UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-Q


(Mark One)





R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGEACT OF 1934


For the quarterly period ended June 30, 2012





Or





£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from  _____  to _____





Commission file number: 000-51152





PETROHUNTER ENERGY CORPORATION


(Exact name of registrant as specified in its charter)





Maryland

98-0431245(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)910 16th Street

80202Suite 208, Denver, Colorado

(Zip Code)(Address of principal executive offices)


(303) 572-8900


(Registrant’s telephone number, including area code)





1600 Stout Street, Suite 450, Denver, Colorado 80202


(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R     No £





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes XNo £(not required)





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


Large accelerated filer £                                                                                     Accelerated filer £


Non-accelerated filer £                                                                                     Smaller reporting company R





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £     No R





As of August 14, 2012, the registrant had 439,078,759shares of common stock outstanding.











FORWARD-LOOKING STATEMENTS





Certain statements contained in this Quarterly Report constitute “forward-looking statements”. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”).





CURRENCIES





All amounts expressed herein are in U.S. dollars unless otherwise indicated.








2


PETROHUNTER ENERGY CORPORATION





FORM 10-Q





FOR THE NINE-MONTH PERIOD ENDED


JUNE 30, 2012





INDEX





PagePART I — FINANCIAL INFORMATIONItem 1.
Financial Statements
4Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
12Item 3.
Quantitative and Qualitative Disclosures About Market Risk
14Item 4.
Controls and Procedures
14PART II — OTHER INFORMATIONItem 1.
Legal Proceedings
15Item 1A.
Risk Factors
15Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
15Item 3.
Defaults Upon Senior Securities
15Item 4.
Mine Safety Disclosures
15Item 5.
Other Information
15Item 6.
Exhibits
15SIGNATURES


















































3


PETROHUNTER ENERGY CORPORATION


CONDENSED CONSOLIDATED BALANCE SHEETS





June 30,

2012


September 30,

2011(unaudited)ASSETSCurrent AssetsCash

$
88,786


$
65,759Marketable securities


—



650,000Prepaid expenses and other assets


39,306



33,930TOTAL CURRENT ASSETS


128,092



749,689Property and Equipment, at costFurniture and equipment , net


—



1,808—



1,808Other AssetsRestricted cash


85,000



85,000Deposits and other assets


555



555TOTAL ASSETS

$
213,647


$
837,052
 LIABILITIES AND STOCKHOLDERS’ (DEFICIT)Current LiabilitiesAccounts payable and accrued expenses

$
2,980,829


$
2,619,560Convertible notes payable


717,873



717,873Notes payable — related party


2,722,060



2,722,060Accrued interest payable


281,243



204,517Accrued interest and fees payable — related parties


556,064



100,000Other accrued liabilities


9,402,375



8,605,147Asset retirement obligation


342,251



342,251TOTAL CURRENT LIABILITIES


17,002,695



15,311,408Notes payable – related party


40,759,000



40,759,000Convertible notes payable


6,238,419



6,238,419Accrued interest and fees payable – related parties


8,586,637



6,464,524Accrued interest payable


1,238,555



840,850Asset retirement obligation


396,971



396,971TOTAL LIABILITIES


74,222,277



70,011,172Stockholders’ (Deficit)Preferred stock, $0.001 par value; authorized 100,000,000 shares; none issued and outstanding


—



—Common stock, $0.001 par value; authorized 1,000,000,000 shares;  439,078,759shares issued and outstanding at June 30, 2012 and September 30, 2011, respectively


439,079



439,079Additional paid-in-capital


223,560,118



223,493,218Accumulated other comprehensive(loss)


(43,536
)


(118,826
)Accumulated deficit


(297,964,291
)


(292,987,591
)TOTAL STOCKHOLDERS’ (DEFICIT)


(74,008,630



(69,174,120
)TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

$
213,647


$
837,052




See accompanying notes to these unaudited condensed consolidated financial statements.





4




PETROHUNTER ENERGY CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)











Three Months

Ended

June 30,2012


Three Months

Ended

June 30,2011Costs and ExpensesGeneral and administrative

$
268,451


$
330,383Depreciation, depletion, amortization and accretion


710



308Total operating expenses


269,161



330,691(Loss) From Operations


(269,161
)


(330,691
)Other Income (Expense)Interest income


48



—Interest expense


(1,363,095
)


(1,040,138
)Gains (losses) on sale of marketable securities


(39,680
)


478Total Other(Expense)


(1,402,727
)


(1,039,660
)Net Loss

$
(1,671,888
)

$
(1,370,351
)Net loss per common share — basic and diluted

$
(0.00
)

$
(0.00
)Weighted average number of common shares outstanding — basic and diluted


439,078,759



439,078,759





Net Loss

$
(1,671,888
)

$
(1,370,351
)Other comprehensive income (loss)Gains (losses)  on foreign currency translation adjustments


(2,415
)


10,987Gains (losses) on marketable securities


—



81,315Comprehensive loss attributable to common shareholders

$
(1,674,303
)

$
(1,278,049
)










See accompanying notes to these unaudited condensed consolidated financial statements.





5





PETROHUNTER ENERGY CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)





Nine Months

Ended

June 30,2012


Nine Months

Ended

June 30,2011Costs and ExpensesGeneral and administrative

$
969,599


$
955,865Other operating expenses


106,315



—Depreciation, depletion, amortization and accretion


1,808



924Total operating expenses


1,077,722



956,789(Loss) From Operations


(1,077,722
)


(956,789
)Other Income (Expense)Interest income


68



20Interest expense


(3,877,740
)


(3,101,181
)Gains (losses) on sale of marketable securities


(131,521
)


6,144Gains recognized in connection with recovery of related party accounts payable


171,670



—Loss on settlement of accounts payable – related party


(61,455
)


—Total Other Income (Expense)


(3,898,978
)


(3,095,017
)Net Loss

$
(4,976,700
)

$
(4,051,806
)Net loss per common share — basic and diluted

$
(0.01
)

$
(0.01
)Weighted average number of common shares outstanding — basic and diluted


439,078,759



439,078,759Net Loss

$
(4,976,700
)

$
(4,051,806
)Other comprehensive income (loss)Gains (losses)  on foreign currency translation adjustments


(290
)


(15,724
)Gains (losses) on marketable securities


—



81,315Comprehensive loss attributable to common shareholders

$
(4,976,990
)

$
(3,986,215
)











See accompanying notes to these unaudited condensed consolidated financial statements.





6


PETROHUNTER ENERGY CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited)





Nine months

Ended

June 30,

2012


Nine months

Ended

June 30,

2011Cash flows from operating activitiesNet (loss)

$
(4,976,700
)

$
(4,051,806
)Adjustments used to reconcile net loss to net cash (used in) operating activities:Stock based compensation


66,900



45,226Depreciation, depletion, amortization and accretion


1,808



924Loss on abandonment


—



4,285Loss on sale of  marketable securities


131,521



6,144Non cash interest expense incurred in connection with debt forgiveness


61,455



—Gain on equity method investment


(171,670
)


—Changes in assets and liabilities:Prepaid expenses and other assets


(5,377
)


4,900Accounts payable and accrued expenses


1,642,274



3,159,113Due to shareholder and related parties


2,576,179



(9,978
)Net cash (used in) operating activities


(673,610
)


(841,192
)Cash flows from investing activitiesProceeds related to GST tax refunds on the sale of oil and gas properties


197,375



—Proceeds from sale of marketable securities


499,262



874,376Net cash provided by investing activities


696,637



874,376Net increase (decrease) in cash and cash equivalents


23,027



33,184Cash and cash equivalents, beginning of period


65,759



75,624Cash and cash equivalents, end of period

$
88,786


$
108,808Supplemental schedule of cash flow informationCash paid for interest

$
—


$
—








See accompanying notes to these unaudited condensed consolidated financial statements.


7


PETROHUNTER ENERGY CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)





Note 1 — Organization and Basis of Presentation





The interim condensed consolidated financial statements of PetroHunter Energy Corporation (“we,” “us,” “our,” or the “Company”) are unaudited and contain all adjustments necessary for a fair statement of the results for the interim period presented. Results for interim period are not necessarily indicative of results to be expected for a full year or for previously reported periods due in part, but not limited to, interest rates and our ability to obtain additional capital to sustain operations. You should read these consolidated interim financial statements in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended September 30, 2011.





Note 2 — Summary of Significant Accounting Policies





Basis of Accounting–The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and extinguishment of liabilities in the normal course of business. The report of our independent registered public accounting firm on our financial statements for the fiscal year ended September 30, 2011 includes an explanatory paragraph relating to substantial doubt or uncertainty of our ability to continue as a going concern.  As shown in the accompanying balance sheet, we have an accumulated deficit of $297,964,291 and our current liabilities exceeded our current assets by $16,874,603 as of June 30, 2012. The Company’s ability to meet its contractual obligations and remit payment to its vendors depends on its ability to generate additional financing.  PetroHunter's management continues to explore arrangements whereby it may raise additional capital through the sale of existing assets and/or through joint ventures related to its pending permit applications as well as through potential debt or equity issuances; however there are no assurances the plans of the Company will result in its ability to raise funds. If the Company is unable to execute these plans it may have to further curtail or cease operations.





Cash and Cash Equivalents– We consider investments in highly liquid financial instruments with an original stated maturity of three months or less to be cash equivalents.





Comprehensive Income (Loss) – Financial Accounting Standards Board (“FASB”) ASC 220,“Comprehensive Income,” establishes standards for reporting and display of comprehensive income and its components in financial statements. It requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in the financial statement that is displayed with the same prominence as other financial statements.  The Company’s comprehensive income (loss) consists of both net losses on foreign currency translation adjustments and unrecognized losses in connection with mark to market adjustments on its marketable securities.





Concentration of Credit Risk – Financial instruments which potentially subject us to concentrations of credit risk consist of cash and marketable securities. We periodically evaluate the credit worthiness of financial institutions, and maintain cash accounts only with major financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. On occasion, the Company may have cash in banks in excess of federally insured amounts. We believe that credit risk associated with cash is remote.  Marketable securities credit risk is discussed later in Note 3 – Restricted Cash and Marketable Securities.





Fair Value – We apply the provisions of FASB ASC 820, “Fair Value Measurements.” The carrying amounts reported in the consolidated balance sheets for cash, prepaid assets, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. Fair values of assets and liabilities measured on a recurring basis as of June 30, 2012 and September 30, 2011 included marketable securities, recorded at fair values of $nil and $650,000, respectively, which had quoted prices in active markets for identical assets (level 1) of $nil and $650,000, respectively.





Income Taxes – We record income taxes under the asset and liability method prescribed by FASB ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are recognized for temporary differences





8





between the financial statement amounts and the tax basis of certain assets and liabilities by applying statutory rates in effect when the temporary differences are expected to reverse.





Loss Per Common Share – We do not report fully diluted loss per common share as the effect would be anti-dilutive.





Marketable Securities – We account for marketable securities in accordance with FASB ASC 320,“Accounting for Certain Investments in Debt and Equity Securities.” Historically we accounted for marketable securities by marking to market with unrealized gains and losses reflected as a component of Other Comprehensive Income, until such gains or losses became realized, at which time they are then recognized in our statement of operations. In addition, in circumstances where significant price declines are experienced subsequent to the balance sheet date, we consider whether such declines are other than temporary. After considering our expected holding period, we may record a provision for impairment in the event we do not expect the value of the securities to recover from such a decline in market value. We consider our accounting for marketable securities to involve significant management judgment that is subject to estimation.





Property and Equipment – Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets approximating three to five years.





Reclassifications–Certain prior period amounts have been reclassified in the condensed consolidated financial statements to conform to current period presentation. Such reclassifications have had no effect on the net loss.





Restricted Cash – Restricted cash consists of certificates of deposit, underlying letters of credit for exploration permits, state and local bonds and guarantees to vendors.





Share-Based Compensation – We use the Black-Scholes option-pricing model and the straight-line attribution approach to determine the fair-value of stock-based awards in accordance with FASB ASC 718,“Stock Compensation.”   The option-pricing model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The Company’s expected term represents the period that stock-based awards are expected to be outstanding and is determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards. The expected stock price volatility is based on the Company’s historical stock prices.





Use of Estimates – The preparation of our consolidated financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates.  Our significant estimates include the asset retirement obligation liabilities, other accrued liabilities and the market value of securities.





Asset Retirement Obligation – Asset retirement obligations associated with tangible long-lived assets are accounted for in accordance with FASB ASC 410, “Accounting for Asset Retirement Obligations.” The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties is recorded generally upon acquisition or completion of a well. The net estimated costs are discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense, and (4) revisions to estimated future cash flow requirements. Accretion expense is recorded as a component of depreciation, depletion, amortization and accretion expense.





Recently Issued Accounting Pronouncements





The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants (“AICPA”) and the SEC and we have not identified any that would have a material impact on the Company’s financial position, or statements.





9


Note 3 —Restricted Cash and Marketable Securities





As of June 30, 2012, long term restricted cash consists of $85,000 in certificates of deposit and letters of credit for exploration permits, state and local bonds.





As of June 30, 2012, we have recorded $nil in marketable securities on our Condensed Consolidated Balance Sheet. During the quarter ended June 30, 2012, we sold our remaining shares of Falcon Oil & Gas Ltd. (“Falcon”) common stock. As described in Note 2, we had accounted for these securities in accordance with FASB ASC 320,“Accounting for Certain Investments in Debt and Equity Securities.”





During the nine months ended June 30, 2012, we recognized losses of $131,521 related to sales of these marketable securities. During the nine months ended June 30, 2011, we recognized gains of $6,144 related to the sales of these securities. These gains and losses have been included in other income (expense) on our unaudited condensed consolidated statement of operations.





Note 4— Equity Investment




As of June 30, 2012 and September 30, 2011, we held approximately 50,000,000 shares in Falcon Oil & Gas Australia Limited (“Falcon Australia”), a related party. We have accounted for this investment under the equity method. As of June 30, 2012 and September 30, 2011, our basis in this investment had been reduced to $nil as the result of historical losses of $164,506 recorded during the fiscal year ended September 30, 2010.





Note 5 — Share-Based Compensation





Compensation Expense-Stock-based employee and non-employee compensation expense of $66,900 was charged to operations during the nine months ended June 30, 2012. Stock-based compensation expense of $45,226 was charged to operations during the nine months ended June 30, 2011. Stock-based compensation has been included in general and administrative expense in the consolidated statements of operations.





Note 6 — Common Stock Warrants





The following stock purchase warrants were outstanding at June 30, 2012 and September 30, 2011:





June 30,

2012

September 30,

2011Number of warrants
70,094,223

72,094,223Exercise price
$0.12-$2.10

$0.12 - $2.10Expiration date
2012-2014

2011 - 2014





Note 7 — Related Party Transactions





Our policy is to enter into transactions with related parties on terms that, on the whole, are more favorable, or no less favorable than those available from unaffiliated third parties.  Based on our experience in oil and gas exploration and development and considering the terms of our transactions with unaffiliated third parties, we believe that all of the transactions described below met this policy standard at the time they occurred.





Accounts Payable–During the nine months ended June 30, 2012, $171,670 that had been previously included in accounts payable and had been due to Falcon related to our share of expenses and GST taxes associated with costs incurred in drilling the Shenandoah #1A well in the Beetaloo Basin were repaid. A refund we had applied for in April 2010 was received from the Australian tax authorities. The amount received was used to repay the outstanding balance due Falcon. In connection with this repayment we recognized a gain of $171,670 which has been recorded in other income (expense) in our condensed consolidated statements of operations.





10


Bruner Family Trust–As of June 30, 2012, we owed $2,828,060 in principal and $501,286 in accrued interest to the Bruner Family Trust related to seven outstanding notes payable. We have recognized interest expense in the amount of $77,409 during the nine months ended June 30, 2012 related to these notes.





Equity Method Investment – In April 2010, we were issued 50,000,000 shares of common stock in Falcon Australia in consideration for our contribution of our 25% interest in four exploration permits related to 7 million acres in the Beetaloo Basin, Australia.  As of June 30, 2012, our interest in the investment was 24% and we have recorded no value related to the investment as a result of the dilutive impact of losses incurred during the periods prior to June 30, 2012 (Note 4).





Global Finance – As of June 30, 2012, we owed $40,650,000 in principal and $8,641,415 in accrued interest and fees payable to Global Finance AG. These amounts relate to an outstanding line of credit, notes payable, and advance fees due.  During the nine months ended June 30, 2012, we recorded interest expense in the amount of $2,591,316 related to the various instruments.





Marketable Securities - As of June 30, 2012, we have recorded restricted marketable securities totaling $nil on our consolidated condensed balance sheet. These securities were received from a related party, Falcon. In October 2011, we transferred 800,000 shares of our Falcon stock to Global Finance in consideration for the forgiveness of certain amounts previously accrued as interest. In connection therewith we have recorded a loss of $61,455.





Palter Petroleum Ltd – Through June 30, 2012, we received $300,000 in cash from Paltar Petroleum Ltd (“Paltar”) as partial consideration of an option to purchase a 50% interest in our permit applications in the Beetaloo Basin in Australia. Paltar is controlled by Marc Bruner, a significant shareholder of the Company.





Note 8 — Other Accrued Liabilities





During the nine months ended June 30, 2012, we continued to accrue interest related to amounts owed to Clear Creek Energy Services (“CCES”) as discussed in the audited annual consolidated financial statements for the year ended September 30, 2011.





Note 9 — Subsequent Events





The Company has evaluatedsubsequent events through the date the financial statements were issued. There were no items which would have materially impacted the Company’s condensed consolidated financial statements.

























11





ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The following discussion and analysis should be read in conjunction with the accompanying financial statements and related notes included elsewhere in this report. It contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements.





Factors that could cause or contribute to such differences include, but are not limited to, market prices for natural gas and oil, economic and competitive conditions, capital expenditures and other uncertainties, as well as those factors discussed below, all of which are difficult to predict and which expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not have any intention or obligation to update forward-looking statements included in this report after the date of this report, except as required by law.





Executive Summary





We are an oil and gas exploration company, and we currently own oil and gas leasehold interests either directly or through an equity investment in Australia (Beetaloo Basin) and in Western Colorado (Piceance Basin).  We are incorporated in the State of Maryland.





Results of Operations





The financial information with respect to the nine months ended June 30, 2012 and 2011 that is discussed below is unaudited. In the opinion of management, such information contains all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for such periods.  The results of operations for interim periods are not necessarily indicative of the results of operations for the full fiscal years.





Company Overview for the three and nine months ended June 30, 2012





Our net losses for the three and nine months ended June 30, 2012 were $1,671,888 and $4,976,700, respectively. We had no revenues and continue to incur general and administrative and interest expense.  During the three and nine months ended June 30, 2011, we incurred net losses of $1,370,351 and $4,051,806, respectively.





Comparison of the results of operations for the three and nine months ended June 30, 2012 and 2011





Costs and Expenses





General and Administrative.During the three and nine months ended June 30, 2012, general and administrative expenses amounted to $268,451 and $969,599, respectively, as compared to $330,383 and $955,865, respectively, in the corresponding 2011 periods. Year-to-date general and administrative expenses in 2012 relate primarily to share based compensation, salary accruals, insurance expense, as well as legal and accounting fees.





Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion expenses (“DD&A”) were $710 and $1,808, respectively, for the three and nine months ended 2012 as compared to $308 and $924 in the corresponding 2011 periods. Slight increases in DDA for the current fiscal period resulted from the depreciation of our property and equipment balances.





Interest Expense. During the three and nine months ended June 30, 2012, interest expenses were $1,363,095 and $3,877,740, respectively, as compared to $1,040,138 and $3,101,181, respectively, in the corresponding 2011 periods.  The increase in interest expense relates primarily to interest charges incurred in connection with our liability accrued to settle amounts owed to CCES.





12


Other Operating Expense.During the three and nine months ended June 30, 2012, we incurred $nil and $106,315, respectively, in other operating expenses related to accrued liabilities recorded in connection with three of our wellbores in the Buckskin Mesa having failed mechanical integrity tests. We do not consider this expense to be related to asset retirement obligation liabilities recorded elsewhere herein. We incurred no other operating expense during 2012 and the corresponding 2011 periods.





Going Concern





The report of our independent registered public accounting firm on the financial statements for the year ended September 30, 2011 includes an explanatory paragraph relating to the significant doubt about our ability to continue as a going concern. We have an accumulated deficit of $297,964,291 and our current liabilities exceeded our current assets by $16,874,603 as of June 30, 2012. We require significant additional funding to sustain our operations and satisfy our contractual obligations for our planned development operations. We are in default on certain other obligations. Our ability to establish the Company as a going concern is dependent upon our ability to obtain additional funding in order to finance our planned operations.





Plan of Operation





For the remainder of fiscal 2012, we will focus on pursuing our applications for exploration permits in Australia, as well as pursuing opportunities related to these permits in the Beetaloo Basin. We will continue to pursue opportunities to realize some type of return in our Buckskin Mesa wellbores. We will continue to reduce operating costs and attempt to reduce/renegotiate our debt, accounts payable and other liabilities.





Liquidity and Capital Resources





During our most recent quarter ended June 30, 2012, our cash flows from operations were not sufficient for us to meet our operating commitments.  Our cash flows from operations continue to be, and are expected to continue to be, insufficient to meet our operating commitments throughout the remainder of the fiscal year ending September 30, 2012.





Working Capital.As of June 30, 2012, we had a working capital deficit of $16,874,603 and unrestricted cash of $88,786, while at September 30, 2011 we had a working capital deficit of $14,561,719 and cash of $65,759. The decreases in working capital are primarily attributable to the fact that we have no revenues from operations and continue to incur expenses. We do not expect our working capital deficit to decrease or cash balance to increase in the near future.





Cash Flow.Net cash used in or provided by operating, investing and financing activities for the nine months ended June 30, 2012 and 2011 were as follows:





Nine months Ended

June 30,2012

2011Net cash (used in) operating activities
$(673,610)

$(841,192)Net cash provided by investing activities
$696,637

$874,376





Net Cash Used in Operating Activities.The changes in net cash used in operating activities are attributable to our net income adjusted for non-cash charges as presented in the consolidated statements of cash flows and changes in working capital as discussed above.





Net Cash Provided by Investing Activities.Net cash provided by investing activities for the nine months ended June 30, 2012 was $696,637 as compared to $874,376 for the nine months ended June 30, 2011. Decreases relate to the sale of fewer shares of our remaining marketable securities at lower prices during the 2012 period. Also included in net cash provided by investing activities for the nine months ended June 30, 2012 are amounts related to refunds received in connection with GST taxes related to the sale of oil and gas properties in April 2010.





13


Net Cash Provided by Financing Activities.  We received no cash from financing activities for the nine months ended June 30, 2012 and 2011.





Off-Balance Sheet Arrangements





We do not have off-balance sheet arrangements.





Critical Accounting Policies and Estimates





Our consolidated financial statements have been prepared by management in accordance with U.S. GAAP. We refer you to the corresponding section in Part II Item 7 and the notes to the consolidated financial statements of our Annual Report on Form 10K for the year ended September 30, 2011 for the description of critical accounting policies and estimates.





Recently Issued Accounting Pronouncements





The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified any that would have a material impact on the Company’s financial position or statements.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Foreign Currency Exchange Rate Risk





We hold equity investments in and conduct business in Australia and are subject to exchange rate risk on cash flows related to sales, expenses, financing and investment transactions. We do not currently utilize hedging contracts to protect against exchange rate risk. If our or our investee’s oil and gas operations grow, we may utilize currency exchange contracts, commodity forwards, swaps or futures contracts to manage our exposure to foreign currency exchange rate risks.





Interest Rate Risk





Interest rates on future debt offerings could be higher than current levels, causing our financing costs to increase accordingly. This could limit our ability to raise funds in debt capital markets.




ITEM 4. CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures




An evaluation was performed under the supervision and with the participation of the Company’s management, including Martin B. Oring, the Company’s President and Chief Executive Officer (“CEO”), and Paul D. Maniscalco the Company’s Principal Accounting Officer (“PAO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities and Exchange Act of 1934 as of June 30, 2012. Based on this evaluation, the Company’s CEO and PAO concluded that the Company’s disclosure controls and procedures were effective such that the material information required to be included in the Company’s SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to the Company, including its consolidated subsidiaries, and the information required to be disclosed was accumulated and communicated to management as appropriate to allow timely decisions for disclosure.




Changes in Internal Control over Financial Reporting





There have been no significant changes in our internal control over financial reporting during the nine months ended June 30, 2012 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




14




PART II. OTHER INFORMATION








ITEM 1.                      LEGAL PROCEEDINGS





As of June 30, 2012, the Company is not a party to any legal or administrative actions or proceedings.





ITEM 1A.                   RISK FACTORS





Not required for smaller reporting companies.





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





None.





ITEM 3.                      DEFAULTS UPON SENIOR SECURITIES





None.





ITEM 4.                      MINE SAFETY DISCLOSURES





Not applicable





ITEM 5.                      OTHER INFORMATION





None.





ITEM 6.                      EXHIBITS





See Exhibit Index





15


SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.








PETROHUNTER ENERGY CORPORATION





By:  /s/ Martin B. Oring


Martin B. Oring


Chief Executive Officer





Date: August14, 2012





By:  /s/ Paul D. Maniscalco


Paul D. Maniscalco


Principal Accounting Officer





Date: August 14, 2012


16





EXHIBIT INDEX





Regulation

S-K Number
Exhibit31.1
Rule 13a-14(a) Certification of Martin B. Oring32.1
Certification of Martin B. Oring Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002101*
Financial statements from the Quarterly Report on Form 10-Q of PetroHunter Energy Corporation for the quarterly period ended June 30, 2012, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Cash Flows; and (iv) the Notes to Financial Statements (to be filed by amendment)




*In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement of other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.