,515 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Sales price over cost of  oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   properties sold to  majority stockholder

 

 

 

 

 

 

 

147,675 

 

 

 

 

 

147,675 

   Salary contribution 

 

 

 

 

 

 

 

120,000 

 

 

 

 

 

120,000 

   Interest contribution 

 

 

 

 

 

 

 

72,895 

 

 

 

 

 

72,895 

   Net loss

 

 

 

 

 

 

 

 

 

 

(1,237,259)

 

 

(1,237,259)

Balance, December 31, 2009

 

22,680,000 

 

 

2,268 

 

 

2,051,752 

 

 

(1,672,194)

 

 

381,826 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Salary contribution 

 

 

 

 

 

 

 

30,000 

 

 

 

 

 

30,000 

   Interest contribution 

 

 

 

 

 

 

 

16,500 

 

 

 

 

 

16,500 

   Net loss

 

 

 

 

 

 

 

 

 

 

          (82,046)

 

 

(82,046)

Balance, March 31, 2010

 

22,680,000 

 

$

2,268 

 

$

2,098,252 

 

$

(1,754,240)

 

$

346,280 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*See accompanying notes to the consolidated financial  statements.*

	5

 

 

 

**PETROCORP INC.**

**(An Exploration Stage Company)**

**Consolidated Statements of Cash Flows (Unaudited)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 June 19, 2006

 

 

 

 

 

 

 

 

(inception) to

 

 

Three Months Ended March 31,

 

March 31,

 

 

2010 

 

2009 

 

2010 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Cash flows from operating  activities:

 

 

 

 

 

 

 

 

 

   Net loss

 

$

(82,046)

 

$

(150,505)

 

$

(1,754,240)

   Adjustments to reconcile  net loss to net cash

 

 

 

 

 

 

 

 

 

    used in operating  activities:

 

 

 

 

 

 

 

 

 

       Depletion,  depreciation and amortization

 

 

7,500 

 

 

3,750 

 

 

34,821 

       Impairment charge

 

 

 

 

 

50,867 

 

 

656,742 

       Salary contribution

 

 

30,000 

 

 

30,000 

 

 

270,000 

       Interest  contribution

 

 

16,500 

 

 

11,101 

 

 

125,745 

   Changes in operating  assets and liabilities:

 

 

 

 

 

 

 

 

 

       Revenue receivables

 

 

20,271 

 

 

25,684 

 

 

(4,203)

       Accrued expenses

 

 

(8,298)

 

 

(39,891)

 

   

25,000 

          Net cash used in  operating activities

 

 

	(16,073)

 

  

(68,994)

 

 

	(646,135)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing  activities:

 

 

 

 

 

 

 

 

 

Proceeds  from sale of marketable securities

 

 

5,000 

 

 

-

 

 

5,000 

   Acquisition of oil and  gas properties

 

       

-

 

 

(98,682)

 

 

(1,682,996)

   Proceeds from sale of  oil and gas properties

 

 

-

 

 

-

 

 

96,551 

   Purchase of equipment

 

 

-

 

 

-

 

   

(18,000)

Net  cash provided by (used in) investing activities

 

 

	5,000

 

 

(98,682)

 

 

    (1,599,445)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing  activities:

 

 

 

 

 

 

 

 

 

   Proceeds from notes  payable to majority stockholder

 

  

-

 

  

-

 

  

805,917 

   Repayment of notes  payable to majority stockholder

 

  

-

 

  

26,552 

 

  

(90,000)

   Proceeds from sale of  common stock

 

  

-

 

   

-

 

  

1,557,100 

          Net cash provided  by financing activities

 

 

-

 

 

26,552 

 

  

2,273,017 

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in  cash

 

 

(11,073)

 

 

(141,124)

 

 

27,437 

 

 

 

 

 

 

 

 

 

 

Cash at beginning of year

 

  

38,510 

 

  

556,035 

 

   

-

Cash at end of year

 

$

27,437 

 

$

414,911 

 

$

27,437 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of  cash flow information:

 

 

 

 

 

 

 

 

 

   Cash paid for interest

 

$

-

 

$

-

 

$

359 

   Cash paid for taxes

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of  noncash investing and

 

 

 

 

 

 

 

 

 

   financing activities:

 

 

 

 

 

 

 

 

 

    Forgiveness of debt by  a stockholder

 

$

-

 

$

-

 

$

3,000 

    Salary contribution

 

$

30,000 

 

$

30,000 

 

$

270,000 

    Interest contribution

 

$

16,500 

 

$

11,101 

 

$

125,745 

   Acquisition of  undeveloped oil and gas properties

 

 

 

 

 

 

 

 

 

      from majority  stockholder for notes

 

$

-

 

$

583,823 

 

$

967,881 

   Sale of $448,876 of oil  and gas properties to Soladino

 

 

 

 

 

 

 

 

 

      Investments SA, an  entity owned by our president for

 

 

 

 

 

 

 

 

 

     cancellation of  $500,000 of notes and cash payment of $96,551

 

$

-

 

$

-

 

$

(500,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*See accompanying notes to the consolidated financial  statements.*

6

 

 

 

**PETROCORP INC.**

**(An Exploration Stage Company)**

**March 31, 2010 and 2009**

**Notes to the ConsolidatedFinancial Statements (Unaudited)**

** **

**1.  Basis of Presentation**

 

The accompanying unauditedinterim consolidated financial statements have been prepared in accordance withthe accounting principles generally accepted in the United States of America forinterim financial information and with the instructions to Form 10-Q and Article8 ofRegulation S-X.  Accordingly, they do not include all of the information andfootnotes required by accounting principles generally accepted in the United States of America for annual financial statements.  In the opinion of management,all adjustments, consisting of normal recurring accruals considered necessaryfor a fair presentation, have been included.  Operating results for the threemonths ended March 31, 2010 are not necessarily indicative of the results thatmay be expected for the year ending December 31, 2010.  These financial statements should be read in conjunction with thefinancial statements of the Company for the year ended December 31, 2009 andnotes thereto contained in the Annual Report on Form 10-K of the Companyas filed with the United States Securities and Exchange Commission (the “SEC”) onApril 23, 2010.

 

**2.  Exploration Stage Company**

 

The Company is an exploration stage companyas defined by section 915-10-20 of theFASB Accounting Standards Codification.  Although theCompany has recognized some nominal amount of revenue since inception, the Companyis devoting substantially all of its efforts on establishing the business andits planned principal operations have not yet commenced.  All losses sinceinception have been considered part of the Company’s exploration stageactivities.

** **

**3. Related Party Transactions**

** **

AtMarch 31, 2010, the Company has $1,099,975 in secured, non-interest bearingnotes (four), payable on demand with its majority stockholder SoladinoInvestments SA.

 

Duringthe three month period ended March 31, 2010 the Company recorded interestexpense of $16,500.  Interest is computed at an implied rate of 6% and thisamount was recorded as a capital contribution by the Company.

** **

TheCompany was provided management services by its president, Mr. Fitzsimons duringthe quarter at no cost.  The Company recorded the $30,000 estimated value ofthese services as compensation expense and as a capital contribution.

 

**4. Subsequent Events**

 

TheCompany has evaluated all events that occurred after the balance sheet date throughMay 20, 2010 the date when the financial statements were issued to determine ifthey must be reported.  Management of the Company has determined that there areno reportable subsequent events to be disclosed.

 

 7

 

 
Item 2 – Management’s Discussion and Analysis orPlan of Operation
 

References to “Company”, “we”or “us” refer to Petrocorp Inc., unless the context requires otherwise.

 

Forward Looking Statements

 

Thefollowing is provided to supplement, and should be read in conjunction with,our financial statements and the accompanying notes included in our Form 10-Kas of December 31, 2009.  This report contains forward-looking statements andinformation relating to us that is based on the beliefs of our management aswell as assumptions made by, and information currently available to, ourmanagement. When used in this report, the words “anticipate”, “believe”,“estimate”, “expect”, “intend”, “plan” and similar expressions, as they relateto us or our management, are intended to identify forward-looking statements.These statements reflect management’s current view of us concerning futureevents and are subject to certain risks, uncertainties and assumptions,including among many others:

 

 

●

the  quality of our properties with regard to, among other things, the existence  of reserves in economic quantities;

 

●

uncertainties  about the estimates of reserves; 

 

●

our  ability to increase our production and oil and natural gas income through  exploration and development;

 

●

the  number of well locations to be drilled and the time frame within which they  will be drilled;

 

●

the  timing and extent of changes in commodity prices for natural gas and crude  oil;

 

●

domestic  demand for oil and natural gas; 

 

●

drilling  and operating risks; 

 

●

the  availability of equipment, such as drilling rigs and transportation  pipelines; 

 

●

changes  in our drilling plans and related budgets; 

 

●

the  adequacy of our capital resources and liquidity including, but not limited  to, access to additional borrowing capacity; and

 

●

risks  and uncertainties described in the Risk Factors section or elsewhere in our Annual  Report on Form 10-K.

 

Shouldone or more of these risks or uncertainties materialize or should theunderlying assumptions prove incorrect, actual outcomes and results coulddiffer materially from those indicated in the forward-looking statements.

 

Anyforward-looking statement speaks only as of the date on which such statement ismade, and we undertake no obligation to update any forward-looking statement orstatements to reflect events or circumstances after the date on which suchstatement is made or to reflect the occurrence of unanticipated events. Newfactors emerge from time to time and it is not possible for management topredict all of such factors, nor can it assess the impact of each factor on thebusiness or the extent to which any factor, or combination of factors, maycause actual results to differ materially from those contained in anyforward-looking statements.

 

BusinessOverview

 

Petrocorp Inc. was incorporated on June19, 2006 under the laws of the State of Delaware.  Prior to September 2007, theCompany’s business model provided telephonic conferencing services tobusinesses, organizations and individuals in North America.  Due to capitalconstraints and because its executives could no longer serve the Companywithout compensation, the Company decided to change its business directions.

 

8

 

 

During2009 the Company changed its emphasis from an international oil and gas companyto a US focused company because of current world economic conditions and lackof debt/capital financing.  The Company disposed of its foreign oil and gasleases/permits in two separate transactions.  The Company completed anextensive review of its Alaska and Oklahoma oil and gas leases, operations andrecorded an impairment charge of $639,813 during the fourth quarter.

 

Our office is located at 1065 Dobbs Ferry Road, White Plains, NY 10607 and our telephone number is (914) 674-4373.

** **

Planof Operation

*** ***

We are a US exploration stage Companyengaged in the acquisition, exploration and production, if warranted,development of prospective oil and gas properties.  We plan to conductexploration work on each of our current and future properties in order toascertain whether any of them possess commercially exploitable quantities ofoil and gas reserves.  There is no assurance that a commercially viable oil andgas reserve exists on any of our current and future properties, and a greatdeal of further exploration will be required before a final evaluation as tothe economic feasibility for our future exploration is determined.  To date, wedo not know if any economically viable oil and gas reserves exist on any of ourcurrent or future properties and there is no assurance that we will discoverany.  The Company currently has significant lease holdings on the North Slopeof Alaska and oil and gas production in Oklahoma.  

 

**            Alaska**

 

On October 25, 2007, Union Energy (Alaska) LLC (“UEA”), oursubsidiary, was the winning bidder for tracts 254, 258 and 259 in the NorthSlope Areawide 2007 Competitive Oil and Gas Lease Sale.  The leases, covering14,680 net acres, were issued on August 1, 2008, with a term of seven years andsubject to a 12.5% royalty interest infavor of the State of Alaska.  UEA paid a total of$380,021 to the State of Alaska in respect of the leases.  These tracts arecontiguous and the Company believes, based upon current available geologicaldata and maps from the public domain, to contain the Kavik gas field,discovered in 1969, which has been evaluated in detail by the U.S. Departmentof the Interior, U.S Geological Survey ("USGS").

 

On February 27, 2008, UEA was the winning bidder for tracts 922,923, 927, 988, 989, 990, 991, 992 and 925 in the State of Alaska North SlopeFoothills Areawide 2008 Competitive Oil and Gas Lease Sale. The leases,covering 9,600 net acres, were issued on September 1, 2008, with a term of 10years and subject to a 12.5% royaltyinterest in favor of the State of Alaska.  UEA paid atotal of $59,565 to the State of Alaska in respect of the leases.  These tractsare contiguous and the Company believes, based upon current availablegeological data and maps from the public domain, to contain the East Kurupa gas field, discovered by Texaco in 1976.  The USGS has been studying thepotential for unconventional over-pressured, continuous gas deposits in theColville basin that contains the Kurupa anticline and is now interpreting the East Kurupa well to have encountered a thick section of over-pressured gas in Brookianstrata.

 

Furthermore, any gas recovered from our Alaska leases will not besalable unless or until a proposed North Slope gas pipeline is completed.  Wehave retained Frontier Land Inc. (an established land firm and a member of theAmerican Association of Professional Landmen) to conduct negotiations withother leaseholders regarding their acreage and to acquire other land interestswithin the vicinity of our tracts.

 

9

 

 

**            Oklahoma**

 

OnAugust 12, 2008, the Company acquired from its President, James Fitzsimons, a50% working interest (41.25% net revenue interest) in the Snake Creek prospect,a 3,200 gross (3,022 net) acre gas development project located in northernOkmulgee County.  The Company reimbursed Mr. Fitzsimons for his historic costs(acreage and drilling) by issuing a secured, non-interest bearing note, payableon demand for $210,917 and assumed responsibility for all further costs.

 

OnNovember 30, 2008, the Company acquired from Mr. Fitzsimons, a 100% workinginterest (81.25% net revenue interest) in the Spanish Peak prospect, a 2,041gross (900 net) acre gas development project located in Okmulgee County,Oklahoma.  The Company reimbursed Mr. Fitzsimons for his historic costs(acreage) by issuing a secured, non-interest bearing note, payable on demandfor $173,141 and assumed responsibility for all further costs.

 

OnMarch 31, 2009, the Company purchased 171 oil and gas lease interests totaling3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a costof $583,823.  The Company reimbursed Soladino for its historic costs (acreage)by issuing a secured, non-interest bearing note, payable on demand for $583,823and assumed responsibility for all further costs.

 

The Oklahoma leases are in areas which the Company believes arepromising for oil and gas production although the Company does not make anyrepresentations as to future profitable production, if any.  We have retainedKeith Summar (a member of the American Association of Petroleum Geologists) asa consultant to assist us in our Oklahoma operations.

 

Resultsof Operations

 

For the quarter ended March 31, 2010,we had revenues of $30,910, oil and gas operating costs of $22,560 and incurreda loss of $82,046, as compared to revenues of $4,285, operating costs of$16,905 and a loss of $150,505 in 2009. During the 2010 quarter, the Company paid compensation to its President of$30,000 which was recorded as a capital contribution by the Company andprofessional fees of $31,500, which related primarily to the development of theCompany’s business plan and costs associated with being a public company, ascompared to $26,457 for the 2009 quarter.  Also during the 2010 quarter, theCompany paid general and administrative expenses of $6,782, which includedrent, telephone and other office costs, as compared to $7,997 for the 2009quarter.  Interest expense of $16,500 was computed on the majority stockholderloans at an implied rate of 6% and this amount was recorded as a capitalcontribution by the Company during the quarter.

 

Liquidityand Capital Resources

 

OurCompany's principal cash requirements are for exploration expenses which weanticipate will rise as we proceed to determine the feasibility of developingour current or future property interests.  As of March 31, 2010, we had cash of$27,437 and negative working capital of $848,335.  Our net cash provided byfinancing activities from June 19, 2006 (inception) to March 31, 2010 was $2,273,017.

 

AtMarch 31, 2010, the Company has $1,099,975 in notes (four) payable to SoladinoInvestments SA.  The notes are secured bythe Company’s oil and gas leases, are non interest bearing and payable upondemand.

** **

10

 

 

Weanticipate that additional funding will be provided in the form of equityfinancing from the sale of our common stock, sale of our Tamm Oil and Gas Corp(“TAMO”) stock or loans from our majority stockholder.  We cannot provideinvestors with any assurance that additional funds will be raised.  Currently,we do not have any arrangements in place for future equity financings.

** **

Critical Accounting Policies

Financial Reporting Release No. 60 of the SEC encouragesall companies to include a discussion of critical accounting policies ormethods used in the preparation of the financial statements.  There are nocurrent revenue generating activities that give rise to significant assumptionsor estimates.  Our most critical accounting policies relate to the accountingand disclosure of related party transactions.  Our financial statements filed aspart of our December 31, 2009 Annual Report on Form 10-K include a summary ofthe significant accounting policies and methods used in the preparation of ourfinancial statements.

 

Off-BalanceSheet Arrangements

 

Wehave never entered into any off-balance sheet financing arrangements and havenot formed any special purpose entities. We have not guaranteed any debt orcommitments of other entities or entered into any options on non-financialassets.

** **

**Item3. – Quantitative and Qualitative Disclosures About Market Risk**

 

Theinformation called for by this item is not required as we are a smallerreporting company.

** **

**Item4T. – Controls and Procedures**

 

***Disclosure Controls and Procedures***

 

Regulations under the Securities Exchange Act of 1934 (the“Exchange Act”) require public companies to maintain “disclosure controls and procedures,”which are defined as controls and other procedures that are designed to ensurethat information required to be disclosed by the issuer in the reports that itfiles or submits under the Exchange Act is recorded, processed, summarized andreported, within the time periods specified in the Securities and ExchangeCommission's rules and forms.  Disclosure controls and proceduresinclude, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed by an issuer in the reports that it filesor submits under the Exchange Act is accumulated and communicated to theissuer's management, including its principal executive and principal financialofficers, or persons performing similar functions, as appropriate to allowtimely decisions regarding required disclosure.

 

We conducted an evaluation, with the participation of our ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of ourdisclosure controls and procedures as of March 31, 2010.  Based onthat evaluation, our Chief Executive Officer and Chief Financial Officer haveconcluded that as of March 31, 2010, our disclosure controls and procedureswere not effective at the reasonable assurance level due to the materialweaknesses described below.

 

In light of the material weaknesses described below, we performedadditional analysis and other post-closing procedures to ensure our financialstatements were prepared in accordance with generally accepted accountingprinciples.  Accordingly, we believe that the financial statementsincluded in this report fairly present, in all material respects, our financialcondition, results of operations and cash flows for the periods presented.

 

11

 

 

A material weakness is a control deficiency (within the meaning ofthe Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2)or combination of control deficiencies that result in more than a remotelikelihood that a material misstatement of the annual or interim financialstatements will not be prevented or detected.  Management hasidentified the following two material weaknesses which have caused managementto conclude that, as of March 31, 2010, our disclosure controls and procedureswere not effective at the reasonable assurance level:

 

1.     We do nothave written documentation of our internal control policies andprocedures.  Written documentation of key internal controls overfinancial reporting is a requirement of Section 404 of the Sarbanes-Oxley Actwhich is applicable to us for the quarter ending March 31, 2010.  Managementevaluated the impact of our failure to have written documentation of ourinternal controls and procedures on our assessment of our disclosure controlsand procedures and has concluded that the control deficiency that resultedrepresented a material weakness.

 

            2.      We do nothave sufficient segregation of duties within accounting functions, which is abasic internal control.  Due to our size and nature, segregation ofall conflicting duties may not always be possible and may not be economicallyfeasible.  However, to the extent possible, the initiation oftransactions, the custody of assets and the recording of transactions should beperformed by separate individuals.  Management evaluated the impactof our failure to have segregation of duties on our assessment of ourdisclosure controls and procedures and has concluded that the controldeficiency that resulted represented a material weakness.

 

To address these material weaknesses, management performedadditional analyses and other procedures to ensure that the financialstatements included herein fairly present, in all material respects, ourfinancial position, results of operations and cash flows for the periodspresented.

 

***Management'sReport on Internal Control Over Financial Reporting***

 

Our management is responsible for establishing and maintainingadequate internal control over financial reporting.  Internal controlover financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgatedunder the Exchange Act as a process designed by, or under the supervision of,the issuer’s principal executive and principal financial officers and effectedby the issuer’s board of directors, management and other personnel, to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withaccounting principles generally accepted in the United States of America andincludes those policies and procedures that:

 

 

●

Pertain to the maintenance of records that in reasonable detail  accurately and fairly reflect the transactions and dispositions of the assets  of the issuer;

 

 

 

 

●

Provide reasonable assurance that transactions are recorded as  necessary to permit preparation of financial statements in accordance with  accounting principles generally accepted in the United States of America and  that receipts and expenditures of the Company are being made only in  accordance with authorizations of management and directors of the issuer; and

 

 

●

Provide reasonable assurance regarding prevention or timely  detection of unauthorized acquisition, use or disposition of the issuer’s  assets that could have a material effect on the financial statements.

 

 

 

 

12

 

 

Because of its inherent limitations, internal control overfinancial reporting may not prevent or detectmisstatements.  Projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.  All internal controlsystems, no matter how well designed, have inherentlimitations.  Therefore, even those systems determined to beeffective can provide only reasonable assurance with respect to financialstatement preparation and presentation.  Because of the inherentlimitations of internal control, there is a risk that material misstatementsmay not be prevented or detected on a timely basis by internal control overfinancial reporting.  However, these inherent limitations are knownfeatures of the financial reporting process.  Therefore, it ispossible to design into the process safeguards to reduce, though not eliminate,this risk.

 

As of the end of our most recent quarter, management assessed theeffectiveness of our internal control over financial reporting based on thecriteria for effective internal control over financial reporting established inInternal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission ("COSO") and SEC guidance onconducting such assessments.  Based on that evaluation, theyconcluded that, as of March 31, 2010, such internal control over financialreporting was not effective.  This was due to deficiencies thatexisted in the design or operation of our internal control over financialreporting that adversely affected our internal controls and that may beconsidered to be material weaknesses.

 

The matters involving internal control over financial reportingthat our management considered to be material weaknesses under the standards ofthe Public Company Accounting Oversight Board were: (1) lack of a functioningaudit committee due to a lack of a majority of independent members and a lackof a majority of outside directors on our board of directors, resulting inineffective oversight in the establishment and monitoring of required internalcontrols and procedures; and (2) inadequate segregation of duties consistentwith control objectives of having segregation of the initiation oftransactions, the recording of transactions and the custody ofassets.  The aforementioned material weaknesses were identified byour Chief Financial Officer in connection with the review of our financialstatements as of March 31, 2010.

 

Management believes that the material weaknesses set forth initems (1) and (2) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee andthe lack of a majority of outside directors on our board of directors resultsin ineffective oversight in the establishment and monitoring of requiredinternal controls and procedures, which could result in a material misstatementin our financial statements in future periods.

 

This quarterly report does not include an attestation report ofthe Company's registered public accounting firm regarding internal control overfinancial reporting.  Management's report was not subject toattestation by the Company's registered public accounting firm pursuant to temporaryrules of the SEC that permit the Company to provide only the management'sreport in this annual report.

 

***Management'sRemediation Initiatives***

 

In an effort to remediate the identified material weaknesses andother deficiencies and enhance our internal controls, we have initiated, orplan to initiate, the following series of measures:

 

We will increase our personnel resources and technical accountingexpertise within the accounting function when funds are available to us. First,we will create a position to segregate duties consistent with controlobjectives of having separate individuals perform (i) the initiation oftransactions, (ii) the recording of transactions and (iii) the custody ofassets.  Second, we will create a senior position to focus on financialreporting and standardizing and documenting our accounting procedures with thegoal of increasing the effectiveness of the internal controls in preventing anddetecting misstatements of accounting information.  Third, we plan to appointone or more outside directors to our board of directors who shall be appointedto an audit committee resulting in a fully functioning audit committee who willundertake the oversight in the establishment and monitoring of requiredinternal controls and procedures such as reviewing and approving estimates andassumptions made by management when funds are available to us. We anticipatethe costs of implementing these remediation initiatives will be approximately$50,000 to $100,000 a year in increased salaries, legal and accountingexpenses.

 

13

 

 

Management believes that the appointment of one or more outsidedirectors, who shall be appointed to a fully functioning audit committee, willremedy the lack of a functioning audit committee and a lack of a majority ofoutside directors on our Board.

 

We anticipate that these initiatives will be at least partially,if not fully, implemented by December 31, 2010.

 
PART II –OTHER INFORMATION
 
Item 1 – LegalProceedings
 

TheCompany is not currently a party to any legal proceedings.

 
Item 2 – Unregistered Sales of Equity Securities andUse of Proceeds
 

None.

 
Item 3 – Defaults UponSenior Securities
 

None.

 
Item 4 – Submission ofMatters to a Vote of Security Holders
 

None.
 Item 5 – Other Information
 

None.

 
Item 6 – Exhibits
 

Thefollowing documents are filed as part of this Report.

 

**Exhibit Number**

**Exhibit Description**

31.1

Certification  of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of  the Securities Exchange Act, as amended.  **

31.2

Certification  of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of  the Securities Exchange Act, as amended.  **

32.1

Certificate  (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002) of Principal Financial Officer.  **

32.2

Certificate  (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002) of Principal Financial Officer.  **

 

** Filed herewith

 

14

 

 

**SIGNATURE**

 

 

In accordance with the requirements of the SecuritiesExchange Act of 1934, as amended, the registrant caused this Report on Form10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

 

                                                                                           **PETROCORP INC.**

 

Date:May 20, 2010

                                                                                    By:   /s/ James Fitzsimons                 

        James Fitzsimons, President

 

 

** **

15