UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





þ         REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended: June 30, 2012





o          REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For the transition period from _________ to _________





Commission file number: 333-142516





Great American Energy, Inc.(Exact name of registrant as specified in its charter)





Delaware

333-142516

20-8602410(State or other jurisdiction of

(Commission

(IRS Employerincorporation or organization)

File Number)

Identification No.)





999 18th Street, Suite 3000


Denver, Colorado 80202


(Address of Principal Executive Offices)





(303) 952-0455


(Issuer Telephone number)





Check 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. Yes    No o





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





Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller Reporting Company
þ





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes oNo þ





As of August 20, 2012, there were 88,277,778 shares issued and outstanding of the registrant’s common stock.










INDEX





PART I — FINANCIAL INFORMATIONItem 1.
Financial Statements


F-1Item 2.
Management’s Discussion and Analysis or Plan of Operation.


3Item 3.
Quantitative and Qualitative Disclosure about Market Risk


6Item 4.
Controls and Procedures.


6PART II — OTHER INFORMATIONItem 1.
Legal Proceedings.


7Item 1A.
Risk Factors


7Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.


7Item 3.
Defaults Upon Senior Securities.


7Item 4.
Mine Safety Disclosures


7Item 5.
Other Information.


7Item 6.
Exhibits.




2





PART I — FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS
 
 Unaudited Balance Sheets as of June 30, 2012 and December 31, 2011Unaudited Statements of Operations for the six and three months ended June 30, 2012 and 2011Unaudited Statements of Cash Flows for the six months ended June 30, 2012 and 2011Notes to the Financial Statements




F-1




GREAT AMERICAN ENERGY, INC.


(formerly SOUTHERN BELLA, INC.) AN EXPLORATION STAGE COMPANY
 BALANCE SHEETS


JUNE 30, 2012 AND DECEMBER 31, 2011




UnauditedASSETS

June 30


December 31,2012


2011CURRENT ASSETSCash


$
59,514


$
-Total non-current assets


59,514



-OTHER ASSETSMineral options


150,000



-TOTAL ASSETS

$
209,514


$
-LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESDiscontinued operations - liabilities held for sale

$
-


$
31,025Total current liabilities


-



31,025STOCKHOLDERS' EQUITY (DEFICIT)Preferred stock, $0.000001 par value, 20,000,000 authorized,none issued and outstandingCommon stock, $0.000001 par value, 1,000,000,000 shares authorized, 88,000,000issued and outstanding at June 30, 2012 and December 31, 2011, respectively


88



88Stock payable


250,000



-Additional paid in capital


922,010



743,372Deficit accumulated during exploration stage


-



-Accumulated earnings (deficit)


(962,584
)


(774,485
)Total stockholders' equity (deficit)


209,514



(31,025
)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$
209,514


$
-




The accompanying notes are an integral part of these financial statements.
  F-2
 
 GREAT AMERICAN ENERGY, INC.
 (formerly SOUTHERN BELLA, INC.)
 AN EXPLORATION STAGE COMPANY
 STATEMENTS OF OPERATIONS FOR THE SIX and THREE MONTHS ENDED JUNE 30, 2012 AND 2011
 (UNAUDITED)
 
 SIX MONTHS


THREE MONTHS

PERIOD FROM

JUNE 29, 2012,

ENTRANCE INTO

EXPLORATION STAGE,

TO JUNE 30, 2012ENDED


ENDEDJUNE 30, 2012

JUNE 30, 2011


JUNE 30, 2012


JUNE 30, 2011REVENUE

$
-


$
-


$
-


$
-

$
-COST OF REVENUES


-



-



0



-


-OPERATING EXPENSESOfficers compensation


14,000



-



14,000



-


-General and administrative


93,781



-



55,578



-


-Total operating expenses


107,781



-



69,578



-


-NET LOSS FROM CONTINUING OPERATIONS


(107,781
)


-



(69,578
)


-


-DISCONTINUED OPERATIONSIncome (loss) from operations of discontinued Uptone Pictures, Inc.

(80,318
)


(5,437
)


(40,597
)


5,264


-NET LOSS

$
(188,099
)

$
(5,437
)

$
(110,175
)

$
5,264

$
-BASIC AND DILUTED EARNINGS PER SHARE - CONTINUING OPERATIONS
$
(0.00
)

$
0.00


$
(0.00
)

$
0.00

$
0.00BASIC AND DILUTED EARNINGS PER SHARE - DISCONTINUED OPERATIONS
$
(0.00
)

$
(0.00
)

$
(0.00
)

$
0.00

$
0.00WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING


88,000,000



95,566,667



88,000,000



95,566,667


88,000,000
 The accompanying notes are an integral part of these financial statements.
  F-3
 
 GREAT AMERICAN ENERGY, INC.
 (formerly SOUTHERN BELLA, INC.)
 AN EXPLORATION STAGE COMPANY
 STATEMENTS OF CASH FLOW FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)
 
 SIX MONTHSENDEDJUNE 30, 2012


JUNE 30, 2011CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(188,099
)

$
(5,437
)Adjustment to reconcile net loss to net cash used in operating activities:Donated rent


5,400



3,600Donated consulting services


27,500



-Changes in operating assets and liabilities:Increase or (decrease) in bank overdraft


(572
)


-Increase or (decrease) in accounts payable


(5,630
)


(12,211
)Increase or (decrease) in credit card payable


-



(5,414
)Increase or (decrease) in deferred revenue


(2,500
)


(3,075
)Net cash used in operating activities


(163,901
)


(22,537
)CASH FLOWS FROM INVESTING ACTIVITIESCash surrendered in deconsilidation


(1,988
)


-Cash paid for mineral options


(150,000
)


-Net cash prvided by investing activities


(151,988
)


-CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sale of stock


250,000



30,550Contributed capital


125,403Net cash provided by financing activities


375,403



30,550NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


59,514



8,013CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD


-



506CASH AND CASH EQUIVALENTS - END OF PERIOD

$
59,514


$
8,519SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid

$
-


$
-Income taxes paid

$
-


$
-


The accompanying notes are an integral part of these financial statements.
  F-4





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Southern Bella, Inc. (“Southern Bella”, the “Company” or the “Registrant”) was incorporated in Delaware on February 22, 2007.





Uptone Pictures, Inc. (“Uptone”) was incorporated in North Carolina on March 27, 2006.  Uptone is an entertainment company, which specializes in the creation, production and distribution of content.





On December 17, 2010 (the “Closing”), Southern Bella, Inc., closed a reverse take-over transaction by which it acquired Uptone. Pursuant to a Share Exchange Agreement (the“Exchange Agreement”) between the Registrant and Uptone, Viola J. Heitz, shareholder of Southern Bella, and Wendi Davis, sole shareholder of Uptone, the Registrant acquired 100% of Uptone’s issued and outstanding common stock.





On May 13, 2011, Southern Bella entered into a Subsidiary Put Option Agreement (the “Put Option Agreement”) with Wendi and Michael Davis (the “Purchasers”).  As of May 13, 2011, the Purchasers were members of Southern Bella’s Board of Directors (the “Board”).  On such date, the Purchasers were the beneficial holders of 8,166,667 shares of Southern Bella’s common stock, par value $0.000001 per share, or 94% of Southern Bella’s issued and outstanding common stock (the “Davis Shares”).  Subsequently, the Davis Shares were sold to Geoff Evett pursuant to the terms of a stock purchase agreement further described below.  Under the terms of the Put Option Agreement, Southern Bella acquired a put option (the “Put Option”) obligating the Purchasers to purchase Southern Bella’s holdings of 100 shares of common stock of Uptone, such shares constituting all of the issued and outstanding shares of Uptone (the “Uptone Shares”) for a total price of $100.  Under the terms of  the Put Option, Southern Bella is required to obtain Board and stockholder approval prior exercising the Put Option.  The Put Option will expire on May 13, 2014 (the “Option Termination Date”), unless it is terminated earlier under the terms of the Put Option Agreement.





Pursuant to the terms of the Put Option Agreement, the Purchasers will indemnify Southern Bella for any costs, expenses, liabilities or claims incurred by Uptone before, by and through and after the option period (the period from May 13, 2011 to the Option Termination Date or earlier termination as provided in the Put Option Agreement).





Southern Bella entered into the Put Option Agreement in connection with a stock purchase agreement that the Purchasers separately entered into with Geoff Evett on May 13, 2011 (the “Stock Purchase Agreement”), which closed on May 16, 2011 (the “SPA Closing”).  On the SPA Closing, the Purchasers sold 100% of the Davis Shares to Mr. Evett for an aggregate cash payment of $220,000. On the SPA Closing, the Purchasers, who were previously Southern Bella’s officers, resigned from such positions and Mr. Evett was appointed as President, Chief Executive Officer, Chief Financial Officer and Secretary.  On the Closing, the Purchasers submitted resignation letters from their positions as directors which were effective 10 days after the filing and mailing to Southern Bella’s stockholders of an Information Statement pursuant to Section 14(f) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14f-1 promulgated thereunder.  Mr. Evett became Southern Bella’s sole director on May 27, 2011.





On June 29, 2011, Southern Bella approved the Certificate of Amendment to change its name to Great American Energy, Inc. (“Great American”).  The name change was effective as of August 26, 2011.





On August 30, 2011, the Company effected a 79-for-1 stock-on-stock dividend for all of the issued and outstanding shares of the Company’s common stock on the record date of August 29, 2011 (the “Dividend”). Following the Dividend, the Company had 88,000,000 shares of common stock outstanding.





On April 19, 2012, Mr. Geoff Evett, the Company’s Chief Executive Officer, tendered his resignation from his position as CEO of the Company.





On April 19, 2012, Mr. Felipe Pimienta Barrios was appointed Chief Executive Officer by the Company’s Board of Directors.  On the same date Mr. Pimienta was appointed by the Company’s Board of Directors to fill a vacancy on the Board.





F-5





On May 8, 2012, the Company entered into a Regulation S Subscription Agreement (the “Subscription Agreement”) with Pacific Oil & Gas Investments Ltd. (“Pacific Oil”).  Pursuant to the Subscription Agreement, the Company issued 277,778 “Units” to Pacific Oil in consideration of $250,000.  Each “Unit” consisted of one share of the Company’s common stock and one warrant to purchase a share of our common stock for $1.30 per share. Following the issuance of the Units, the Company has 88,277,778 shares of common stock outstanding.




On June 7, 2012, the Company entered into a Mineral Property Option Agreement (the “Wallach Agreement”) with Mr. David A. Wallach of 0911325 BC, Ltd. (“Wallach”) with an effective date of April 28, 2012.  Pursuant to the Wallach Agreement, Wallach has granted the Company the exclusive right to acquire an undivided 60% interest in 10 mining claims consisting of approximately 2,958 hectares of property located near Trail, British Columbia. To exercise the Wallach Option, the Company must (i) make cash payments to Wallach totaling $350,000, (ii) fund improvement and mineral exploration projects on the property totaling $350,0000, and (iii) if the mineral and exploration projects provide evidence that there is the equivalent of at least $1,000,000,000 of gross value on the property, issue 1,000,000 shares of its common stock to Wallach.  The Company must satisfy the above-described conditions and exercise the Wallach Option no later than April 30, 2015. After exercise of the Wallach Option, Wallach will retain a 2% net smelter royalty for any and all minerals mined and delivered from the property.   The Company and Wallach have also agreed to cooperate in acquiring mining claims in the area within an 8.5 kilometer radius of the property, with such acquisitions to be subject to the terms of the Wallach Agreement.




On June 13, 2012, we entered into the Mineral Property Option Agreement (the “ GeoXplor Option Agreement”) with GeoXplor Corporation, a Nevada corporation (“GeoXplor”). Pursuant to the GeoXplor Option Agreement, GeoXplor has granted the Company the exclusive right to acquire a 100% interest in and to 48 unpatented mining claims comprising approximately 7,680 acres of property located in and around Esmeralda County, Nevada. To exercise the GeoXplor Option, the Company must make cash payments to GeoXplor totaling $575,000 and fund improvement and mineral exploration projects on the property totaling $800,0000.  The Company must satisfy the above-described conditions and exercise the GeoXplor Option no later than July 1, 2015. After exercise of the GeoXplor Option, GeoXplor will be granted a 3% net smelter royalty for any and all minerals mined and delivered from the property.





On June 29, 2012, the Company exercised the above-described Put Option and the Company divested itself of the Uptone Shares. In connection with this exercise, all of the assets and liabilities of Uptone have been transferred to the Purchasers and as of June 29, 2012, the Company no longer has any subsidiaries and the operations of Uptone are no longer the operations of the Company.




BASIS OF PRESENTATION




The Company follows accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.




EXPLORATION STAGE





The Company complies with Accounting Standards Codification 915-10 for its characterization of the Company as exploration stage.





RECLASSIFICATIONS





Certain prior period amounts have reclassified to conform to the current period presentation. There was no material effect to the financial statements as result of these reclassifications.





USE OF ESTIMATES




The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.




CASH AND CASH EQUIVALENTS




For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2012 and December 31, 2011, there were no cash equivalents.




DISCONTINUED OPERATIONS
 
 The results of operations of a component of an entity that either has been disposed of or is classified as held for sale is reported in discontinued operations if both of the following conditions are met:
 
 a.  The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction.
 b.  The entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.
 
 In a period in which a component of an entity either has been disposed of or is classified as held for sale, the income statement of the Company for current and prior periods will report the results of operation of the component, including any gain or loss recognized, in discontinued operations.  The results of operation of a component classified as held for sale shall be reported in discontinued operations in the period(s) in which they occur.




F-6




MINERAL PROPERTY COSTS




































FINANCIAL INSTRUMENTS




Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:




Level 1




Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.




Level 2




Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.




Level 3




Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.




The Company’s financial instruments consist principally of cash, credit cards payable and deferred revenue. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.




INCOME TAXES




Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.




BASIC AND DILUTED NET LOSS PER COMMON SHARE




Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same due to the anti dilutive nature of potential common stock equivalents.  Great American had no common stock equivalents outstanding at June 30, 2012 and December 31, 2011.




F-7





RECENT ACCOUNTING PRONOUNCEMENTS





In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented.  The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.





In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.





In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.





In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.





In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.





In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.





F-8




The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations




NOTE 2 - GOING CONCERN




Great American’s financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations.  As of June 30, 2012, the Company has working capital of $59,514 and has an accumulated deficit of $962,584.  These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.




NOTE 3 – STOCKHOLDERS’ EQUITY





On December 31, 2010, Wendi Davis owned 8,166,667 shares of common no-par stock.  During 2010, the Company received $151,517 of contributed capital from two related parties and $18,450 of capital from a non related party.





Under the Exchange Agreement in 2010, the Registrant completed the acquisition of all of the issued and outstanding shares of Uptone through the issuance of 8,166,667 restricted shares of Common Stock to Wendi Davis, sole shareholder of Uptone.  Immediately prior to the Exchange Agreement transaction, the Registrant had 8,666,667 shares of Common Stock issued and outstanding, of which 8,166,667 share of Common Stock are owned by Viola J. Heitz, which 8,166,667 shares were cancelled immediately prior to the Closing pursuant to the Exchange Agreement.  Immediately after the issuance of the shares to Wendi Davis, sole shareholder of Uptone, the Registrant had 8,666,667 shares of Common Stock issued and outstanding.




On June 30, 2012, the Company had a stock payable amount of $250,000 associated with the Regulation S Subscription Agreement (the “Subscription Agreement”) with Pacific Oil & Gas Investments Ltd. (“Pacific Oil”) entered on May 8, 2012. Pursuant to the Subscription Agreement, the Company issued 277,778 “Units” to Pacific Oil in consideration of $250,000. Each “Unit” consisted of one share of the Company’s common stock and one warrant to purchase a share of our common stock for $1.30 per share.




NOTE 4 – PUT OPTION
 
 Under the terms of the Put Option Agreement, Southern Bella acquired a put option (the “Put Option”) obligating the Purchasers to purchase Southern Bella’s holdings of 100 shares of common stock of Uptone, such shares constituting all of the issued and outstanding shares of Uptone (the “Uptone Shares”) for a total price of $100.
  Below is the summary of the Put Option Agreement including fair value of assets disposed, liabilities disposed and consideration received as of June 29, 2012, when the option was exercised.
 
 Below are the asset and liability values for Uptone Pictures, Inc. prior to exercise of Put Option Agreement:
  Cash

$
1,988Total assets


1,988Accrued liabilities


12,798Deferred revenue


9,525Total liabilities


22,323Net assets – discontinued operations

$
(20,335
)


F-9





Geoff Evett owns 600,000 shares of common stock at .000001 par value.  During 2011, the Company received $50,537 of contributed capital from two related parties.





On June 29, 2011, the Company entered into a contribution agreement with the President, Geoff Evett, where Mr. Evett returned 7,566,667 shares of common stock to the Company as a contribution to the Company’s capital.





On August 29, 2011, the Company declared a 79 for 1 stock dividend payable on August 30, 2011 to shareholders of record on August 29, 2011.  This dividend is shown retroactively.





During 2011 Metlera Capital which is owned equally by Geoff Evett and his wife contributed $87,106 in capital, $10,800 in rent and $4,000 in consulting to the Company.





During the first quarter of 2012, Metlera Capital contributed $46,534 in capital, $2,700 in rent and $20,000 in consulting to the Company.  Also during the first quarter of 2012, 7Worldwide, owned by the former President, Mike Davis and Medplus, owned by the former Secretary’s father, contributed $20,100 and $28,450, respectively.




During the second quarter of 2012, Metlera Capital contributed $31,742 in capital, $2,700 in rent and $7,500 in consulting to the Company.  Also during the second quarter of 2012, 7Worldwide, owned by the former President, Mike Davis and Medplus, owned by the former Secretary’s father, contributed $3,175 and $28,252, respectively.





NOTE 5 – RELATED PARTY TRANSACTIONS





During the first quarter of 2012, the Company received $95,084 of contributed capital from three related parties:  $20,100 from 7Worldwide, owned by the former President, Mike Davis, $28,450 from MedPlus, owned by the former Secretary’s father, and $46,534 of contributed capital from Metlera Capital SL, owned equally by Geoff Evett and his wife.  The $46,534 consists of $23,834 of cash, $2,700 in rent and $20,000 in consulting.





During the second quarter of 2012, the Company received $63,169 of contributed capital from three related parties:  $3,175 from 7Worldwide, owned by the former President, Mike Davis, $28,252 from MedPlus, owned by the former Secretary’s father, and $31,742 of contributed capital from Metlera Capital SL, owned equally by Geoff Evett and his wife.  The $31,742 consists of $21,542 in cash, $2,700 in rent and $7,500 in consulting.





Prior to the exercise of the Put Option, the Company conducted its operations from facilities located in Wake Forest, North Carolina.  This office was provided to the Company by its former President, Mike Davis, for which the company recognized expenses of $900 per month through July 1, 2012.  Rent expense for the six months ending June 30, 2012 and the year ending December 31, 2011 was $5,400 and $10,800, respectively.




NOTE 6 – MINERAL OPTIONS
  On June 7, 2012, the Company entered into a Mineral Property Option Agreement (the “Wallach Agreement”) with Mr. David A. Wallach of 0911325 BC, Ltd. (“Wallach”) with an effective date of April 28, 2012. Pursuant to the Wallach Agreement, Wallach has granted the Company the exclusive right to acquire an undivided 60% interest in 10 mining claims consisting of approximately 2,958 hectares of property located near Trail, British Columbia. To exercise the Wallach Option, the Company must (i) make cash payments to Wallach totaling $350,000, of which $75,000 had been paid as of June 30, 2012 (ii) fund improvement and mineral exploration projects on the property totaling $350,0000, and (iii) if the mineral and exploration projects provide evidence that there is the equivalent of at least $1,000,000,000 of gross value on the property, issue1,000,000 shares of its common stock to Wallach. The Company must satisfy the above-described conditions and exercise the Wallach Option no later than April 30,2015. After exercise of the Wallach Option, Wallach will retain a 2% net smelter royalty for any and all minerals mined and delivered from the property. The Company and Wallach have also agreed to cooperate in acquiring mining claims in the area within an 8.5 kilometer radius of the property, with such acquisitions to be subject to the terms of the Wallach Agreement.
  On June 13, 2012, we entered into the Mineral Property Option Agreement (the “ GeoXplor Option Agreement”) with GeoXplor Corporation, a Nevada corporation (“GeoXplor”). Pursuant to the GeoXplor Option Agreement, GeoXplor has granted the Company the exclusive right to acquire a 100% interest in and to 48 unpatented mining claims comprising approximately 7,680 acres of property located in and around Esmeralda County, Nevada. To exercise the GeoXplor Option, the Company must make cash payments to GeoXplor totaling $575,000, of which $75,000 had been paid as of June 30, 2012 and fund improvement and mineral exploration projects on the property totaling $800,0000. The Company must satisfy the above-described conditions and exercise the GeoXplor Option no later than July 1, 2015. After exercise of the GeoXplor Option, GeoXplor will be granted a 3% net smelter royalty for any and all minerals mined and delivered from the property.


NOTE 7 – SUBSEQUENT EVENTS





Subsequent events have been evaluated through the date the financial statements were issued and has determined that there are no additional reporting subsequent events requiring disclosure.




F-10





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
  The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report.





Overview





Great American Energy, Inc. (“Great American Energy” or the “Registrant”) was incorporated in Delaware on February 22, 2007 (originally under the name Southern Bella, Inc.). The Registrant was organized to acquire catering companies throughout the United States. The first catering company acquired by the Registrant was Dupree Catering, Inc. (“Dupree”). Dupree is a Kentucky corporation, formed on October 28, 1991. On March 1, 2007, the Registrant acquired all of the shares of stock of Dupree for $110,000 and Dupree became the wholly-owned subsidiary of the Registrant. The Registrant sold all of the assets of Dupree on July 1, 2008.





On December 17, 2010 the Registrant, closed a reverse take-over transaction by which it acquired 100% of the issued and outstanding common stock of Uptone Pictures, Inc., a North Carolina corporation (“Uptone”) which specializes in the creation, production and distribution of entertainment content.





On May 13, 2011, the Registrant entered into a Subsidiary Put Option Agreement (the “Put Option Agreement”) with Wendi and Michael Davis (the “Purchasers”).  As of May 13, 2011, the Purchasers were members of the Registrant’s Board of Directors (the “Board”).  On such date, the Purchasers were the beneficial holders of 8,166,667 shares of the Registrant’s common stock, par value $0.000001 per share, or 94% of the Registrant’s issued and outstanding common stock (the “Davis Shares”).  Subsequently, the Davis Shares were sold to Geoff Evett pursuant to the terms of a stock purchase agreement further described below.  Under the terms of the Put Option Agreement, the Registrant acquired a put option (the “Put Option”) obligating the Purchasers to purchase the Registrant’s holdings of 100 shares of common stock of Uptone, such shares constituting all of the issued and outstanding shares of Uptone (the “Uptone Shares”) for a total price of $100.  Under the terms of  the Put Option, the Registrant is required to obtain Board and stockholder approval prior exercising the Put Option.  The Put Option will expire on May 13, 2014 (the “Option Termination Date”), unless it is terminated earlier under the terms of the Put Option Agreement.





Pursuant to the terms of the Put Option Agreement, the Purchasers will indemnify the Registrant for any costs, expenses, liabilities or claims incurred by Uptone before, by and through and after the option period (the period from May 13, 2011 to the Option Termination Date or earlier termination as provided in the Put Option Agreement).





We entered into the Put Option Agreement in connection with a stock purchase agreement that the Purchasers separately entered into with Geoff Evett on May 13, 2011 (the “Stock Purchase Agreement”), which closed on May 16, 2011 (the “SPA Closing”).  On the SPA Closing, the Purchasers sold 100% of the Davis Shares to Mr. Evett for an aggregate cash payment of $220,000. On the SPA Closing, the Purchasers, who were previously our officers, resigned from such positions and Mr. Evett was appointed as President, Chief Executive Officer, Chief Financial Officer and Secretary.  On the Closing, the Purchasers submitted resignation letters from their positions as directors which were effective 10 days after the filing and mailing to our stockholders of an Information Statement pursuant to Section 14(f) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14f-1 promulgated thereunder.  Mr. Evett became our sole director on May 27, 2011.





On June 29, 2011, we entered into a contribution agreement (the “Contribution Agreement”) with Geoff Evett, our sole director, president, and largest shareholder. Pursuant to the Contribution Agreement, Mr. Evett returned 7,566,667 shares of our common stock to us as a contribution to our  capital. Prior to the execution of the Contribution Agreement, Mr. Evett held 8,166,667 shares of our common stock representing approximately 94.23% of our issued and outstanding shares. Following the execution of the Contribution Agreement, Mr. Evett holds 600,000 shares of our common stock representing approximately 54.54% of our issued and outstanding shares.





On June 29, 2011, we approved the Certificate of Amendment to change our name to Great American Energy, Inc.  The name change was effective as of August 26, 2011.





On August 30, 2011, we effected a 79-for-1 stock-on-stock dividend for all of the issued and outstanding shares of our common stock on the record date of August 29, 2011 (the “Dividend”). Following the Dividend, we had 88,000,000 shares of common stock outstanding.




3





On April 19, 2012, our then Chief Executive Officer, Mr. Evett, tendered his resignation and our Board appointed Mr. Felipe Pimienta Barrios as our Chief Executive Officer and member of our Board.  Mr. Evett remains on our Board.





On May 8, 2012, we entered into a Regulation S Subscription Agreement (the “Subscription Agreement”) with Pacific Oil & Gas Investments Ltd. (“Pacific Oil”).  Pursuant to the Subscription Agreement, we issued 277,778 “Units” to Pacific Oil in consideration of $250,000.  Each “Unit” consisted of one share of the Company’s common stock and one warrant to purchase a share of our common stock for $1.30 per share. The issuance of the Units to Pacific Oil pursuant to the Subscription Agreement was exempt from registration pursuant to Regulation S under the Securities Act of 1933 (the “Act”).  We made this determination based on the representations of Pacific Oil which included, in pertinent part, that Pacific Gas is not a “U.S. Person” as that term is defined in Regulation S under the Act. Following the issuance of the shares pursuant to the Subscription Agreement, we have 88,277,778 shares of common stock outstanding.





Transition to Mineral Exploration and Development Industry





As disclosed in previous quarterly and annual reports, the Company has been working on transitioning its operations to focus on the mineral exploration and development industry.  In connection with this transition, during the quarter ended June 30, 2012, we took the actions described below.




On June 7, 2012, we entered into a Mineral Property Option Agreement (the “ Wallach Agreement”) with Mr. David A. Wallach of 0911325 BC, Ltd. (“Wallach”) with an effective date of April 28, 2012.  Pursuant to the Wallach Agreement, Wallach has granted the Company the exclusive right to acquire an undivided 60% interest in 10 mining claims consisting of approximately 2,958 hectares of property located near Trail, British Columbia (the “Wallach Option”).




To exercise the Wallach Option, we must (i) make cash payments to Wallach totaling $350,000, (ii) fund improvement and mineral exploration projects on the property totaling $350,000, and (iii) if the mineral and exploration projects provide evidence that there is the equivalent of at least $1,000,000,000 of gross value on the property, we must issue 1,000,000 shares of its common stock to Wallach.




We must satisfy the above-described conditions and exercise the Wallach Option no later than April 30, 2015. After exercise of the Wallach Option, Wallach will retain a 2% net smelter royalty for any and all minerals mined and delivered from the property.   The Company and Wallach have also agreed to cooperate in acquiring mining claims in the area within an 8.5 kilometer radius of the property, with such acquisitions to be subject to the terms of the Wallach Agreement.




On June 13, 2012,we entered into the Mineral Property Option Agreement (the “ GeoXplor Option Agreement”) with GeoXplor Corporation, a Nevada corporation (“GeoXplor”).




Pursuant to the GeoXplor Option Agreement, GeoXplor has granted us the exclusive right to acquire a 100% interest in and to 48 unpatented mining claims comprising approximately 7,680 acres of property located in and around Esmeralda County, Nevada (the “GeoXplor Option”).




To exercise the GeoXplor Option, we must make cash payments to GeoXplor totaling $575,000 and fund improvement and mineral exploration projects on the property totaling $800,0000.  We must satisfy the above-described conditions and exercise the GeoXplor Option no later than July 1, 2015. After exercise of the GeoXplor Option, GeoXplor will be granted a 3% net smelter royalty for any and all minerals mined and delivered from the property.





On June 29, 2012, we exercised the above-described Put Option and the Company divested itself of the Uptone Shares. In connection with this exercise, all of the assets and liabilities of Uptone have been transferred to the Purchasers and as of June 29, 2012, the Company no longer has any subsidiaries and the operations of Uptone are no longer the operations of the Company.





Because the Put Option was exercised on June 29, 2012, the results of operations discussed below concern the consolidated business of the Registrant and Uptone and, except as otherwise indicated by the context, references to “we,” “us,” and “our” hereinafter in this Form 10-Q are to the consolidated business of Uptone, except that references to “our common stock”, “our shares of common stock” or “our capital stock” or similar terms shall refer to the common stock of the Registrant.




4





Results of Operations





On June 29, 2012, we exercised the above-described Put Option and the Company divested itself of its subsidiary, Uptone Pictures, Inc. (“Uptone”). Accordingly, the revenues and expenses from Uptone are presented as net income from discontinued operations. The revenues and expenses from Uptone in 2011 are also presented as discontinued operations for comparison purposes.
 
 Continuing Operations. Revenue from continuing operations was $0 for the six and three month periods ending June 30, 2012 and $0 during the same periods ended June 30, 2011.  Cost of revenues was $0 for the six and three month periods ending June 30, 2012 and $0 for during the same periods ended June 30, 2011.
 
 Officers compensation was $14,000 for the six month period ended June 30, 2012 and $0 for the three month period ended June 30, 2012, an increase due to increasing the compensation of officers in connection with commencing new operations.  General and administrative expenses were $93,781 for the six month period ended June 30, 2012 and $0 for the same period in 2011.  General and administrative expenses were $55,578 for the three month period ended June 30, 2012 and $0 for the same period in 2011.  The increases of $93,781 and $55,578 for the six and three month periods ended June 30, 2012, respectively, were due to increased general and administrative expenses relating to recent corporate transactions. Net loss from continuing operations were ($107,781) and ($69,578) for the six and three month periods ended June 30, 2012, respectively.
 
 Discontinued Operations. The loss from the discontinued operations of Uptone was ($80,318) for the six month period ended June 30, 2012 compared to ($5,437) for the same period in 2011. The loss from discontinued operations for the three month period ended June 30, 2012 was ($40,597) compared to income of $5,264 for the same period in 2011.
 
 Net Loss.Net income (loss) for the six and three month periods ended June 30, 2012 were ($188,099) and ($110,175), respectively, compared to ($5,437) and $5,264 for the same periods in 2011.  The increased losses of ($182,662) and ($115,439) were primarily due to increased general and administrative expenses and the acquisition of mineral options.


Liquidity and Capital Resources





We generated net losses for the period ending June 30, 2012 and the year ending December 31, 2011, and had a deficit accumulated through June 30, 2012 of $962,584. We had a working capital surplus of $59,514 for the period ending June 30, 2012 and a working capital deficit of $31,025 for the year ended December 31, 2011. We have no long term obligations.





We had a cash balance of $59,514 at June 30, 2012 and $0 at December 31, 2011. For the six month period ended June 30, 2012 we had net cash inflows of $59,514. Cash flows used in operations for the six month period ended June 30, 2012 were ($163,901) compared with ($22,537) for the same period in 2011, an increase primarily attributable to increased general and administrative costs and the acquisition of mineral options. Cash flows used in operations for the six month period ending June 30, 2012 consisted primarily of a net loss from operations of ($188,099) compared with ($5,437) for the same period in 2011, an increase due to increased general and administrative expenses. We had net cash provided by financing activities of $375,403 for the six month period ended June 30, 2012, compared with $30,550 for the same period in 2011, an increase attributable to proceeds of sales of our stock of $250,000 and a capital contribution of $125,403. Cash flows used in investing activities were ($151,988) for the six month period ending June 30, 2012 compared with $0 for the same period in 2011. The increase was primarily due to cash paid for mineral options.




During the remaining fiscal year 2012, we expect that our operations will be funded by advances from management and financing activities. However, there is no assurance that we will be able to obtain sufficient funds to support our operations as planned. We are dependent on the continued support of our creditors and our ability to raise further capital to fund ongoing expenditures. In current market conditions there is uncertainty that the necessary funding can be obtained as needed, raising substantial doubt as to our to continue operating as a going concern. In the event we are unable to raise additional capital, we will not be able to meet our obligations and will be required to further curtail or terminate some of our projects and/or activities.





All of our costs associated with complying with the securities laws, rules, and regulations applicable to public companies, estimated to be less than $25,000 annually, will be funded by a loan from management, to the extent that funds are available to do so. However, management is not obligated to provide these or any other funds. If we fail to secure such funding, we may fail to meet our reporting obligations as a public company and could lose our eligibility for the quotation of our stock on the over the counter bulletin board. Should this occur, investors may have increased difficulty selling their stock.





Our independent auditors have indicated in their audit report for the years ended December 31, 2011 that there is substantial doubt about our ability to continue as a going concern over the next twelve months.





Off-Balance Sheet Arrangements





There are no off-balance sheet arrangements.




5


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Not applicable





ITEM 4. CONTROLS AND PROCEDURES.
  Disclosure Controls and Procedures





We have established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. Our controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officers to allow timely decisions regarding required disclosure.





We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at June 30, 2012 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer/Chief Financial Officer concluded that, at and as of June 30, 2012, our disclosure controls and procedures are not effective.





Changes in Internal Control over Financial Reporting





There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





6


PART II — OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS.
  None.





ITEM 1A. RISK FACTORS
  Not applicable.





ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


On May 8, 2012, the Company entered into a Regulation S Subscription Agreement (the “Subscription Agreement”) with Pacific Oil & Gas Investments Ltd. (“Pacific Oil”).  Pursuant to the Subscription Agreement, the Company issued 277,778 “Units” to Pacific Oil in consideration of $250,000.  Each “Unit” consisted of one share of the Company’s common stock and one warrant to purchase a share of the Company’s common stock for $1.30 per share. The issuance of the Units to Pacific Oil pursuant to the Subscription Agreement was exempt from registration pursuant to Regulation S under the Securities Act of 1933 (the “Act”).  The Registrant made this determination based on the representations of Pacific Oil which included, in pertinent part, that Pacific Gas is not a “U.S. Person” as that term is defined in Regulation S under the Act.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  None.





ITEM 4. MINE SAFETY DISCLOSURES
  As disclosed under “Item 2. Management’s Discussion and Analysis or Plan of Operations - Transition to Mineral Exploration and Development Industry,” on June 7, 2012, and June 13, 2012, we acquired options to acquire interests in certain mining claims. Mining operations have not yet commenced on such properties and, accordingly, we do not have any information to disclose pursuant to Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, which require certain safety related disclosures by companies which operate mines regulated under the Federal Mine Safety and Health Act of 1977.
  ITEM 5. OTHER INFORMATION.
  Not applicable.




7





ITEM 6. EXHIBITS.


Exhibit

Item3.1

Articles of Incorporation(1)3.2

Bylaws(2)31.1

Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002*32.1

Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002*101.INS

XBRL Instance Document (3)101.SCH

XBRL Taxonomy Extension Schema (3)101.CAL

XBRL Taxonomy Extension Calculation Linkbase(3)101.DEF

XBRL Taxonomy Extension Definition Linkbase(3)101.LAB

XBRL Taxonomy Extension Label Linkbase(3)101.FRE

XBRL Taxonomy Extension Presentation Linkbase(3)





*              Filed herewith.


(1)            Incorporated by reference to the exhibit to the registrant’s annual report on Form 10-K filed with the SEC on April 13, 2012.


(2)            Incorporated by reference to the exhibit to the registrant’s registration statement on Form SB-2 filed with the SEC on November 14, 2007.


(3)            XBRL Interactive Data File will be filed by amendment to this Form 10-Q within 30 days of the filing date of this Form 10-Q, as permitted by Rule 405(f)(3) of Regulation S-T




8





SIGNATURES





In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





GREAT AMERICAN ENERGY, INC.Date: August 20, 2012
By:
/s/ Felipe Pimienta BarriosFelipe Pimienta Barrios(Authorized Officer/Principal Executive Officer, Principal Financial Officer/Principal Financial Officer)