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

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2009

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

For the transition period from __________ to _________

Commission file Number 333-106299

ODYSSEY OIL AND ENERGY, INC

(Exact name of small business issuer as specified in its charter)

ODYSSEY OIL AND GAS, INC.
(Former Name of Registrant)
 
FLORIDA
 
65-1139235
(State or other jurisdiction of incorporation
 
(IRS Employer Identification No.)
or organization)
   

18 George Avenue
Rivonia, 2128 South Africa
Address of Principal Executive Offices

+27 (11) 807-1446

(Issuer's telephone number)

Check whether the issuer: (1) filed all documents reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act 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 Regulation 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

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. (Check one):
 
Large accelerated filer ¨
 Accelerated filer   ¨
   
Non-accelerated filer (Do not check if a smaller reporting company)   ¨
 
Smaller reporting company  x

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

The number of shares of the registrant's common stock, par value $0.0001 per share, outstanding as of August 20, 2009 was 292,566,500 shares
 

 
PART I. FINANCIAL INFORMATION
 
  4
Item 1. Consolidated Condensed Financial Statements and Notes - Quarter Ended June 30, 2009
 
  4
Item 2. Management's Discussion and Analysis or Plan of Operation
 
  5
Item 3. Controls and Procedures  
 
  9
PART II. OTHER INFORMATION
   
Item 1. Legal Proceedings  
 
  10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  
 
  10
Item 3. Default Upon Senior Securities  
 
  10
Item 4. Submission of Matters to a Vote of Security Holders  
 
  10
Item 5. Other Information  
 
  10
Item 6. Exhibits and Reports on Form 8-K  
 
  10
Signatures  
 
  11
 
2

 
FORWARD LOOKING STATEMENT

Certain statements contained in this discussion and analysis or incorporated herein by reference that are not related to historical results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Statements that are predictive, that depend upon or refer to future events or conditions, and/or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "hopes," and similar expressions constitute forward-looking statements. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), business strategies or prospects, or possible future actions by us are also forward-looking statements.

These forward-looking statements are based on beliefs of our management as well as current expectations, projections, assumptions and information currently available to the Company and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated or implied by such forward-looking statements.  Should one or more of those risks or uncertainties materialize or should underlying expectations, projections and assumptions prove incorrect, actual results may vary materially from those described.  Those events and uncertainties are difficult to predict accurately and many are beyond our control. We assume no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of these statements except as specifically required by law. Accordingly, past results and trends should not be used to anticipate future results or trends.

3

 
Item 1. Financial Statements

Unaudited financial statements as of the quarter ended June 30, 2009 are submitted in compliance with Rule 210.8-03 of Regulation S-X.
 
ODYSSEY OIL & ENERGY, INC.  & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)

CONTENTS

PAGE
 
F-1
 
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008
         
PAGE
 
F-2
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 AND FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED)
         
PAGES
 
F-3 – F-5
 
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED)
         
PAGES
 
F-6 – F-7
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 AND FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE  30, 2009 (UNAUDITED)
         
PAGES
  
F-8 - F-18
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 
4

 

ODYSSEY OIL & ENERGY, INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS

   
As of
   
As of
 
   
June 30,
   
December 31,
 
   
2009
   
2008
 
   
(Unaudited)
       
ASSETS
           
             
CURRENT ASSETS
           
Cash
  $ 35,542     $ 1,196  
Total Current Assets
    35,542       1,196  
                 
Property & equipment, net
    1,000       1,000  
Patent costs, net
    82,872       -  
TOTAL ASSETS
  $ 119,414     $ 2,196  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 49,657     $ 77,060  
Loans payable and accrued interest - related parties
    539,857       312,209  
Liabilities held for sale - discontinued operations
    255,387       253,434  
Total Liabilities
    844,901       642,703  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' DEFICIT
               
Attributable to Odyssey Oil & Energy, Inc.:
               
Preferred stock, $.0001 par value, 20,000,000 shares authorized, none issued and outstanding
    -       -  
Common stock, $.0001 par value, 650,000,000 shares authorized, 292,565,500 and 143,742,500 shares issued and outstanding, respectively
    29,256       14,375  
Additional paid-in capital
    82,090,549       26,786,251  
Accumulated deficit during development stage
    (81,706,743 )     (27,127,703 )
Accumulated other comprehensive income
    2,004       3,434  
Total
    415,066       (323,643 )
Non-controlling interest
    (1,140,553 )     (316,864 )
Total Stockholders' Deficit
    (725,487 )     (640,507 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 119,414     $ 2,196  

See accompanying notes to condensed consolidated financial statements.
 
F-1

 
ODYSSEY OIL & ENERGY, INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

                           
For the
 
                           
Period From
 
   
For the Three
   
For the Three
   
For the Six
   
For the Six
   
May 28,2003
 
   
Months Ended
   
Months Ended
   
Months Ended
   
Months Ended
   
(Inception)
 
   
June 30, 2009
   
June 30, 2008
   
June 30, 2009
   
June 30, 2008
   
to June 30, 2009
 
                               
REVENUE
  $ -     $ -     $ -     $ -     $ 26,695  
                                         
OPERATING EXPENSES
                                       
Drilling costs and expenses
    -       -       -       -       51,886  
General and administrative
    2,486,460       14,962       2,502,818       20,529       2,437,870  
Professional fees
    (5,548 )     5,610       7,061       19,199       142,991  
Amortization
    -       -       -       -       33,400  
Impairment of investment in oil and gas leases
    -       -       -       -       247,931  
Impairment of bio-fuels plant development contract
    15,000,000       21,717,235       15,000,000       21,717,235       36,717,235  
Impairment of Hybrid Battery Technology license
    37,878,422       -       37,878,422       -       37,878,422  
Total Operating Expenses
    55,359,334       21,737,807       55,388,301       21,756,963       77,509,735  
                                         
LOSS FROM CONTINUING OPERATIONS
    (55,359,334 )     (21,737,807 )     (55,388,301 )     (21,756,963 )     (77,483,040 )
                                         
OTHER INCOME (EXPENSE)
                                       
Interest income
    -       -       1       -       2,794  
Interest expense
    (6,876 )     (5,211 )     (13,207 )     (10,049 )     (58,544 )
Total Other Income (Expense)
    (6,876 )     (5,211 )     (13,206 )     (10,049 )     (55,750 )
                                         
LOSS FROM CONTINUING OPERATIONS BEFORE
                                       
INCOME TAXES
    (55,366,210 )     (21,743,018 )     (55,401,507 )     (21,767,012 )     (77,538,790 )
                                         
Provision for Income Taxes
    -       -       -       -       -  
                                         
LOSS FROM CONTINUING OPERATIONS
    (55,366,210 )     (21,743,018 )     (55,401,507 )     (21,767,012 )     (77,538,790 )
                                         
LOSS FROM DISCONTINUED OPERATIONS
    -       (92,308 )     (504 )     (185,983 )     (8,736,516 )
                                         
NET LOSS
    (55,366,210 )     (21,835,326 )     (55,402,011 )     (21,952,995 )     (86,275,306 )
                                         
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING
                                       
INTEREST
    822,971       -       822,971       -       822,971  
                                         
NET LOSS ATTRIBUTABLE TO ODYSSEY OIL & ENERGY
    (54,543,239 )     (21,835,326 )     (54,579,040 )     (21,952,995 )     (85,452,335 )
                                         
OTHER COMPREHENSIVE INCOME
                                       
Foreign currency translation gain (loss)
    (1,962 )     (89 )     (1,430 )     49       2,004  
                                         
COMPREHENSIVE LOSS
  $ (54,545,201 )   $ (21,835,415 )   $ (54,580,470 )   $ (21,952,946 )   $ (85,450,331 )
                                         
LOSS PER COMMON SHARE - BASIC AND DILUTED
                                       
Continuing operations
  $ (0.25 )   $ (0.19 )   $ (0.30 )   $ (0.22 )        
Discontinued operations
    -       -       -       -          
                                         
Weighted average number of shares outstanding during the period - Basic and Diluted
    216,599,071       114,127,115       180,372,047       100,204,615          

See accompanying notes to condensed consolidated financial statements.

 
F-2

 

ODYSSEY OIL & ENERGY, INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE 30, 2009
(UNAUDITED)

 
                               
Accumulated
   
Accumulated
             
                           
Additional
   
Deficit During
   
Other
   
Deferred
       
   
Preferred Stock
   
Common Stock
   
Paid-In
   
Development
   
Comprehensive
   
Stock
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Income
   
Compensation
   
Total
 
Common stock issued to founders for cash ($.03 per share)
    -     $ -       7,500     $ 1     $ 249     $ -     $ -     $ -     $ 250  
                                                                         
Common stock issued for license ($.03 per share
    -       -       49,500,000       4,950       1,645,050       -       -       -       1,650,000  
                                                                         
Common stock issued to officer as compensation ($.03 per share)
    -       -       21,375,000       2,138       710,362       -       -       -       712,500  
                                                                         
Common stock issued for cash ($.03 per share)
    -       -       2,400,000       240       79,760       -       -       -       80,000  
                                                                         
Common stock issued for cash ($.15 per share)
    -       -       833,334       83       124,917       -       -       -       125,000  
                              -                                       -  
Common stock issued to consultant for services ($.03 per share)
    -       -       24,600,000       2,460       817,540       -       -       -       820,000  
                                                                         
Net loss for the period from May 28, 2003 (inception) to December 31, 2003
    -       -       -       -       -       (1,737,805 )     -       -       (1,737,805 )
                                                                         
Balance, December 31, 2003
    -       -       98,715,834       9,872       3,377,878       (1,737,805 )     -       -       1,649,945  
                                                                         
Common stock issued for cash ($.15 per share)
    -       -       2,016,693       202       302,301       -       -       -       302,503  
                                                                         
Net loss, 2004
    -       -       -       -       -       (551,203 )     -       -       (551,203 )
                                                                         
Balance, December 31, 2004
    -       -       100,732,527       10,074       3,680,179       (2,289,008 )     -       -       1,401,245  
                                                                         
Common stock issued in reverse merger
    -       -       33,292,500       3,329       (3,329 )     -       -       -       -  
                                                                         
Common stock issued to consultant for services ($.01 per share)
    -       -       15,000,000       1,500       148,500       -       -       -       150,000  
                                                                         
Common stock cancelled related to license rights ($.01 per share)
    -       -       (49,500,000 )     (4,950 )     (490,050 )     -       -       -       (495,000 )
                                                                         
In-kind contribution
    -       -       -       -       12,000       -       -       -       12,000  
                                                                         
Warrants issued for non-exclusive license
    -       -       -       -       143,238       -       -       -       143,238  
                                                                         
Net loss, 2005
    -       -       -       -       -       (1,696,989 )     -       -       (1,696,989 )
                                                                         
Balance, December 31, 2005
    -       -       99,525,027       9,953       3,490,538       (3,985,997 )     -       -       (485,506 )

See accompanying notes to condensed consolidated financial statements.

 
F-3

 

ODYSSEY OIL & ENERGY, INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE 30, 2009 (CONTINUED)
(UNAUDITED)

                                 
Accumulated
   
Accumulated
             
                           
Additional
   
Deficit During
   
Other
   
Deferred
       
   
Preferred Stock
   
Common Stock
   
Paid-In
   
Development
   
Comprehensive
   
Stock
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Income
   
Compensation
   
Total
 
                                                       
In-kind contribution
    -       -       -       -       12,000       -       -       -       12,000  
                                                                         
Common stock cancelled in connection with exchange of ownership in CardioBioMedical Corporation to its original stockholders
    -       -       (66,232,527 )     (6,623 )     (3,211,742 )     3,745,592       -       -       527,227  
                                                                         
Common stock issued to purchase investment  in oil and gas leases ($.003 per share)
    -       -       60,000,000       6,000       159,000       -       -       -       165,000  
                                                                         
Net loss, 2006
    -       -       -       -       -       (140,836 )     -       -       (140,836 )
                                                                         
Balance, December 31, 2006
    -       -       93,292,500       9,330       449,796       (381,241 )     -       -       77,885  
                                                                         
In-kind contribution
    -       -       -       -       12,000       -       -       -       12,000  
                                                                         
Common shares issued to acquire 100% of  outstanding common shares of Uranium Acquisition Corp., Inc.
    -       -       15,000,000       1,500       4,248,500       -       -       -       4,250,000  
                                                                         
Net loss, 2007
    -       -       -       -       -       (4,635,418 )     -       -       (4,635,418 )
                                                                         
Balance, December 31, 2007
    -       -       108,292,500       10,830       4,710,296       (5,016,659 )     -       -       (295,533 )
                                                                         
In-kind contribution
    -       -       -       -       12,000       -       -       -       12,000  
                                                                         
Common stock issued to consultant for services  ($.82 per share)
    -       -       450,000       45       367,455       -       -       -       367,500  
                                                                         
Common shares issued to acquire 100% of  outstanding common shares of ALG Bio Oils Ltd.
    -       -       35,000,000       3,500       21,696,500       -       -       -       21,700,000  
                                                                         
Other comprehensive income
    -       -       -       -       -       -       3,434       -       3,434  
                                                                         
Net loss, 2008
    -       -       -       -       -       (22,111,044 )     -       -       (22,111,044 )
                                                                         
Balance, December 31, 2008
    -       -       143,742,500       14,375       26,786,251       (27,127,703 )     3,434       -       (323,643 )

See accompanying notes to condensed consolidated financial statements.

 
F-4

 

ODYSSEY OIL & ENERGY, INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM MAY 28, 2003 (INCEPTION) TO JUNE 30, 2009 (CONTINUED)
(UNAUDITED)

                                 
Accumulated
   
Accumulated
             
                           
Additional
   
Deficit During
   
Other
   
Deferred
       
   
Preferred Stock
   
Common Stock
   
Paid-In
   
Development
   
Comprehensive
   
Stock
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Income
   
Compensation
   
Total
 
                                                       
In-kind contribution
    -       -       -       -       6,000       -       -       -       6,000  
                                                                         
Additional common shares issued in connection with acquisition of ALG Bio Oils Ltd. ($.20 per share)
    -       -       75,000,000       7,500       14,992,500       -       -       -       15,000,000  
                                                                         
Common shares issued to acquire 51% of  outstanding common shares of H-Power (Pty) Ltd. ($.58 per share)
    -       -       65,000,000       6,500       37,693,500       -       -       -       37,700,000  
                                                                         
Common stock issued to consultant of ALG Bio Oils Ltd. for services ($.58 per share)
    -       -       1,356,500       135       786,635       -       -       -       786,770  
                                                                         
Common stock issued to consultant of H-Power (Pty) Ltd. for services ($.27 per share)
    -       -       6,200,000       620       1,673,380       -       -       -       1,674,000  
                                                                         
Common stock issued for cash ($.12 per share)
    -       -       1,266,500       126       152,283       -       -       -       152,409  
                                                                         
Other comprehensive income
    -       -       -       -       -       -       (1,430 )     -       (1,430 )
                                                                         
Net loss, six months ended June 30, 2009
    -       -       -       -       -       (54,579,040 )     -       -       (54,579,040 )
                                                                         
Balance, June 30, 2009
    -     $ -       292,565,500     $ 29,256     $ 82,090,549     $ (81,706,743 )   $ 2,004     $ -     $ 415,066  

See accompanying notes to condensed consolidated financial statements.

 
F-5

 

ODYSSEY OIL & ENERGY,  INC. & SUBSIDIARIES
(F/K/A ODYSSEY OIL & GAS, INC. & SUBSIDIARIES)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

               
For the
 
               
Period From
 
   
For the Six
   
For the Six
   
May 28,2003
 
   
Months Ended
   
Months Ended
   
(Inception)
 
   
June 30, 2009
   
June 30, 2008
   
to June 30, 2009
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Loss from continuing operations
  $ (54,578,536 )   $ (21,952,995 )   $ (76,715,819 )
Loss from discontinued operations
    (504 )     -       (8,736,516 )
Net loss
    (54,579,040 )     (21,952,995 )     (85,452,335 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
In-kind contributions
    6,000       6,000       39,000  
Stock issued for services
    2,460,770       183,750       3,051,927  
Amortization
    -       -       33,400  
Impairment of investment in oil and gas leases
    -       -       247,931  
Impairment of bio-fuels plant development contract
    15,000,000       21,717,235       36,717,235  
Impairment of Hybrid Battery Technology license
    37,877,520               37,877,520  
Acquisition costs
    -       -       8,245,592  
Non-controlling interest
    (822,971 )     -       (1,140,360 )
Changes in operating assets and liabilities:
                       
Increase (decrease) in accounts payable and accrued expenses
    (14,197 )     7,386       357,138  
Cash flows from operating activities in continuing operations
    (71,918 )     (38,624 )     (22,952 )
Cash flows from operating activities in discontinued operations
    1,953       -       (188,712 )
Net Cash Used In Operating Activities
    (69,965 )     (38,624 )     (211,664 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchase of property and equipment
    -       -       (116,331 )
Purchase of website
    -       -       (1,000 )
Patent costs
    (82,872 )     -       (82,872 )
Acquisition of ALG Bio Oils Ltd. net of cash purchased
    -       180       180  
Acquisition of H-Power (Pty) Ltd. net of cash purchased
    16       -       16  
Cash flows from investing activities in continuing
                       
operations
    (82,856 )     180       (200,007 )
Cash flows from investing activities in discontinued operations
    -       -       -  
Net Cash Provided By (Used In) Investing Activities
    (82,856 )     180       (200,007 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds on sale of common stock
    152,410       -       152,410  
Proceeds from loan payable
    -       -       12,236  
Repayment of stockholder's loans
    -       -       (12,730 )
Proceeds from loans payable - related parties
    48,456       40,967       292,916  
Repayment of from loans payable - related parties
    (16,990 )     -       (4,869 )
Cash flows from financing activities in continuing operations
    183,876       40,967       436,677  
Cash flows from financing activities in discontinued operations
    -       -       3,286  
Net Cash Provided By Financing Activities
    183,876       40,967       439,963  
                         
EFFECT ON EXCHANGE RATE ON CASH
    3,291       49       7,250