UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009

¨ 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 000-52565

BALD EAGLE ENERGY INC.
(Exact name of registrant as specified in its charter)

NEVADA
72-1619354
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

21 Waterway Avenue, Suite 300
The Woodlands, Texas 77380
(Address of principal executive offices)

(281) 362-2821
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant 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 Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨   No x The registrant has not been phased into the Interactive Data reporting system.
 
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   o
     
Non-accelerated filer   o
(Do not check if a smaller reporting company)
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 ¨ No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of August 19, 2009, the issuer had 84,826,934   shares of common stock outstanding.
 
 
 
 
 
TABLE OF CONTENTS

 
Page
   
PART I – FINANCIAL INFORMATION
 
   
Item 1.   Financial Statements
 
   
Balance Sheets as of June 30, 2009 (unaudited) and September 30, 2008
1
   
Statements of Operations for the three and nine months ended June 30, 2009 and 2008, and for the period from inception through June 30, 2009 (unaudited)
2
   
Statements of Cash Flows for the nine months ended June 30, 2009 and 2008, and for the period from inception through June 30, 2009 (unaudited)
3
   
Notes to the Financial Statements (Unaudited)
4
   
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations
8
   
Item 3.   Quantitative and Qualitative Disclosures About Market Risks
16
   
Item 4.   Controls and Procedures
16
   
PART II – OTHER INFORMATION
 
   
Item 1.   Legal Proceedings
17
   
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
17
   
Item 3.   Defaults Upon Senior Securities
17
   
Item 4.   Submission of Matters to a Vote of Security Holders
17
   
Item 5.   Other Information
17
   
Item 6.   Exhibits
18
   
SIGNATURES
19
 
 
i
 
 
PART I - FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS.
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
BALANCE SHEETS
 
   
(Unaudited)
June 30, 2009
   
September 30, 2008
 
ASSETS
           
Current
           
Cash
 
$
13,514
   
$
47,170
 
Prepaid
   
12,138
     
-
 
Total current assets
   
25,652
     
47,170
 
Oil & gas rights
   
621,608
     
621,608
 
Total Assets
 
$
647,260
   
$
668,778
 
                 
LIABILITIES
               
Current
               
Accounts payable and accrued liabilities
 
$
284,264
   
$
244,021
 
Loan payable – related party
   
-
     
5,784
 
Total current liabilities
   
284,264
     
249,805
 
                 
Total Liabilities
   
284,264
     
249,805
 
                 
Commitments
               
                 
STOCKHOLDER'S EQUITY
               
Capital Stock
               
Authorized:
               
400,000,000 common voting stock, $0.001 par value
               
100,000,000 preferred stock, $0.001 par value, none issued
               
Issued and outstanding:
               
79,326,934  and  71,898,600   common shares, respectively
   
79,327
     
71,899
 
Additional paid-in-capital
   
1,552,344
     
1,059,772
 
Deficit accumulated during the exploration stage
   
(1,268,675
)
   
(712,698
)
                 
Total Stockholders' Equity
   
362,996
     
418,973
 
                 
Total Liabilities and Stockholders' Equity
 
$
647,260
   
$
668,778
 
 
The accompanying notes are an integral part of these financial statements.
 
 
1
 
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS

For the three and nine months ended June 30, 2009 and 2008, and for the period
October 12, 2005 (Inception) to June 30, 2009
(Unaudited)

   
Three months
ended
June 30, 2009
   
Three months
ended
June 30, 2008
   
Nine months
ended
June 30, 2009
   
Nine months
ended
June 30, 2008
   
October 12, 2005
(Inception) to
June 30, 2009
 
Expenses
                             
General and administrative
 
$
96,778
   
$
55,306
   
$
555,977
   
$
93,604
   
$
1,251,476
 
Mineral property acquisition and exploration costs
   
-
     
-
     
-
     
-
     
17,199
 
Net loss for the period
 
$
(96,778
)
 
$
(55,306
) 
 
$
(555,977
)
 
$
(93,604
) 
 
$
(1,268,675
)
                                         
Basic loss per share
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.01
)
 
$
(0.00
)
       
                                         
Weighted average number of common shares outstanding
   
76,872,271
     
71,101,933
     
74,234,215
     
70,813,044
         
 
The accompanying notes are an integral part of these financial statements.
 
 
2
 
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
 
For the nine months ended June 30, 2009 and 2008, and for the period
October 12, 2005 (Inception) to June 30, 2009
(Unaudited)
 
   
Nine months ended
June 30, 2009
   
Nine months ended
June 30, 2008
   
October 12, 2005
(Inception) to
June 30, 2009
 
                   
Operating Activities:
                 
Net loss
 
$
(555,977
)
 
$
(93,604
)
 
$
(1,268,675
)
Add: Impairment of mineral property
   
-
     
-
     
9,699
 
Change in operating assets and liabilities:
                       
Prepaid expense
   
(12,138
)
   
(1,463
)
   
(12,138
)
Accounts payable and accrued liabilities
   
40,243
     
2,192
     
284,264
 
                         
Cash used in operating activities
   
(527,872
)
   
(92,875
)
   
(986,850
)
                         
Investing Activities:
                       
Mineral property acquisition and exploration costs
   
-
     
-
     
(9,699
)
Oil & gas rights acquisitions
   
-
     
(470,000
)
   
(621,608
)
Cash used in investing activities
   
-
     
(470,000
)
   
(631,307
)
                         
Financing Activities:
                       
Proceeds from (payments on) loan payable – related party
   
(5,784
)
   
5,960
     
-
 
Proceeds from issuance of common stock for cash
   
500,000
     
550,000
     
1,631,671
 
                         
Cash provided by financing activities
   
494,216
     
555,960
     
1,631,671
 
                         
Net increase (decrease) in cash
   
(33,656
)
   
(6,915
)
   
13,514
 
                         
Cash, beginning of the period
   
47,170
     
14,504
     
-
 
                         
Cash, end of the period
 
$
13,514
   
$
7,589
   
$
13,514
 
                         
Supplemental cash disclosures
                       
Cash paid for interest
 
 $
1,555
   
 $
-
   
 $
1,555
 
Cash paid for taxes
 
 $
-
   
 $
-
   
 $
-
 

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

 
3
 

BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2009

(Unaudited)
 
Note 1
Interim Reporting and Continuance of Operations

While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the Company's September 30, 2008 annual report filed on Form 10-K on January 13, 2009.

Operating results for the three and nine-month periods ended June 30, 2009 are not necessarily indicative of the results that can be expected for the year ending September 30, 2009.

The interim financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  However, at June 30, 2009, the Company had not yet achieved profitable operations, had accumulated losses of $1,268,675 since its inception and is expected to incur further losses in the development of its business, all of which raises substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from its proposed business operations when they come due. Management has no formal plan in place to address this concern, but it intends for the Company to obtain additional funds through additional private equity financing and/or related party advances; however, there is no assurance that additional funding will be available.
 
Note 2 
Alaska North Slope leases

On April 18, 2008, the Company entered into a purchase agreement for the acquisition of exclusive oil and gas rights under certain leases in the State of Alaska. The total consideration was $621,608, which was payable in stages beginning with an initial payment on April 18, 2008. The lease assignments were  made effective as of September 29, 2008, which is when the transaction is treated as being closed; however, the assignments were not delivered to the Company until November 14, 2008.  According to the terms of the purchase agreement, the Company was assigned the rights to a 100% working interest (representing a net revenue interest of 78.33%) under six (6) separate oil and gas leases (the "North Slope Leases") located in the State of Alaska's North Slope hydrocarbon province, which include the exclusive right to drill for, extract, remove, process and dispose of oil and natural gas and associated substances.  The parcels subject to the North Slope Leases acquired by the Company constitute an aggregate total of 18,418 acres.  The initial primary term of each North Slope Lease begins on February 1, 2007, and expires on January 31, 2012, unless it is extended for production or as otherwise provided under the terms of the applicable lease. As part of the transfer, the sellers (Samuel H. Cade and Daniel K. Donkel) reserved an overriding royalty interest equal to 5% of 8/8ths, in addition to the 16.67% royalty interest reserved by the State of Alaska, which will apply to all renewals and extensions of the North Slope Leases.

 
4
 
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2009

(Unaudited)

The application for assignment of the North Slope Leases to the Company was completed and submitted to the State of Alaska Department of Natural Resources on November 14, 2008.  Our local representatives in Alaska worked closely with the State of Alaska's Department of Natural Resources (the "Alaska DNR") in order to complete all necessary steps to complete the transfers of the North Slope Leases.  On May 1, 2009, we received a letter from the Alaska DNR approving the assignments, and we subsequently recorded the North Slope Lease assignments at the Barrow Recording District.  The filing information for the assignments is as follows:

North Slope Leases
(all recording references are to Official Records of the Barrow Recording District, Alaska)

Lease ADL
 
Assignor
 
Assignee
 
 
Lease Date
 
Recording
Information
390947
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000266-0
390947
 
Daniel K. Donkel
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000267-0
390956
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000268-0
390956
 
Daniel K. Donkel
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000269-0
390987
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000270-0
390987
 
Daniel K. Donkel
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000271-0
390988
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000272-0
390988
 
Daniel K. Donkel
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000273-0
390989
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000274-0
390989
 
Daniel K. Donkel
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000275-0
390990
 
Samuel H. Cade
 
Bald Eagle Energy Inc.
 
February 1, 2007
 
2009-000276-0
390990
  
Daniel K. Donkel
  
Bald Eagle Energy Inc.
  
February 1, 2007
  
2009-000277-0

The holder of the North Slope Leases must pay annual rental to the State of Alaska in accordance with the following rental schedule:

 
•
for the first year of those leases, which began in February 2007, $1.00 per acre or fraction of an acre, which results in aggregate annual rent of $18,418;

 
•
for the second year, $1.50 per acre or fraction of an acre, which results in aggregate annual rent of $27,627;

 
•
for the third year, $2.00 per acre or fraction of an acre, which results in aggregate annual rent of $36,836;
 
 
5
 
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2009

(Unaudited)

 
•
for the fourth year, $2.50 per acre or fraction of an acre, which results in aggregate annual rent of $46,045; and

 
•
for the fifth year and following years, $3.00 per acre or fraction of an acre, which results in aggregate annual rent of $55,254.

The Company acquired the North Slope Leases during the second year of the initial term of those leases.  The prior owners had paid the first two annual payments due to the State of Alaska. During the application process, the Company paid the annual rental fees due for the third year under the North Slope Leases to the State of Alaska, which provided the Company receipts confirming those payments in the first week of February.  We are continuing our plans to raise capital to develop the North Slope Leases.  Consequently, the Company will incur significant expenses regardless of our success in exploring for oil and gas on these leases.  The State of Alaska may increase the annual rental rate as provided by law if the North Slope Leases are extended beyond the primary term.
 
Note 3 
Share Capital
 
During the nine months ended June 30, 2009, the Company issued 7,113,334 shares at prices between $0.03 and $0.25 per share, along with warrants for the purchase  of 7,113,334 shares at exercise prices between $0.07 and $0.45 per share with three year terms. The Company received cash proceeds of $450,000. The relative fair value of the warrants was $260,125.

The Company also issued 315,000 shares previously subscribed.

On June 25, 2009, the Company subscribed 2,500,000 common shares at $0.02, along with warrants for the purchase of 2,500,000 shares of common stock at an exercise price of $0.06 each, exercisable at any time and which expire June 26, 2012, to one non-affiliated non-U.S. person for total proceeds of $50,000. The shares were issued subsequent to June 30, 2009. The relative fair value of the warrants was $28,808.

There were 11,758,334 warrants outstanding and exercisable as of June 30, 2009. These warrants had exercise prices ranging from $0.06 to $1.00 per share, and an average remaining life of approximately 2.6 years.
 
Note 4 
Contractual Obligations
 
Rental of the Company's offices in The Woodlands, Texas is $1,500 per month pursuant to a Services Agreement, which expires October 31, 2009. The Company rents a virtual office at 2911 Turtle Creek Boulevard, Suite 300, Dallas, Texas, on a month-to-month basis pursuant to an Office and Services Agreement that expired March 31, 2009, at a cost of approximately $238 per month.
 
 
6
 
 
BALD EAGLE ENERGY INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2009

(Unaudited)

Andrew S. Harper resigned from our Board of Directors and as our President and Chief Executive Officer on March 31, 2009.  We subsequently entered into an Independent Contractor Agreement with Mr. Harper dated April 1, 2009, which provides for him to deliver executive management services to us from time to time in the role as a Chief Operating Officer of the Company.  The agreement has an initial term that ends on December 31, 2009, and it will renew for consecutive 90 day periods until it is terminated by either party with at least 30 days prior to the end of the initial or any renewal term, or upon the earlier death or disability of Mr. Harper.  In exchange for his services, Mr. Harper will be paid a monthly fee of $2,000, plus $160 per hour for each hour he works in excess of 12 hours during the calendar month, as well as reimbursement for certain expenses that he incurs on behalf of the Company.  In addition, on April 1, 2009 we agreed to pay $50,000 ($5,000 per month) to Mr. Harper as a bonus.
 
Note 5 
Subsequent events
 
On July 20, 2009, the Company accepted subscriptions for 3,000,000 common shares at $0.01, along with warrants for the purchase of 3,000,000 shares of common stock at an exercise price of $0.03 each, exercisable at any time and which expire July 20, 2012, to one non-affiliated non-U.S. person for total proceeds of $30,000.
 
 
7
 
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q 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 "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the "SEC"), particularly our periodic reports filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act").

As used in this Quarterly Report, the terms "we," "us," "our," "Bald Eagle" and "the Company" mean Bald Eagle Energy Inc. and its subsidiaries unless otherwise indicated.

OVERVIEW

Our company was incorporated under the laws of the state of Nevada on October 12, 2005 under the name "Columbus Ventures Inc."  We amended our Articles of Incorporation to change our name as of July 21, 2008 to "Bald Eagle Energy Inc." in order to more accurately reflect our current principal business activities, which are the acquisition, exploration and development of oil and natural gas properties and prospects.

On March 31, 2009, we accepted the resignation of Andrew S. Harper from our Board of Directors and as our President and Chief Executive Officer.   Alvaro Vollmers, our sole remaining director, appointed himself to serve as the President and Chief Executive Officer on an interim basis, effective immediately.  Following the termination of his employment, Mr. Harper is being paid $5,000 per month for the ten months starting in April 2009 as a bonus, in addition to any amounts paid to him under the terms of his consulting arrangement with the Company.   See Note 5 to the Interim Financial Statements.   If our future cash flow and operating performance improves, we may hire Mr. Harper again on a full-time basis.

North Slope Leases

We are an exploration stage company engaged in the acquisition, exploration and development of oil and natural gas properties and prospects.  We recently acquired the rights to a 100% working interest (representing a net revenue interest of 78.33%) on an aggregate 18,418 acres located within the State of Alaska's North Slope hydrocarbon province under six (6) separate leases referred to as the North Slope Leases.  We acquired our interest in the North Slope Leases under the terms of a purchase agreement we entered into on April 18, 2008.  We closed the purchase and sale of the North Slope Leases effective as of September 29, 2008, and after we received approval from the Alaska DNR by letter dated May 1, 2009, we recorded the lease assignment documents at the Barrow Recording District. See Note 2 to the Interim Financial Statements.

The North Slope Leases give the Company, as lessee, the exclusive right to drill for, extract, remove, process and dispose of oil and natural gas and associated substances in the geographic areas covered by those leases, subject to their terms.  The initial primary term of each North Slope Lease began on February 1, 2007, and expires on January 31, 2012, unless it is extended for production or as otherwise provided under the terms of the applicable lease.
 
The Company plans to act as a non-operator, which means the Company will not directly engage in exploration, drilling or development operations, but instead will exploit the Company's assets by seeking joint ventures with oil and natural gas companies that have exploration, development and production expertise.

 
8
 
 
We have not earned any revenues to date.  We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of oil and natural gas resources on the North Slope Leases or any other properties we may acquire, or if such deposits are discovered, that we will enter into further substantial exploration programs.

Plan of Operation

Our plan of operation for the next twelve months is to fully evaluate the exploration potential of the six North Slope Leases in the Alaska North Slope petroleum province and to plan and prepare for the first exploration field operations on those leases, which would be new seismic data acquisition during the winter season of 2010.  In addition, we plan to evaluate further new exploration opportunities in Alaska, focusing in the North Slope area.

We changed the Company's focus to oil and gas explorations and began the process of acquiring the North Slope Leases on April 18, 2008 and, due to our inability to generate a return on our investments in this effort, we have experienced losses since that time. As at June 30, 2009, we have a working capital deficit of $258,612.  During the nine months ended June 30, 2009, we completed financings in which an aggregate 9,613,334 shares and warrants for an equal number of shares were sold for proceeds of $500,000; however, we will need to raise additional funds to continue our operations and the exploration of the North Slope Leases.

We currently do not have sufficient funds to execute our plan of operation for exploring the North Slope Leases during the next twelve months and we will therefore require additional funds. We have relied principally on the issuance of common stock by private placements to raise funds to finance our business, which has diluted the value of our shares.  There is no assurance that market conditions will continue to permit us to raise funds when required.  If possible, we will issue more common stock at prices we find to be acceptable, which may further dilute the value of our common stock.

Our business model is to utilize the services of oil industry expert consultants, and we do not expect any significant increases in the number of employees in the near future.

We are an exploration stage company with limited operations and have not yet received revenues from operations, generated profitability or experienced positive cash flow from operations.  We currently have no properties with any known deposits of oil or gas.  Andrew S. Harper, our former Chief Executive Officer and President who now works for the Company as an independent contractor, has extensive experience in the oil and gas industry with specific industry experience in exploration operations and new ventures evaluation.

In addition to our activities related to the North Slope Leases, we intend to pursue other lease opportunities in the North Slope area.  If we are successful in securing additional exploration interests in Alaska leases, we will be required to pay rentals and complete work programs to maintain our interests in good standing.  There can be no certainty as to the costs of future lease acquisitions and exploration work programs; however, we will require additional funds to discharge our obligations and exploration work programs whether the interests are acquired through joint venture or through competitive lease sales.  We do not have sufficient capital to satisfy potential future exploration expenditures and we will rely principally on the issuance of common stock to raise funds to finance the expenditures that we expect to incur should we secure exploration interests.  Failure to raise additional funds will result in the failure to meet our obligations and the relinquishment of our interest in any future leases acquired.  We have relied principally on the issuance of common stock in private placements to raise funds to support our business but there can be no assurance that we will be successful in raising additional funds through the issuance of additional equity.

We do not expect any significant purchases of plants and equipment or any increase in the number of employees in the near future.

 
9
 

RISK FACTORS

If we do not obtain additional financing, our business will fail.

Our operating funds are not sufficient to meet the anticipated costs of completing our exploration program on the North Slope Leases. Therefore, we will need to obtain additional financing in order to complete our current business plan for the exploration and development of those lease interests.  As of June 30, 2009, we had cash on hand in the amount of $13,514. We have not earned any income since our inception, and our plan of operation calls for significant expenses in connection with the exploration of our oil and natural gas leases, so we have incurred significant losses.

We currently do not have any agreements for future financings and we may not be able to obtain financing when required. Our ability to obtain additional financing would be subject to a number of factors outside of our control, including the results from our exploration program, and any unanticipated problems relating to our oil and natural gas exploration activities, including environmental assessments and additional costs and expenses that may exceed our current estimates. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us, in which case our business will fail.

We anticipate that we will incur the following expenses over the next twelve months:

Category
 
Planned Expenditures Over
The Next 12 Months (US $)
 
General & Administrative
 
$
600,000
 
Geological & Geophysical
 
$
2,492,688
 
TOTAL
 
$
3,092,688
 

If our forecast regarding anticipated expenses is inaccurate, we may need to raise additional funds beyond what we have forecasted.  There can be no assurance that additional financing will be available when needed on favorable terms, or at all.

We have yet to earn revenue and our ability to sustain our operations is dependent on our ability to raise financing.  As a result, our accountants believe there is substantial doubt about our ability to continue as a going concern.

We have accrued net losses of $1,268,675   for the period from our inception on October 12, 2005 to June 30, 2009, and have no revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of oil and natural gas leases.

These factors raise substantial doubt that we will be able to continue as a going concern. LBB & Associates Ltd., LLP, Certified Public Accountants, our independent auditors, have expressed substantial doubt about our ability to continue as a going concern.  This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise.  If we fail to raise sufficient capital when needed, we will not be able to complete our business plan.  As a result we may have to liquidate our business and investors may lose their investment.  Investors should consider our auditor's comments when determining if an investment in Bald Eagle is suitable.

Our only assets consist of our rights in the North Slope Leases, and the success of our business depends solely on our ability to commercially develop our interests in the North Slope Leases.  If we lose our interests in the North Slope Leases or are unable to develop those interests to a sufficient degree, our business may fail.

Currently, our principal assets consist of our rights to the North Slope Leases, and we have allocated substantially all of our available working capital to the acquisition of those rights under the purchase agreement we entered into in April 2008.  Because we have no other source of revenues at this time, our ability to generate revenues depends entirely on our successful development of the North Slope Leases.  If we are unable to explore and develop those properties in commercial quantities, or if our interests in those leases are revoked or limited in any significant way, then our business is likely to fail. We have completed the acquisition of the North Slope Leases under the related purchase agreement, and the Alaska DNR has approved the assignment of the North Slope Leases ;  however, if the state were to revoke the transfer of the North Slope Leases or in any other manner limit the Company's ability to explore or develop those properties, then it would have a material adverse impact on the Company and the Company's stockholders could lose the value of their investment in the Company.  In addition, the Company is required to make annual rental payments in order to maintain the effectiveness of the North Slope Leases.  If the Company is unable to generate sufficient funds through operations or future investments to make those minimum rental payments, then it could lose its interest in some or all of the North Slope Leases, which could have a material adverse impact on the Company and the Company's stockholders could lose the value of their investment in the Company.
 
10
 
Because of the unique difficulties and uncertainties inherent in oil and natural gas exploration ventures, we face a high risk of business failure.

Investors should be aware of the difficulties normally encountered by new oil and natural gas exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the oil and natural gas properties that we plan to undertake.  These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.  The North Slope Leases do not contain known oil and natural gas deposits and, therefore, any program conducted on the North Slope Leases would be an exploratory search for oil and natural gas. There is no certainty that any expenditures made in the exploration of the North Slope Leases will result in discoveries of commercial quantities of oil and natural gas.  Most exploration projects do not result in the discovery of commercially producible oil and natural gas deposits.  Problems such as unusual or unexpected geological conditions or operational difficulties are common to oil and natural gas exploration activities and often result in unsuccessful exploration efforts. If the results of our exploration program do not reveal viable commercial oil and natural gas deposits, we may decide to abandon the North Slope Leases and acquire new leases for new exploration.  Our ability to acquire additional leases will be dependent upon our possessing adequate capital resources when needed.  If no funding is available, we may be forced to abandon our operations.

Geological conditions are variable and unpredictable and heighten exploration risk.

Oil and gas exploration and development involves a higher degree of risk and few properties that are explored are ultimately developed into producing properties. Even if production is commenced from a well, the production will inevitably decline and may be affected or terminated by changes in geological conditions that cannot be foreseen or remedied. A change in geological conditions may render a discovery uneconomic.

The market price for oil and natural gas is volatile and determined by factors beyond our control.  Failure to accurately forecast prices may result in financial losses.

Market prices for oil and natural gas may fluctuate widely from time to time depending on international demand, production and other factors that cannot be foreseen. A decline in price may render a discovery uneconomic resulting in unforeseen losses. If a discovery becomes uneconomic due to declining prices, funds spent to develop the discovery might not be recoverable, leading to financial losses.
 
We have no known oil and natural gas reserves and if we cannot find any, we may have to cease operations.

We have no oil and natural gas reserves. If we do not find any commercially exploitable oil and natural gas reserves or if we cannot complete the exploration of any oil and natural gas reserves, either because we do not have the money to do so or because it is not economically feasible to do so, we may have to cease operations and our investors may lose their investments. Oil and natural gas exploration is highly speculative. It involves many risks and is often non-productive. Even if we are able to find oil and natural gas reserves on the North Slope Leases, our production capability will be subject to further risks including:

 
·
the costs of bringing the property into production, including exploration work, preparation of production feasibility studies, and construction of production facilities, all of which we have not budgeted for;
 
11
 
 
·
the availability and costs of financing;

 
·
the ongoing costs of production; and

 
·
environmental compliance regulations and restraints.

The marketability of any oil and natural gas acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of adequate facilities and processing equipment near the North Slope Leases, and other factors such as government regulations, including regulations relating to allowable production, the importing and exporting of oil and natural gas, and environmental protection.

Given the above-noted risks, the chances of our finding and commercially exploiting reserves on our oil and natural gas leases are remote and funds expended on exploration are subject to the risk of being lost.

Because of the inherent dangers involved in oil and natural gas exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable oil and natural gas deposits involves numerous hazards.  As a result, we may become subject to liability for such hazards, including pollution, hydrocarbon spills and other hazards against which we cannot insure or against which we may elect not to insure.  At the present time we have no insurance to cover against these hazards.  The payment of such liabilities may result in our inability to complete our planned exploration program and/or obtain additional financing to fund our exploration program.

As we undertake exploration of our oil and natural gas leases, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.

There are several governmental regulations that materially restrict oil and natural gas exploration.  We will be subject to state and federal laws of the State of Alaska and the United States of America as we carry out our exploration program on the North Slope Leases. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. If we enter the development and production phase, the cost of complying with permit and regulatory environment laws will be greater because the impact on the project area is greater.  Permits and regulations will control all aspects of the development and production program if the project continues to that stage.

We may conduct further offerings in the future in which case investors' shareholdings will be diluted.

Since our inception, we have relied on sales of our common stock to fund our operations.  We may conduct further equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake.  If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders.  We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations.  If we issue additional stock shares, then our existing investors' percentage ownership of our common stock will be diluted. The result of this could reduce the value of current investors' stock.
 
Because our stock is a penny stock, shareholders will be more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 per share, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.  Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities.  The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them.  As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to penny stock rules.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

 
12
 
 
 
·
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

 
·
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

 
·
contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

 
·
contains a toll-free telephone number for inquiries on disciplinary actions;

 
·
defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

 
·
contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide the customer, prior to effecting any transaction in a penny stock, with: (a) bid and offer quotations for the penny stock; (b) the amount of compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a suitably written statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

 
13
 
RESULTS OF OPERATIONS

Three and Nine Months Ended June 30, 2009 and 2008

The following table presents certain items included in the Company's consolidated statements of operations for the three and nine months ended June 30, 2009 and 2008, a copy of which are included in this Quarterly Report on Form 10-Q, and the percentage change from the prior period.  All such data should be read only in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and accompanying notes:

  
 
Three Months Ended
   
Nine Months Ended
 
  
 
June 30,
2009
   
June 30,
2008
   
Percentage
Increase /
Decrease
   
June 30,
2009
   
June 30,
2008
   
Percentage
Increase /
Decrease
 
Expenses
 
$
(96,778
)
 
$
(55,306
)
   
75
%
 
$
(555,977
)
 
$
(93,604
)
   
494
%
                                                 
Net Loss
 
$
(96,778
)
 
$
(55,306
)
   
75
%
 
$
(555,977
)
 
$
(93,604
)
   
494
%

Revenues

We have not earned any revenues to date. We do not anticipate earning revenues from our oil and gas exploration activities in the near future.

Operating Expenses

Our operating expenses for the relevant periods consisted of the following:

  
 
Three Months Ended
   
Nine Months Ended
 
  
 
June 30,
2009
   
June 30,
2008
   
Percentage
Increase /
   Decrease
   
June 30,
2009
   
June 30,
2008
   
Percentage
Increase /
Decrease
 
General & Administrative
 
$
96,778
   
$
55,306
     
75
%
 
$
555,977
   
$
93,604
     
494
%
                                                 
Total Operating Expenses
 
$
96,778
   
$
55,306
     
75
%
 
$
555,977
   
$
93,604
     
494
%

We anticipate our operating expenses will increase as we undertake our exploration program for the North Slope Leases.  We anticipate our accounting and legal expenses will also increase as a result of our ongoing reporting requirements under the Exchange Act.

 
14
 
 
LIQUIDITY AND CAPITAL RESOURCES

Working Capital
                 
  
 
June 30, 2009
   
September 30, 2008
   
Percentage
Increase / (Decrease)
 
Current Assets
 
$
25,652
   
$
47,170
     
-46
%
Current Liabilities
   
(284,264
)
   
(249,805
)
   
14
%
Working Capital (Deficit)
 
$
(258,612
)
 
$
(202,635
)
   
28
%

Cash Flows
 
Nine Months Ended
 
  
 
June 30, 2009
   
June 30, 2008
 
Cash Flows Used In Operating Activities
 
$
(527,872
)
 
$
(92,875
)
Cash Flows Used in Investing Activities
   
-
     
(470,000
)
Cash Flows Provided By Financing Activities
   
494,216
     
555,960
 
Net Increase (Decrease) In Cash During Period
 
$
(33,656
)
 
$
6,915
 

The decrease in our working capital at June 30, 2009 from September 30, 2008, and the increase in our cash used during the three months ended June 30, 2009, from the comparable period ended June 30, 2008 are primarily attributable to: (i) consulting expenses associated with the preliminary work related to our development of the North Slope Leases, as well as increased requirements of legal, accounting and investor relations services; and (ii) from the fact that we had no revenue during the three months ended June 30, 2009.

During the nine months ended June 30, 2009, our sole source of cash flow came in the form of private placements of the Company's shares in the amount of $500,000.

The Company received certain marketing services from a media marketing consulting agency as part of the development of the Company's initial marketing campaign. The amount was accrued for as of December 31, 2008, at which time the Company owed approximately $169,000 to the vendor. The Company and the vendor previously agreed that the Company would pay the vendor $10,000 on January 16, 2009, and $22,714 on each of February 10, March 10, April 10, May 10, June 10, July 10 and August 10, 2009, as payment of all amounts due.  However, the Company has not fully complied with those agreed-upon payment terms. As of August 19, 2009, the Company still owes this vendor $70,858.
 
Future Financings

As of the date of this Quarterly Report, we had cash on hand in the amount of $13,514.  We will require additional financing to sustain our business operations if we are not successful in exploring and developing our leased properties and earning revenues.  We currently do not have any arrangements for financing and we may not be able to obtain financing when required.  Obtaining additional financing would be subject to a number of factors, including the various items referenced in "Risk Factors" above.  These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

There are no assurances that we will be able to obtain sufficient financing if and when required.
 
OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

15
 
CRITICAL ACCOUNTING POLICIES

The financial statements presented with this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information.  These financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles.  In the opinion of our management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at June 30, 2009 and for all periods presented in the attached financial statements, have been included.  Interim results for the three month period ended June 30, 2009 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.

Our significant accounting policies are disclosed in the notes to our audited financial statements for the year ended September 30, 2008 included in our Annual Report on Form 10-K filed with the SEC on January 13, 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.  Based on that evaluation, our principal executive officer and principal financial officer have concluded that these disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
16
 

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

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

On April 06, 2009 we accepted subscriptions for a private placement to one investor of 1,400,000 units at a price of $0.05 per unit for total proceeds of $70,000.  Each unit is comprised of one share of our common stock and one share purchase warrant.  Each share purchase warrant will entitle the holder to purchase one additional share of our common stock at a price of $0.08 per share for a period ending April 06, 2012.  This private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  We did not engage in a distribution of this offering in the United States.  The investor represented that it was not a US person as defined in Regulation S, and has provided representations indicating that it was acquiring our securities for investment purposes only and not with a view towards distribution.

On April 29, 2009, we accepted subscriptions for a private placement to one investor of 1,666,667 units at a price of $0.03 per unit for total proceeds of $50,000.  Each unit is comprised of one share of our common stock and one share purchase warrant.  Each share purchase warrant will entitle the holder to purchase one additional share of our common stock at a price of $0.07 per share for a period ending April 29, 2012.  This private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act.  We did not engage in a distribution of this offering in the United States.  The investor represented that it was not a US person as defined in Regulation S, and has provided representations indicating that it was acquiring our securities for investment purposes only and not with a view towards distribution.

On June 25, 2009, we accepted subscriptions for a private placement to one investor of 2,500,000 units at a price of $0.02 per unit for total proceeds of $50,000.  Each unit is comprised of one share of our common stock and one share purchase warrant.  Each share purchase warrant will entitle the holder to purchase one additional share of our common stock at a price of $0.06 per share for a period ending June 25, 2012.  This private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act.  We did not engage in a distribution of this offering in the United States.  The investor represented that it was not a US person as defined in Regulation S, and has provided representations indicating that it was acquiring our securities for investment purposes only and not with a view towards distribution.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

 
17
 
 
ITEM 6. EXHIBITS.
 
Exhibit Number
 
Description of Exhibits
     
3.1
 
Articles of Incorporation. (1)
     
3.2
 
Bylaws, as amended. (1)
     
10.1
 
Independent Contractor Agreement, dated as of April 1, 2009 between the Registrant and Andrew S. Harper. (2)
     
31.1
 
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
(1)
 
Previously filed as an exhibit to our Registration Statement on Form SB-2, as filed with the Securities and Exchange Commission on November 21, 2006.
     
(2)
 
Previously filed as an exhibit to our Form 10-Q, as filed with the Securities and Exchange Commission on May 20, 2009.
     

 
18
 

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.

 
BALD EAGLE ENERGY INC.
   
Date: August 19, 2009
By: 
/s/ Alvaro Vollmers
 
ALVARO VOLLMERS
 
Chief Executive Officer, President, Chief Financial
Officer, Secretary and Treasurer
 
Director
 
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)

 
19
 
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