UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the quarterly period ended ~~September~~December 3031, 2012

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the transition period from ____to____

Commission File Number: 333-169014

American Energy Development Corp.

(Exact name of registrant as specified in its charter)

Nevada	27-2304001
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1230 Avenue of the Americas, 7th Floor, New York, NY 10020

(Address of principal executive offices) (Zip Code)

(855) 645-2332
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated file, 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	x

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

As of ~~November~~March 195, ~~2012~~2013, there were ~~101~~102,~~996~~331,~~256~~448 shares of the issuer’s $.001 par value common stock issued and outstanding.

TABLE OF CONTENTS PART I FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2122
Item 4.	Controls and Procedures	22
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2223
Item 3.	Defaults Upon Senior Securities	2223
Item 4.	Mine Safety Disclosures	2223
Item 5.	Other Information	2223
Item 6.	Exhibits	2223

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

		September 30, 2012				June 30, 2012
		December 31, 2012 (Unaudited)				June 30, 2012
Current assets
ASSETS
Cash	$	24,908			$	84,452
Current assets
Accounts receivable		-				9,472
Cash		$	18,696			$	84,452
Total current assets		24,908				93,924
Accounts receivable			11,402				9,472
Oil and Gas Property
Total current assets			30,098				93,924
Evaluated, net of accumulated depletion of $12,762 and $9,117 as of September 30, 2012 and June 30, 2012, respectively		1,098,438				1,102,083
Oil and Gas Property
Unevaluated		13,142,982				12,909,593
Evaluated, net of accumulated depletion of $19,559 and $9,117 as of December 31, 2012 and June 30, 2012, respectively			1,091,641				1,102,083
Total assets	$	14,266,328			$	14,105,600
Unevaluated			634,670				12,909,593
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Total assets		$	1,756,409			$	14,105,600
Current liabilities
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Accounts payable and accrued expenses	$	454,611			$	211,707
Current liabilities
Total current liabilities		454,611				211,707
Accounts payable and accrued expenses		$	486,572			$	211,707
Stockholders’ equity (deficit)
Total current liabilities			486,572				211,707
Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued and outstanding		-				-
Stockholders’ equity (deficit)
Common stock, $.001 par value; 3,000,000,000 shares authorized, and 101,921,256 and 101,752,506 shares issued and outstanding, as of September 30, 2012 and June 30, 2012, respectively		101,921				101,752
Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued and outstanding			-				-
Additional paid-in capital		15,605,075				15,553,719
Common stock, $.001 par value; 3,000,000,000 shares authorized, and 102,331,448 and 101,752,506 shares issued and outstanding, as of December 31, 2012 and June 30, 2012, respectively			102,331				101,752
Accumulated other comprehensive loss		(6,117)				(6,117)
Additional paid-in capital			15,690,788				15,553,719
Deficit accumulated during the exploration stage		(1,889,162)				(1,755,461)
Accumulated other comprehensive loss			(6,117	)			(6,117	)
Total stockholders’ equity (deficit)		13,811,717				13,893,893
Deficit accumulated during the exploration stage			(14,517,165	)			(1,755,461	)
Total liabilities and stockholders’ equity (deficit)	$	14,266,328			$	14,105,600
Total stockholders’ equity (deficit)			1,269,837				13,893,893
Total liabilities and stockholders’ equity (deficit)		$	1,756,409			$	14,105,600

See accompanying notes to financial statements.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended September 30, 2012			For the Three Months Ended September 30, 2011			From Inception (March 10, 2010) Through September 30, 2012
Revenues		70,574			-			159,585
Operating Costs		6,605			-			14,908
Net revenue	$	63,969					$	144,677
Operating expenses
General and administrative		197,670			117,972			882,544
Impairment of oil and gas property		-			-			1,143,681
Total operating expenses		197,670			117,972			2,026,225
Loss from operations		(133,701	)		(117,972	)		(1,881,548	)
Interest expense		-			(756	)		(7,614	)
Loss before income taxes		(133,701	)		(118,728	)		(1,889,162	)
Provision for income taxes		-			-			-
Net loss	$	(133,701	)	$	(118,728	)		(1,889,162	)
Net loss per common share – basic and diluted	$	(0.00	)	$	(0.00	)
Weighted average of common shares – basic and diluted		101,772,683			171,176,883

(UNAUDITED)

	For the Three Months Ended December 31, 2012				For the Three Months Ended December 31, 2011			For the Six Months Ended December 31, 2012			For the Six Months Ended December 31, 2011			From Inception (March 10, 2010) Through December 31, 2012

Revenues		$	44,485		$	2,276		$	115,059		$	2,276		$	204,070

Operating costs			15,458			164			22,063			164			30,366

Net revenue			29,027			2,112			92,996			2,112			173,704

Operating expenses
General and administrative			144,495			120,958			342,165			238,930			1,027,039
Impairment of oil and gas property			12,512,535			-			12,512,535			-			13,656,216
Total operating expenses			12,657,030			120,958			12,854,700			238,930			14,683,255

Loss from operations			(12,628,003	)		(118,846	)		(12,761,704	)		(236,818	)		(14,509,551	)

Interest expense			-			(1,193	)		-			(1,949	)		(7,614	)

Loss before income taxes			(12,628,003	)		(120,039	)		(12,761,704	)		(238,767	)		(14,517,165	)

Provision for income taxes			-			-			-			-			-

Net loss		$	(12,628,003	)	$	(120,039	)	$	(12,761,704	)	$	(238,767	)	$	(14,517,165	)

Net loss per common share – basic and diluted		$	(0.12	)	$	(0.00	)	$	(0.13	)	$	(0.00	)

Weighted average of common shares – basic and diluted			102,083,998			102,240,252			101,929,258			112,777,570

See accompanying notes to financial statements.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE PERIOD FROM INCEPTION (MARCH 10, 2010)

THROUGH DECEMBER 31, 2012

~~THROUGH SEPTEMBER 30, 2012~~ (UNAUDITED)

		Common Stock							Additional Paid-In				Accumulated Other			Deficit Accumulated During Exploration			Total Stockholders’
											Deficit
		Number of Shares			Amount				Capital				Comprehensive Loss			Stage			Equity (Deficit)
								Accumulated			Accumulated			Total
Balance, March 10, 2010			-		$	-			$	-			$	-		$	-		$	-
	Common Stock				Additional			Other			During			Stockholders'
Issuance of common stock for services			90,000,000			90,000				(87,000	)			-			-			3,000
	Number of				Paid-In			Comprehensive			Exploration			Equity
Additional paid-in capital in exchange for facilities provided by related party			-			-				1,200				-			-			1,200
	Shares			Amount	Capital			Loss			Stage			(Deficit)
Balance, June 30, 2010			90,000,000			90,000				(85,800	)			-			(11,083	)		(6,883	)
Balance, March 10, 2010	-		$	-	$	-		$	-		$	-		$	-
Issuances of common stock for cash			69,167,100			69,167				161,390				-			-			230,557
Issuance of common stock for services	90,000,000			90,000		(87,000)			-			-			3,000
Issuance of common stock for oil and gas properties			12,000,000			12,000				1,073,000				-			-			1,085,000
Additional paid-in capital in exchange for facilities provided by related party	-			-		1,200			-			-			1,200
Additional paid-in capital in exchange for facilities provided by related party			-			-				3,600				-			-			3,600
Balance, June 30, 2010	90,000,000			90,000		(85,800)			-			(11,083)			(6,883)
Net loss			-			-				-				-			(125,444	)		(125,444	)
Issuances of common stock for cash	69,167,100			69,167		161,390			-			-			230,557
Balance, June 30, 2011			171,167,100		$	171,167			$	1,152,190				-		$	(136,527	)	$	1,186,830
Issuance of common stock for oil and gas properties	12,000,000			12,000		1,073,000			-			-			1,085,000
Issuance of common stock for services			90,000			90				810				-			-			900
Additional paid-in capital in exchange for facilities provided by related party	-			-		3,600			-			-			3,600
Issuances of common stock for cash			2,669,215			2,669				1,617,331				-			-			1,620,000
Net loss	-			-		-			-			(125,444)			(125,444)
Surrender of common stock by the stockholder			(85,150,000	)		(85,150	)			85,150				-			-			-
Balance, June 30, 2011	171,167,100		$	171,167	$	1,152,190		$	-		$	(136,527)		$	1,186,830
Additional paid-in capital in exchange for facilities provided by related party			-			-				3,600				-			-			3,600
Issuance of common stock for services	90,000			90		810			-			-			900
Forgiveness of debt by former stockholders			-			-				7,614				-			-			7,614
Issuances of common stock for cash	2,669,215			2,669		1,617,331			-			-			1,620,000
Issuance of common stock for oil and gas properties			12,976,191			12,976				12,687,024				-			-			12,700,000
Surrender of common stock by the stockholder	(85,150,000)			(85,150)		85,150			-			-			-
Foreign currency loss			-			-				-				(6,117	)		-			(6,117	)
Additional paid-in capital in exchange for facilities provided by related party	-			-		3,600			-			-			3,600
Net Loss			-			-				-				-			(1,618,934	)		(1,618,934	)
Forgiveness of debt by former stockholders	-			-		7,614			-			-			7,614
Balance, June 30, 2012			101,752,506		$	101,752			$	15,553,719				(6,117	)	$	(1,755,461	)	$	13,893,893
Issuance of common stock for oil and gas properties	12,976,191			12,976		12,687,024			-			-			12,700,000
Issuance of common stock for services			168,750			169				50,456				-			-			50,625
Foreign currency loss	-			-		-			(6,117)			-			(6,117)
Additional paid-in capital in exchange for facilities provided by related party			-			-				900				-			-			900
Net Loss	-			-		-			-			(1,618,934)			(1,618,934)
Net Loss			-			-				-				-			(133,701	)		(133,701	)
Balance, June 30, 2012	101,752,506		$	101,752	$	15,553,719		$	(6,117)		$	(1,755,461)		$	13,893,893
Balance, September 30, 2012			101,921,256		$	101,921			$	15,605,075			$	(6,117	)	$	(1,916,066	)		13,811,717
Issuance of common stock for services	468,750			469		101,156			-			-			101,625
Issuances of common stock for cash	75,000			75		29,925			-			-			30,000
Additional paid-in capital in exchange for facilities provided by related party	-			-		1,800			-			-			1,800
Issuance of common stock for oil and gas properties	35,192			35		4,188			-			-			4,223
Net Loss	-			-		-			-			(12,761,704)			(12,761,704)
Balance, December 31, 2012	102,331,448		$	102,331	$	15,690,788		$	(6,117)		$	(14,517,165)		$	1,269,837

See accompanying notes to financial statements. 

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~(UNAUDITED)

	For the Three Months Ended September 30, 2012				For the Three Months Ended September 30, 2012				From Inception (March 10, 2010) Through September 30, 2012
	For the Six Months Ended December 31, 2012			For the Six Months Ended December 31, 2011			From Inception (March 10, 2010) Through December 31, 2012
Cash flows from operating activities
Net loss	$	(~~133~~12,~~701~~761,704)	)	$	$(238,767)	~~(22,903~~	)$	(14,517,165)	$	~~(1,889,162~~	)
Adjustments to reconcile net loss to net cash used in operating activities
Additional paid-in capital in exchange for facilities provided by related party		~~900~~1,800			1,800	~~900~~		10,200		~~9,300~~
Common stock issued for services		50101,625			900	-		105,525		~~54,525~~
Depletion expense		310,~~645~~442			-	-		19,559		~~12,762~~
Impairment of oil and gas properties		-12,512,535			-	-		13,656,216		~~1,143,681~~
Changes in operating assets and liabilities
Decrease in accounts receivable		9,472								-
Decrease (Increase) in accounts receivable		(1,930)			(1,814)			(11,402)
Increase in accounts payable and accrued expenses		242,904				16,479				269,813
Increase (decrease) in accounts payable and accrued expenses		274,865			20,318			301,774
Net cash used in operating activities		~~173~~137,~~845~~633			(217,563)	~~(5,524~~	)	(435,293)		~~(399,081~~	)
Cash flows from investing activities
Purchase and capitalized costs of oil and gas properties		(~~233~~237,~~389~~612)	)		(551,168)	-		(1,424,474)		~~(1,420,251~~	)
Net cash used by investing activities		(~~233~~237,~~389~~612)	)		(551,168)	-		(1,424,474)		~~(1,420,251~~	)
Cash flows from financing activities
Proceeds from issuance of common stock		-34,223			450,000	-		1,884,580		~~1,850,357~~
Proceeds from issuance of stockholder loan		-			123,450	-				-
Net cash provided by financing activities		-34,223			573,450	-		1,884,580		~~1,850,357~~
Effect of exchange rates on cash and cash equivalents		-			-	-		(6,117)		~~(6,117~~	)
Net increase (decrease) in cash		(5965,~~544~~756)	)		(195,281)	~~(5,524~~	)	18,696		~~24,908~~
Cash, beginning of period		84,452			208,523	~~7,983~~		-		-
Cash, end of period	$	2418,~~908~~696		$	$13,242	~~2,459~~	$	18,696	$	~~24,908~~
Supplemental disclosure of cash flow information
Income taxes paid	$	-		$	$-	-	$	-	$	-
Interest paid	$	-		$	$-	-	$	-	$	-
Non-cash transactions
Forgiveness of debt from former shareholder	$	-		$	$3,000	~~3,000~~	$	7,614	$	~~7,614~~
Common stock for oil and gas properties	$	-		$	$1,085,000	~~1,085,000~~	$	12,700,000	$	~~12,700,000~~

See accompanying notes to financial statements.  

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Presentation

Nature of Operations

American Energy Development Corp. (the "Company") is currently an exploration stage company under the provisions of Accounting Standards Codification (ASC) No. 915, Development Stage Entities, and was incorporated under the laws of the State of Nevada on March 10, 2010. Since inception, the Company has produced almost no revenues and will continue to report as an exploration stage company until significant revenues are produced.

The Company’s principal activity is the exploration and development of oil and gas properties.

On July 12, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from “LJM Energy Corp.” to “American Energy Development Corp.” (the “Name Change”). The effective date of the Name Change with the Nevada Secretary of State is July 14, 2011.

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim condensed consolidated financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. The principles for interim consolidated financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements on Form 10-K for the year ended June 30, 2012. The condensed consolidated financial statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments necessary for a fair statement of the condensed results for the interim periods. Operating results for the three and six month period ended ~~September~~December 3031, 2012 are not necessarily indicative of the results that may be expected for the year ending June 30, 2013. We made certain reclassifications to prior-period amounts to conform to the current presentation.

Exploration Stage

The Company is engaged in the acquisition, exploration and development of producing oil and gas properties. As of ~~September 30~~December 31, 2012, the Company owns acreage in the State of Michigan which includes a 43.75% working interest in three separate oil and gas leases in Ingham County, Michigan (the “Dansville Prospect”) totaling approximately 1,343 acres along with option rights to acquire a 50% working interest in three (3) prospects located in Trenton Township, Washtenaw County, Trenton Township, Jackson County, and Kinneville Township, Ingham County, Michigan (the “Option Prospects”), and seismic data for certain properties located in Ingham and Calhoun Counties, Michigan for further exploration and analysis. The Company also owns a 1.4% working interest in certain oil and gas leases in Pottawatomie County, Oklahoma (the “Magnolia Prospect”).

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Exploration Stage (Continued)

Additionally, the Company owns all of the issued and outstanding shares of Reservoir Resources Limited, which through its wholly-owned subsidiary, Fairfax Shelfco 307 Limited (“Fairfax 307”), is the owner of a ninety-five percent (95%) share in the Petroleum Exploration and Development ~~Licence~~License for UK Onshore Block SU97, known as licence PEDL236 (the “~~Licence~~License”), which grants to Fairfax 307 an exclusive license during the term of the ~~Licence~~License to search, bore for and obtain petroleum in UK Onshore Block SU97, a 24,700 acre onshore exploration prospect located in the Weald Basin in Windsor, United Kingdom. Reservoir Resources also owns two-dimensional seismic data and information relating to certain areas of the ~~Licence~~License.

~~The~~In ~~Company’s~~December ~~success~~2012, ~~will~~the ~~depend~~Company indetermined ~~large~~that ~~part~~the oncosts ~~its ability~~ to obtain ~~and~~required ~~develop~~approvals ~~its~~necessary ~~oil~~to develop and ~~gas~~drill ~~interests.~~the .Windsor ~~There~~Prospect ~~can~~of beReservoir noResources ~~assurance~~were ~~that~~too ~~oil~~significant and ~~gas~~the ~~properties~~likelihood ~~obtained~~of byobtaining the ~~Company~~approvals ~~will~~too ~~contain~~remote ~~reserves~~to orpursue ~~that~~the ~~properties~~prospect ~~with reserves will be profitable to extract~~further. As ~~The~~a ~~Company~~result, ~~will be subject to local and national laws and regulations which could impact~~ the Company~~’s ability~~ tohas ~~execute~~impaired its ~~business~~ ~~plan~~investment of Reservoir Resources.

The Company’s success will depend in large part on its ability to obtain and develop its oil and gas interests. There can be no assurance that oil and gas properties obtained by the Company will contain reserves or that properties with reserves will be profitable to extract. The Company will be subject to local and national laws and regulations which could impact the Company’s ability to execute its business plan.

As discussed in Note 2, the accompanying financial statements have been prepared assuming the Company will continue as a going concern.

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The Company is required to estimate the fair value of all financial instruments included on its balance sheet under ASC 825, Financial Instruments. The carrying value of cash, accounts payable and accrued expenses approximate their fair value due to the short period to maturity of these instruments.

Oil and Gas Properties

The Company follows the full cost method of accounting for crude oil and natural gas properties. Under this method, all direct costs and certain indirect costs associated with acquisition of properties and successful as well as unsuccessful exploration and development activities are capitalized. Depreciation, depletion, and amortization of capitalized crude oil and natural gas properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Oil and Gas Properties (Continued)

The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry.

For each cost center, capitalized costs are subject to an annual ceiling test, in which the costs shall not exceed the cost center ceiling. The cost center ceiling is equal to i) the present value of estimated future net revenues computed by applying current prices of oil and gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus ii) the cost of properties not being amortized; plus iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less iv) income tax effects related to differences between the book and tax basis of the properties. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the cost center ceiling, the excess is charged to expense and separately disclosed during the period in which the excess occurs.

Asset Retirement Obligation

The Company accounts for its future asset retirement obligations by recording the fair value of the liability, if any, during the period in which it was incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The increase in carrying value of a property associated with the capitalization of an asset retirement cost is included in proved oil and gas properties within the Company’s balance sheets. The Company depletes the amount added to proved oil and gas property costs using the units-of-production method and the straight-line basis over the life of the assets.

The Company’s asset retirement obligation consists of costs related to the plugging of wells, removal of facilities and equipment and site restoration on its oil and gas properties and gathering assets. The asset retirement liability, if any, will be allocated to operating expense using a systematic and rational method. As of ~~September~~December 3031, 2012, the Company reviewed plug and abandonment costs of its producing Brown 2-12 well and deemed the amount to be immaterial.

Revenue Recognition

Working interest, royalty and net profit interests are to be recognized as revenue when oil and gas are sold. The Company records the sale of its interests in prospects generally as a reduction to the cost pool without gain or loss recognition unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to a cost center. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool. All terms of the sale are to be finalized and price readily determinable.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Value of Stock Issued for Services

The Company periodically issues shares of its common stock in exchange for, or in settlement of, services. The Company’s management values the shares issued in such transactions at either the then market price of the Company’s common stock after taking into consideration factors such as volume of shares issued or trading restrictions, or the value of the services rendered, whichever is more readily determinable.

Reclassifications

Certain amounts in the 2012 financial statements have been reclassified for comparative purposes to conform to the current year presentation.

Concentrations of Credit Risk

The Company collects its receivables on its working interests in oil and gas properties from the well operators. As such, the Company generally has relatively few customers. These receivables are unsecured and the Company performs ongoing credit evaluations of the well operators’ financial condition whenever necessary. At ~~September~~December 3031, 2012, the Company had one customer that accounted for 100% of its oil and gas sales. Bad debt expense is recognized on an account-by-account review after all means of collection have been exhausted and recovery is not probable.

There was no bad debt expense for the period ended ~~September~~December 3031, 2012.

Recent Accounting Pronouncements

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350) - Testing Goodwill for Impairment (ASU 2011-08), to allow entities to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for us in fiscal 2013 and earlier adoption is permitted. The Company is currently evaluating the impact of our pending adoption of ASU 2011-08 on our consolidated financial statements.

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

2. GOING CONCERN

As shown in the accompanying financial statements, the Company has incurred a net ~~operating~~ loss of ($114,~~889~~517,~~162~~165) from inception (March 10, 2010) through ~~September~~December 3031, 2012. The Company is subject to those risks associated with exploration stage companies. The Company’s present revenues are insufficient to meet operating expenses. Additional debt and equity financing will be required by the Company to fund its development activities and to support operations. However, there is no assurance that the Company will be able to obtain additional financing. Furthermore, the Company's existence is dependent upon management's ability to develop profitable operations. These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

Management is currently devoting substantially all of its efforts to develop its existing oil and gas properties. The Company also continues to search for additional productive properties. There can be no assurance that the Company's efforts will be successful, or that those efforts will translate in a beneficial manner to the Company. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

~~On December 19, 2011, the board of directors of the Company increased the size of the board of directors from two to three directors and appointed Kevin J~~3. EMPLOYMENT Goldrick as a director. On this date, the Company and Mr. Goldrick entered into a director agreement (“Director Agreement”). The Director Agreement provides that Mr. Goldrick will receive an annual cash compensation of $12,000 and equity compensation of 100,000 shares of common stock with the possibility to purchase stock options subject to certain conditions as specified in the Director Agreement.AGREEMENTS

On December 19, 2011, the board of directors of the Company increased the size of the board of directors from two to three directors and appointed Kevin J. Goldrick as a director. On this date, the Company and Mr. Goldrick entered into a director agreement (“Director Agreement”). The Director Agreement provides that Mr. Goldrick will receive an annual cash compensation of $12,000 and equity compensation of 100,000 shares of common stock with the possibility to purchase stock options subject to certain conditions as specified in the Director Agreement. On December 6, 2012, Kevin Goldrick resigned as a director of the Company.

4. INVESTMENTS IN OIL AND GAS PROPERTIES

Dansville Prospect – Proved (Evaluated) Property

On June 14, 2011, the Company entered into and closed an omnibus agreement (“Omnibus Agreement”) with Range Michigan LLC, a Wyoming limited liability company (“Range”), pursuant to which the Company acquired interests in certain oil and gas drilling areas and land leases located in Ingham County, Michigan and seismic data relating to such areas and leases for the total purchase price of 12,000,000 shares of the Company’s common stock for the cost to date of the development and seismic data which was $ 1,085,000. During the year, the company incurred additional costs of approximately $1,152,000. The Omnibus Agreement required the Company to effect a 30-to-1 forward stock split of all shares of Common Stock within 30 days of the effective date of the Omnibus Agreement (“Forward Split”). The forward stock split occurred on July 14, 2011.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

4. INVESTMENTS IN OIL AND GAS PROPERTIES (Continued)

Dansville Prospect – Proved (Evaluated) Property

Amendment to Omnibus Agreement, Participation Agreement and Option Agreement with Range Michigan LLC

On September 19, 2011, the Company entered into a First Amendment to Omnibus Agreement (“Omnibus Amendment”) with Range Michigan LLC, a Wyoming limited liability company (“Range”), pursuant to which the Omnibus Agreement dated June 14, 2011 between the parties was amended to reflect the Company’s name change to American Energy Development Corp. and extend the participation date for the wells from December 31, 2011 to July 1, 2012.

In connection with the Omnibus Amendment, the Company entered into a First Amendment to Participation Agreement (“Participation Amendment”) with Range, pursuant to which the Participation Agreement dated June 14, 2011 between the parties was amended to, among other things, (i) reflect the Company’s name change to American Energy Development Corp., (ii) extend the date in which the Company is required to participate in the Required Wells from December 31, 2011 to July 1, 2012, (iii) provide that it is anticipated that each of the two remaining two of the Required Wells will be spudded by July 1, 2012, and (iv) authorize Range to withhold the first $100,000 from the Company’s share of the proceeds from the production of the first Required Well( the Brown #2 -12 well) for the payment of the option fee specified Option Agreement and Option Amendment as described below.

In connection with the Omnibus Amendment, the Company entered into a First Amendment to Option Agreement (“Option Amendment”) with Range, which provides that in the event the Brown #2-12 Well is a producing well, Range will withhold the first $100,000 of the Company’s share of production proceeds for payment of the option fee and if the Company’s share of the proceeds from the Brown #2-12 Well are insufficient to pay the entire amount of the option fee on or before February 1, 2012then the Company shall pay Range the remaining balance of the option fee on or before February 5, 2012. As of September 30, 2012, the Brown #2-12 well production has been insufficient to pay the Option Fee. The Company has renegotiated with Range to waive the option fee.

The Company will remit to the seller an overriding royalty interest of 2.5% of the overall gross market value at the time of production of all oil and gas produced from the licensed areas from proceeds of the sale of oil and gas produced. The property currently has one well that is producing in which they hold a net realizable interest of 26%.

During the prior fiscal year, the Company recorded an impairment ~~change~~charge of approximately $1,145,000 based on the independent assessment of the future value of its proved reserves.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

4. INVESTMENTS IN OIL AND GAS PROPERTIES (Continued)

Reservoir Resources

On September 13, 2011, the Company entered into a Purchase Agreement with Pepper Canister Nominees Limited pursuant to which the Company will acquire all of the issued and outstanding shares of the Seller’s wholly-owned subsidiary, Reservoir Resources Limited, which, through its wholly-owned subsidiary, owns an oil and gas exploration and development license in the United Kingdom in exchange for 12,500,000 shares of the Company’s common stock valued at $12,500,000 ($1.00 per share) . The Company is subject to development requirements whereby the Company must drill at least one well in the licensed area to a depth of 400 meters to be spudded by December 31, 2012 (“Target Date”), failure of which will result in the Seller being granted the option to cancel the Purchase Agreement within 60 days of the Target Date, re-acquire all shares of Reservoir Resources and retain 50% of the Company’s shares received as the Purchase Price. The purchase of Reservoir Resources was completed on March 12, 2012. ~~The Company is currently undergoing various reserve studies to assess potential production and to continue the development of the wells purchased.~~

The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows:

Cash	$	$	250
Oil and gas property – License			42,400
Oil and gas property - License			42,400
Oil and Gas Property - Unproved			12,470,135
Oil and gas property - Unproved			12,470,135
Total assets acquired			12,512,785
Liabilities Assumed			(12,785)	)
Total		$	12,500,000

In December 2012, the Company determined that the costs to obtain required approvals necessary to develop and drill the Windsor Prospect of Reservoir Resources were too significant and the likelihood of obtaining the approvals too remote to pursue the prospect further. As a result, the Company has impaired its investment of Reservoir Resources in the amount of $12,512,535.

White Tail Prospect

On March 6, 2012, the Company entered into a letter of intent to acquire a forty three and seventy five hundredths percent (43.75%) working interest and a thirty five percent (35%) net revenue interest in the White-tail Prospect from Range Michigan LLC, a Wyoming limited liability company, which covers approximately 4,000 acres. On February 5, 2013, the Company entered into a Termination Agreement with Range as further described Note 11.

In consideration of the purchase of the interests in the White-tail Prospect, the Company agreed to pay Range a total purchase price of $487,500. The Company paid Range $87,500 to reimburse Range for development costs incurred to date and on June 15, 2012, the Company issued 476,191 common shares for $200,000, or $0.42/share. The Company further agreed to pay one hundred percent (100%) of the Authority For Expenditure (“AFE”) for a 3-D high resolution seismic survey of the White-tail Prospect. The Company has incurred approximately $226,000 of the AFE to date.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

4. INVESTMENTS IN OIL AND GAS PROPERTIES (Continued)

Osprey Prospect

On April 17, 2012, the Company entered into a letter of intent to acquire 43.75% working interest and a 35% net revenue interest in the Osprey Prospect from Range Michigan LLC, a Wyoming limited liability company.

In consideration of the purchase of the interests in the Osprey Prospect, the Company will pay Range a total purchase price of $80,000. The Company paid Range $50,000 to reimburse Range for development costs incurred to date and any prior land lease payments. AsIn ofOctober ~~September 30 ,~~2012 ~~the remaining $30~~,~~000~~ ~~was~~Range agreed to beaccept ~~payable~~our inreimbursement ~~common~~costs ~~shares. In~~of ~~addition, the Company further agreed to pay~~ $9150,000 as apartial ~~prospect~~payment ~~fee~~on ~~upon receipt of~~ the ~~Authority~~White ~~For~~Tail ~~Expenditure (“AFE”) and 70% of the total cost of drilling and completion in the Osprey~~ Prospect.

5. ADVISOR AGREEMENT

On September 20, 2011, the Company entered into an Advisory Board Member Agreement (“Advisor Agreement”) with Desmond Oswald, pursuant to which the Company appointed Mr. Oswald to serve as an advisor to the Company continuing indefinitely, until terminated at any time by Mr. Oswald or the Company. The Advisor Agreement provides that Mr. Oswald will be available at a minimum of one time per quarter a year for advisory board meetings to (i) facilitate introductions to potential partners, suppliers, customers and investors, (ii) provide opinions to assist the Company in identify and recruiting potential technical, strategic and other partners or individuals, and (iii) apprise the Company of technological, competitive and other changes and developments that he may from time to time become aware of. The Advisor Agreement also provides that Mr. Oswald is paid $900 for the preparation and attendance of each advisory board meeting and Mr. Oswald was issued 90,000 shares of the Company’s common stock as compensation subject to certain vesting requirements as specified in the Advisor Agreement.

6. LOANS FROM STOCKHOLDER

On March 31, 2010, the Company issued a promissory note to a stockholder and officer of the Company in exchange for a loan of $30,000 with interest that accrued at the rate of 10% per annum. On March 22, 2012, the Company repaid the loan and the stockholder and officer of the Company forgave the accrued interest due to him on this promissory note and contributed the same amount to capital.

On December 2, 2011, the Company issued a promissory note to a stockholder and officer of the Company in the amount of $109,962. The promissory note, which was due on June 2, 2012, including interest at the annual rate of 5% was repaid on March 22, 2012. On this date, the stockholder and officer of the Company forgave the accrued interest due to him on this promissory note and contributed the same amount to capital.

On December 23, 2011, a stockholder and officer of the Company provided an advance to fund operations. The advance was unsecured, non-interest bearing and due on demand. On March 22, 2012 the Company repaid the amount due of $13,488.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

7. COMMON STOCK

On July 12, 2011, the Company filed a Certificate of Change pursuant to Section 78.209 of the Nevada Revised Statutes (the “Certificate of Change”) with the Nevada Secretary of State to effect a thirty for one forward stock split of the Company’s common stock (the “Forward Stock Split”). The Certificate of Change increased the number of authorized shares of the Company’s common stock from 100,000,000 to 3,000,000,000 and the number of issued and outstanding shares of common stock for shareholders of record as of July 13, 2011, from 5,705,570 shares to 171,167,100 shares. The Company’s common stock continues to be $.001 par value. Fractional shares were rounded upward. The effective date of the Forward Stock Split with the Nevada Secretary of State was July 14, 2011. These financial statements reflect the Forward Stock Split in historical and current numbers and disclosures.

During the year ended June 30, 2011, the Company issued 69,167,100 shares of common stock to unrelated investors at $0.003 per share for a total of $230,557.

On June 14, 2011, the Company issued 12,000,000 shares of its common stock in connection with the Omnibus Agreement as discussed in Note 4.

During the year ended June 30, 2011, the Company issued 69,167,100 shares of common stock to unrelated investors at $0.003 per share for a total of $230,557.

On September 20, 2011, the Company issued 90,000 shares of its common stock pursuant to the Advisory Agreement discussed in Note 5.

On October 3, 2011, the Company entered into a Securities Purchase Agreement (the “Financing Agreement”) with an investor (the “Investor”) pursuant to which the Company, at its sole and exclusive option, may issue and sell to the Investor, and the Investor shall purchase up to $7,800,000 of the Company’s $0.001 par value common stock and five-year warrants to purchase common stock (the “Warrants”) from time to time over a two year period at a purchase price (the “Purchase Price”) of the higher of (i) $0.40 per share, and (ii) eighty percent (80%) of the 10-day volume weighted average price (VWAP) of the Company’s common stock. The Company shall have sole discretion to issue and sell the common stock and Warrants pursuant to the Financing Agreement and the Investor shall have no right to acquire the common stock and Warrants from the Company until a drawdown notice is received from the Company. The Investor shall have sole discretion in determining whether the proposed use of proceeds as provided by the Company in the drawdown notice is acceptable to the Investor.

The Company received an initial drawdown of $200,000 (“First Drawdown”) on October 3, 2011. In exchange for the First Drawdown, the Company issued 500,000 shares of common stock at a purchase price of $0.40 per share and Warrants to purchase 500,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share. The Warrants expire five years from the date of the investment.

On October 12, 2011, the Company received an additional $200,000 drawdown (“Second Drawdown”). In exchange for the Second Drawdown, the Company issued 500,000 shares of common stock at a purchase price of $0.40 per share and Warrants to purchase 500,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share, pursuant to the Financing Agreement. The Warrants expire five years from the date of the investment.

In connection with the Financing Agreement, on October 3, 2011, the Company also entered into a Stock Cancellation Agreement (the “Cancellation Agreement”) with Joel Felix, pursuant to which the Company and Mr. Felix agreed to cancel 85,000,000 shares of common stock held by Mr. Felix as consideration for the Investor’s willingness to enter into and as a condition of the Financing Agreement.

On October 17, 2011, the Company canceled and retired 150,000 shares of Common Stock from an unrelated third party.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

7. COMMON STOCK (Continued)

On October 17, 2011, the Company canceled and retired 150,000 shares of Common Stock from an unrelated third party.

On November 23, 2011, the Company issued 100,000 shares of its common stock to unrelated investors at $0.50 per share for a total of $50,000.

On February 3, 2012, the Company received an additional $50,000 drawdown (“Third Drawdown”). In exchange for the Third Drawdown, the Company issued 125,000 shares of common stock at a purchase price of $0.40 per share and Warrants to purchase 125,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share, pursuant to the Financing Agreement. The Warrants expire five years from the date of the investment.

On March 12, 2012, the Company issued 12,500,000 shares of its common stock pursuant to a Purchase Agreement with Pepper Canister Nominees Limited to acquire all of the issued and outstanding shares of Reservoir Resources Limited, which through its wholly-owned subsidiary, owns an oil and gas exploration and development license in the United Kingdom. See Note 4.

On March 20, 2012, the Company received an additional $1,000,000 drawdown (“Fourth Drawdown”). In exchange for the Fourth Drawdown, the Company issued 1,282,052 shares of common stock at a purchase price of $0.78 per share and Warrants to purchase 1,282,052 shares of common stock at an exercise price of 120% of the purchase price, or $0.94 per share, pursuant to the Financing Agreement. The Warrants expire five years from the date of the investment.

On March 22, 2012, a stockholder and officer of the Company forgave $7,614 of accrued interest due to him in relation to his advances to the Company and contributed the same amount to capital.

On March 30, 2012, the Company received an additional $120,000 drawdown (“Fifth Drawdown”). In exchange for the Fifth Drawdown, the Company issued 162,163 shares of common stock at a purchase price of $0.74 per share and Warrants to purchase 162,163 shares of common stock at an exercise price of 120% of the purchase price, or $0.89 per share, pursuant to the Financing Agreement. The Warrants expire five years from the date of the investment.

On June 15, 2012, the Company issued 476,191 common shares valued at $200,000 as partial consideration for the White-tail Prospect. See Note 4.

On September 19, 2012, the Company issued 75,000 common shares valued at $25,000 to a consultant for services performed.

On September 19, 2012, the Company issued 93,750 common shares valued at $28,125 to a board member as consideration for his services.

On October 31, 2012, the Company received an additional $30,000 drawdown (“Sixth Drawdown”). In exchange for the Sixth Drawdown, the Company issued 75,000 shares of common stock at a purchase price of $0.40 per share and Warrants to purchase 75,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share, pursuant to the Financing Agreement. The Warrants expire five years from the date of the investment.

On November 29, 2012, the Company issued 300,000 common shares valued at $51,000 to a consultant for services performed.

On December 20, 2012, the Company issued 35,192 common shares valued at $4,223 pursuant to an agreement whereby the third party would be issued additional shares if the company issued additional shares for less than $0.30 per share.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

8. WARRANTS

Warrant Activity

As described in Note 7, the Company issued a convertible note with detachable warrants. A summary of warrant activity for the period from June 30, 2011 through ~~September~~December 3031, 2012 is presented below:

		Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contract Term
			Weighted		Weighted
Outstanding June 30, 2011			-		$	-	-
			Average		Average
Issued			2,569,215		$	.70	4.52 years
	Number of		Exercise		Remaining
Exercised			-			-	-
	Warrants		Price		Contract Term
Outstanding June 30, 2012			2,569,215		$	.70	4.52 years
Outstanding June 30, 2011	-		$	-	-
Issued	2,569,215		-$	0.75	4.03 years	-	-
Exercisable, September 30, 2012			2,569,215		$	.70	4.26 years
Exercised	-			-	-
Outstanding June 30, 2012	2,569,215		$	0.75	4.03 years
Issued	75,000		$	0.48	5.00 years
Exercisable, December 31, 2012	2,644,215		$	0.74	4.06 years

Shares Reserved for Future Issuance

The Company has reserved shares for future issuance upon conversion of warrants as follows:

Warrants	~~2,569,215~~	2,644,215
Reserved shares at September 30, 2012	2,569,215
Reserved shares at December 31, 2012		2,644,215

9. PROVISION FOR INCOME TAXES

Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

As of December 31, 2012, the Company had federal net operating loss carryforwards of approximately ($2,000,000) that can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2030. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.

AMERICAN ENERGY DEVELOPMENT CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

9. PROVISION FOR INCOME TAXES (Continued)

~~Deferred~~A ~~income~~summary ~~taxes~~of ~~are reported using~~ the ~~liability~~Company’s ~~method. Deferred~~deferred tax assets ~~are~~as ~~recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts~~ of ~~assets~~December ~~and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when~~31, in2012 ~~the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities~~ are ~~adjusted~~as ~~for the effects of changes in tax laws and rates on the date of enactment.~~follows:

As of September 30, 2012, the Company had federal net operating loss carryforwards of (1,889,962), which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2030. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.

	2012
Federal net operating loss (@ 34%)	$	680,000
Less: valuation allowance		(680,000	)

Net deferred tax asset	$	-

ADuring ~~summary~~the ofperiod ended December 31, 2012, the Company’s ~~deferred~~valuation ~~tax~~allowance ~~assets~~increased asby ofapproximately ~~September 30~~$38, ~~2012 are as follows:~~000.

	2012
Federal net operating loss (@ 34%)	$	642,600
Less: valuation allowance		(642,600)
Net deferred tax asset	$	---

During the period ended September 30, 2012, the Company’s valuation allowance increased by approximately $27,400.

10. RELATED PARTY TRANSACTIONS

From the Company’s inception (March 10, 2010) through June 30, 2012, the Company utilized office space of an officer and stockholder at no charge. The Company treated the usage of the office space as additional paid-in capital and charged the estimated fair value rent of $900 per month to operations. For the year ended June 30, 2012 and 2011 rent expense was $3,600 and $3,600, respectively.

In connection with the Financing Agreement, on October 3, 2011, the Company also entered into the Cancellation Agreement with Joel Felix, pursuant to which the Company and Mr. Felix agreed to cancel 85,000,000 shares of common stock held by Mr. Felix as consideration for the Investor’s willingness to enter into and as a condition of the Financing Agreement.

11. SUBSEQUENT EVENTS

On February 5, 2013, the Company entered into an Assignment of Oil and Gas Leases, Termination of Lease Acquisition Agreement and Operating Agreement and Disclaimer (the "Termination Agreement") with Range Michigan LLC ("Range") pursuant to which the Company and Range agreed that (i) the Company assign to Range all of its 43.75% working interest in Range's right to oil and gas leases covering the White-tail Prospect in Northern Michigan (the "Prospect"), effective January 22, 2013, for the nominal consideration of $10 and (ii) both the Company and Range terminate the Lease Acquisition Agreement dated June 15, 2012 by and between the Company and Range (the "Purchase Agreement") and the Joint Operating Agreement dated March 31, 2012 by and between the Company and Range (the "Operating Agreement"), effective January 23, 2013, due to the Company's non-payment of seismic program costs as required pursuant to the Purchase Agreement. There were no material early termination penalties incurred by the Company in connection with the Termination Agreement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “shall,” “could,” “expect,” “estimate,” “anticipate,” “predict,” “probable,” “possible,” “should,” “continue” or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. WeFactors ~~cannot guaranty~~ that ~~any~~could ofcause ~~the~~actual ~~assumptions~~results ~~relating~~ to ~~the~~differ ~~forward-looking~~materially ~~statements~~include, ~~specified~~but ~~in the following information~~ are ~~accurate,~~not ~~and~~limited ~~we assume no obligation~~ to ~~update any such forward-looking statements.~~:

~~Critical~~· ~~Accounting~~risks ~~Policy~~associated ~~and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance~~ with ~~accounting~~drilling ~~principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates~~ and ~~assumptions~~production ~~that~~programs ~~affect~~resulting ~~the~~from ~~reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis~~geological, ~~management evaluates its estimates and judgments~~technical, ~~including those related to revenue recognition~~drilling, ~~accrued~~seismic ~~expenses, financing operations,~~ and ~~contingencies and litigation. Management bases its estimates and judgments on historical experience and on various~~ other ~~factors~~unforeseen that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Quarterly Report on Form 10-Q for the period ended September 30, 2012.problems;

~~Overview.We~~· ~~are~~unexpected anresults ~~exploration~~of ~~stage company focused on~~ exploration, ~~production~~ and development ofdrilling ~~oil~~ and ~~natural~~related ~~gas~~activities inon the ~~United States and the United Kingdom. In Michigan, we own working interests located in Ingham County, Michigan, known as the~~ Dansville Prospect, and a working interest in Northern Michigan, known as the White-tail Prospect. We also entered into a letter of intent to acquire a working interest in Southern Michigan, known as the Osprey Prospect. In the United Kingdom, through our subsidiaries, we own a license to search, bore and obtain petroleum in an onshore exploration prospect located in the Weald Basin in Windsor, United Kingdom. We also own a working interest located in Pottawatomie County, Oklahoma, known as the Magnolia Prospect. For all of our working interests, we depend on operating partners to propose, permit and initiate the drilling of wells.;

~~The~~· ~~following~~availability ~~discussion~~ of ~~our~~capital ~~financial condition~~ and ~~results~~financing ofto ~~operations~~fund ~~should~~exploration ~~be read in conjunction with our financial statements for the year ended June 30, 2011, together with notes thereto, as previously filed with our Annual Report on Form 10-K,~~ and ~~our~~development ~~financial~~drilling ~~statements for the period ended September 30, 2012, together with notes thereto, which are included in this Quarterly Report.~~ activities;

·	increases in operating costs;

·	availability of skilled personnel;

·	unpredictable weather conditions; other factors listed from time to time in the Company's filings with the Securities and Exchange Commission.

We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Quarterly Report on Form 10-Q for the period ended December 31, 2012.

Overview. We are an exploration stage company focused on exploration, production and development of oil and natural gas in the United States and the United Kingdom. In Michigan, we own working interests located in Ingham County, Michigan, known as the Dansville Prospect. In the United Kingdom, through our subsidiaries, we own a license to search, bore and obtain petroleum in an onshore exploration prospect known as the Windsor Prospect located in the Weald Basin in Windsor, United Kingdom. During December 2012, we determined that further exploration and development of the Windsor Prospect was no longer economically viable and as a result took as impairment charge of $12,512,535. For all of our working interests, we depend on operating partners to propose, permit and initiate the drilling of wells.

Recent Developments. On February 5, 2013, we entered into an Assignment of Oil and Gas Leases, Termination of Lease Acquisition Agreement and Operating Agreement and Disclaimer (the “Termination Agreement”) with Range Michigan LLC (“Range”) to assign to Range all of our 43.75% working interest in Range’s right to oil and gas leases covering the White-tail Prospect in Northern Michigan, effective January 22, 2013, and to terminate the Lease Acquisition Agreement dated June 15, 2012 (the “Acquisition Agreement”) and the Operating Agreement, effective January 23, 2013, due to our non-payment of certain costs as required pursuant to the Acquisition Agreement.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the year ended June 30, 2012, together with notes thereto, as previously filed with our Annual Report on Form 10-K, and our financial statements for the period ended December 31, 2012, together with notes thereto, which are included in this Quarterly Report.

For the three months ended ~~September~~December 30, 2012, as compared to the three months ended ~~September~~December 3031, 2011.

Results of Operations.

Revenues. We had revenues of $44,485 for the three months ended December 31, 2012, as compared to revenues of $2,276 for the three months ended December 31, 2011. The increase in revenues is due to an increase in oil and gas sales from our interest in the Brown 2-12 well in the Dansville Prospect. We hope the Brown 2-12 well will continue to generate those revenues for the foreseeable future, although we cannot guaranty it will do so. The Cremer 1-1 well in the Dansville Prospect was abandoned in May 2012 due to high salt content. Spudding of the Bowen well in the Dansville Prospect has been postponed for further technical evaluations due to its proximity to the Cremer 1-1 well. During December 2012, we determined that further exploration and development of the Windsor Prospect was no longer economically viable.

~~Revenues~~Operating Expenses. For Wethe ~~had~~three ~~revenues~~months ofended ~~$70~~December 31,~~574~~ ~~for~~2012, ~~the~~our ~~three~~total ~~months~~operating ~~ended~~expenses ~~September~~were 30$12, ~~2012~~657,030, as compared to nototal ~~revenues~~operating expenses of $120,958 for the three months ended ~~September~~December 3031, 2011. We ~~anticipate~~Our weoperating ~~will~~expenses ~~begin~~were ~~generating~~comprised ~~more~~of ~~significant~~general ~~revenues from oil~~ and ~~gas~~administrative ~~sales~~expenses ~~from our interest~~ in the ~~Dansville~~amount ~~Prospect~~of $144,495 and ~~hope~~an toimpairment ~~generate~~charge ~~revenues~~of ~~from~~$12,512,535 ~~the~~related ~~anticipated~~to ~~development of~~ the ~~White-tail~~Windsor Prospect. The To increase ~~the~~in ~~size~~general ofand ~~our~~administrative ~~operations~~expenses ~~during~~is ~~the~~primarily ~~next~~related ~~twelve~~to ~~months,~~additional wecosts ~~need~~related to ~~begin~~our ~~generating~~operations ~~more~~and ~~significant~~increased ~~revenues~~professional ~~from~~fees ~~the Dansville Prospect~~ and ~~begin~~costs ~~development~~associated ofwith ~~the~~us ~~White-tail~~being ~~Prospect.~~a ~~Our~~public ~~failure~~company toand ~~do so will significantly hinder~~ our ~~ability~~impairment toof ~~increase~~ the ~~size~~Windsor ~~of our operations and further develop our business~~Prospect.

~~Operating~~We ~~Expenses.~~expect ~~For~~that ~~the three months ended September 30, 2012,~~ our ~~total~~future monthly operating expenses ~~were~~for ~~$197,670,~~fiscal asyear ~~compared~~2013 towill ~~total~~increase ~~operating~~from ~~expenses~~our ofcurrent ~~$117,972~~expense ~~for the three months ended September 30~~levels, ~~2011.~~plus ~~Our~~we ~~operating~~expect ~~expenses~~to ~~were~~incur ~~solely~~additional ~~comprised~~direct ofcosts ~~general~~relating ~~and~~to ~~administrative~~drilling ~~expenses. The~~the ~~increase~~Dansville inProspect ~~general~~ and ~~administrative~~any ~~expenses~~new isprospects ~~primarily~~that ~~related~~we toacquire. ~~additional~~We ~~costs~~will ~~related~~continue to ~~the~~incur ~~increased~~significant ~~size~~general ofand ~~our~~administrative ~~operations,~~expenses ~~the~~as ~~expansion~~a result of ~~our personnel, increased professional fees and costs associated with us~~ being a public company.

WeNet ~~expect~~Loss. For ~~that~~the ~~our~~three ~~future~~months ~~monthly~~ended ~~operating~~December ~~expenses~~31, ~~for~~2012, ~~fiscal~~our ~~year~~net ~~2013~~loss ~~will~~was ~~increase~~$12,628,003, ~~from~~as compared to our ~~current~~net ~~expense~~loss ~~levels~~of $120,039 ~~plus~~for wethe ~~expect~~three tomonths ~~incur~~ended ~~additional~~December ~~direct~~31, ~~costs~~2011. The ~~relating~~increase in net loss is due to ~~drilling~~an ~~the~~impairment ~~Dansville~~charge ~~Prospect~~of ~~and~~$12,512,535 related to the ~~White-tail~~Windsor Prospect. inWe ~~Michigan~~expect ~~and~~that ~~any~~generating ~~new~~more ~~prospects~~significant ~~that~~revenues wefrom ~~acquire.~~oil Weand ~~will~~gas ~~continue~~sales towill ~~incur~~offset ~~significant~~our ~~general~~operating costs and ~~administrative~~reduce ~~expenses~~our asnet alosses ~~result~~in ofthe ~~being~~future. We acannot ~~public~~guarantee ~~company,~~that ~~but~~ we ~~also~~will ~~hope~~be able to generate ~~more~~additional ~~significant~~revenues or, if that we do generate additional revenues, ~~from~~that ~~oil~~such revenues will be sufficient to cover our operating costs and ~~gas~~reduce ~~sales~~our atnet ~~the~~loss ~~Dansville~~in ~~Prospect~~future periods.

~~Net Loss.~~ For the ~~three~~six months ended ~~September~~December 30, 2012, ~~our net loss was $133,701,~~ as compared to ~~our net loss of $118,728 for~~ the three months ended ~~September~~December 3031, 2011. The larger loss is due to an increase in general and administrative expenses. We expect to begin generating more significant revenues from oil and gas, which we hope will cover our operating costs and reduce our net losses in the future. We cannot guarantee that we will be able to generate additional revenues or, if that we do generate additional revenues, that such revenues will be sufficient to cover our operating costs and reduce our net loss in future periods.

~~Financial~~Results ~~Condition, Liquidity and Capital Resources. As~~ of ~~September 30, 2012, we have cash of $24,908 which comprises our current assets as of that date~~Operations. ~~Our total assets of $14,266,328 as of September 30, 2012 consist of our current assets of $24,908, evaluated oil and gas property of $1,098,438 and unevaluated oil and gas property of $13,142,982.~~

AsRevenues. We had revenues of ~~September~~$115,059 30for the six months ended December 31, 2012, weas ~~had~~compared ~~total~~to ~~current~~revenues ~~liabilities~~ of $~~454~~2,~~611~~276 ~~all~~for ofthe ~~which~~six ~~were~~months ~~represented~~ended byDecember ~~accounts~~31, ~~payable~~2011. The increase in revenues is due to an increase in oil and ~~accrued~~gas ~~expenses.~~sales from our interest in the Brown 2-12 well in the Dansville Prospect. We ~~had~~hope nothe ~~other~~Brown ~~long~~2-12 ~~term~~well ~~liabilities~~will continue to generate those revenues for the foreseeable future, ~~commitments~~although orwe ~~contingencies~~cannot guaranty it will do so. The Cremer 1-1 well in the Dansville Prospect was abandoned in May 2012 due to high salt content. Spudding of the Bowen well in the Dansville Prospect has been postponed for further technical evaluations due to its proximity to the Cremer 1-1 well. During December 2012, we determined that further exploration and development of the Windsor Prospect was no longer economically viable.

OnOperating ~~October~~Expenses. 3,For ~~2011, we entered into a Securities Purchase Agreement (“Financing Agreement”) with an investor pursuant to which we may, at our sole and exclusive option, issue and sell to~~ the ~~investor,~~six ~~and~~months ~~the~~ended ~~investor~~December ~~shall purchase up to $7~~31,~~800,000~~ ~~of our common stock and five-year warrants to purchase common stock (the “Warrants”) from time to time over a two year period at a purchase price of the higher of (i) $0.40 per share~~2012, ~~and (ii) eighty percent (80%) of the 10-day volume weighted average price (VWAP) of~~ our ~~common~~total ~~stock. We~~operating ~~received~~expenses anwere ~~initial drawdown of~~ $~~200~~12,~~000 on October 3~~854, ~~2011~~700, ~~and~~as wecompared ~~issued~~to ~~500,000~~total ~~shares~~operating ofexpenses ~~common stock at a purchase price~~ of $~~0.40 per share and Warrants to purchase 500~~238,~~000~~930 ~~shares~~for ~~of common stock at an exercise price of 120% of~~ the ~~purchase~~six ~~price,~~months orended ~~$0.48~~December ~~per share. The Warrants expire five years from the date of the investment. The second drawdown of $200~~31,~~000~~ ~~was delivered on October 12,~~ 2011. ~~and~~Our weoperating ~~issued~~expenses ~~500,000~~were ~~shares~~comprised of ~~our~~general ~~common stock at a purchase price of $0.40 per share~~ and ~~Warrants~~administrative toexpenses ~~purchase 500,000 shares of our common stock at an exercise price of $0.48 per share to the investor~~ in ~~connection with~~ the ~~second~~amount ~~drawdown. The third drawdown~~ of $50144,~~000~~495 ~~was delivered on February 3, 2012~~ and wean ~~issued~~impairment ~~125,000~~charge ~~shares~~ of ~~our common stock at a purchase price of~~ $~~0.40 per share and Warrants to purchase 125~~12,~~000~~512,535 ~~shares~~related ~~of our common stock at an exercise price of $0.48 per share~~ to the ~~investor~~Windsor ~~in connection with the third drawdown~~Prospect. The ~~fourth~~increase ~~drawdown~~in ofgeneral ~~$1,000,000 was delivered on March 20, 2012~~ and weadministrative ~~issued~~expenses ~~1,282,052 shares of our common stock at a purchase price of $0.78 per share and Warrants to purchase 1,282,052 shares of our common stock at an exercise price of $0.94 per share to the investor~~ in ~~connection with~~ the ~~fourth~~six ~~drawdown. The~~months ~~fifth~~ended ~~drawdown~~December ~~of $120~~31,~~000~~ ~~was delivered on March 30,~~ 2012 ~~and~~is weprimarily ~~issued~~related ~~162,163~~to ~~shares~~increased ofprofessional ~~our~~fees ~~common stock at a purchase price of $0.74 per share~~ and ~~Warrants~~costs toassociated ~~purchase 162,163 shares of our common stock at an exercise price of $0.89 per share to the investor in connection~~ with ~~the~~us ~~fifth~~being ~~drawdown. The sixth drawdown of $30,000 was delivered on October 31, 2012 and we issued 75,000 shares of our common stock at~~ a ~~purchase~~public ~~price~~company ~~of $0.40 per share~~ and ~~Warrants to purchase 75,000 shares of~~ our ~~common~~impairment ~~stock at an exercise price~~ of ~~$0.48 per share to~~ the ~~investor~~Windsor ~~in connection with the sixth drawdown~~Prospect.

We expect that our future monthly operating expenses for fiscal year 2013 may increase from our current expense levels, plus we expect to incur additional direct costs relating to drilling the Dansville Prospect and any new prospects that we acquire. We will continue to incur significant general and administrative expenses as a result of being a public company.

Net Loss. For the six months ended December 31, 2012, our net loss was $12,761,704, as compared to our net loss of $238,767 for the six months ended December 31, 2011. The increase in net loss is due to an increase in general and administrative expenses and an impairment charge of $12,512,535 related to the Windsor Prospect. We expect that generating more significant revenues from oil and gas sales will offset our operating costs and reduce our net losses in the future. We cannot guarantee that we will be able to generate additional revenues or, if that we do generate additional revenues, that such revenues will be sufficient to cover our operating costs and reduce our net loss in future periods.

OnFinancial ~~March 2~~Condition, ~~2012,~~Liquidity weand ~~entered~~Capital ~~into~~Resources. As aof ~~financial~~December ~~public relations agreement with a consultant~~31, ~~which provides that~~2012, ~~among other things,~~ we ~~shall~~have ~~engage~~cash ~~the consultant for an initial term~~ of ~~6 months and continue on a month-to-month basis thereafter to provide certain financial public relations advisory services to us in exchange for~~ $318,~~000~~696 ~~per~~and ~~month~~accounts ~~for~~receivable ~~the~~of ~~first three months,~~ $511,~~000~~402 ~~per~~which ~~month~~comprises ~~for~~our ~~the~~current ~~following~~assets ~~three~~as ~~months,~~of ~~and~~that ~~$7,000 per month for each month thereafter~~date. WeOur ~~paid~~total ~~$3,000~~assets ~~per month for the first three months~~ of ~~March~~$1,756,409 ~~April~~as ~~and~~of ~~May~~December ~~2012. On September 19~~31, 2012, weconsist ~~agreed~~of toour ~~pay~~current ~~for~~assets ~~services rendered for the months~~ of ~~June~~$18,696, ~~July~~accounts ~~and~~receivable ~~August 2012 with cash compensation~~ of $311,~~000~~402, ~~per~~evaluated ~~month~~oil and ~~equity~~gas ~~compensation~~property of 25$1,~~000~~091,641 ~~shares~~and ofunevaluated ~~our~~oil ~~common~~and ~~stock~~gas ~~per~~property ~~month~~of $634,670.

OnAs ~~September~~of 19December 31, 2012, we ~~entered~~had ~~into~~total ~~the~~current ~~First~~liabilities ~~Amendment~~of ~~to that Director’s Agreement (“Director Amendment”) with Kevin Goldrick~~$486,572 ~~our~~all ~~director. Pursuant~~of towhich ~~the~~were ~~Director~~represented ~~Amendment,~~by weaccounts ~~agreed~~payable toand ~~increase~~accrued ~~the amount of stock compensation to Mr~~expenses. ~~Goldrick~~We tohad anno ~~aggregate~~other oflong ~~125,000~~term ~~shares and issued 93~~liabilities,~~750~~ ~~shares~~commitments ofor ~~its common stock to Mr~~contingencies. ~~Goldrick for services rendered.~~

On October 3, 2011, we entered into a Securities Purchase Agreement (“Financing Agreement”) with an investor pursuant to which we may, at our sole and exclusive option, issue and sell to the investor (“Investor”), and the Investor shall purchase up to $7,800,000 of our common stock and five-year warrants to purchase common stock (the “Warrants”) from time to time over a two year period at a purchase price of the higher of (i) $0.40 per share, and (ii) eighty percent (80%) of the 10-day volume weighted average price (VWAP) of our common stock. We received an initial drawdown of $200,000 on October 3, 2011, and we issued 500,000 shares of common stock at a purchase price of $0.40 per share and Warrants to purchase 500,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share. The Warrants expire five years from the date of the investment. The second drawdown of $200,000 was delivered on October 12, 2011 and we issued 500,000 shares of our common stock at a purchase price of $0.40 per share and Warrants to purchase 500,000 shares of our common stock at an exercise price of $0.48 per share to the Investor in connection with the second drawdown. The third drawdown of $50,000 was delivered on February 3, 2012 and we issued 125,000 shares of our common stock at a purchase price of $0.40 per share and Warrants to purchase 125,000 shares of our common stock at an exercise price of $0.48 per share to the Investor in connection with the third drawdown. The fourth drawdown of $1,000,000 was delivered on March 20, 2012 and we issued 1,282,052 shares of our common stock at a purchase price of $0.78 per share and Warrants to purchase 1,282,052 shares of our common stock at an exercise price of $0.94 per share to the Investor in connection with the fourth drawdown. The fifth drawdown of $120,000 was delivered on March 30, 2012 and we issued 162,163 shares of our common stock at a purchase price of $0.74 per share and Warrants to purchase 162,163 shares of our common stock at an exercise price of $0.89 per share to the Investor in connection with the fifth drawdown. The sixth drawdown of $30,000 was delivered on October 31, 2012 and we issued 75,000 shares of our common stock at a purchase price of $0.40 per share and Warrants to purchase 75,000 shares of our common stock at an exercise price of $0.48 per share to the Investor in connection with the sixth drawdown.

On April 17, 2012, we entered into a letter of intent with Range to acquire a 43.75% working interest and a 35% net revenue interest in the Osprey Prospect in Southern Michigan. We did not enter into a definitive agreement with Range for the acquisition of those interests and in October 2012, Range agreed to accept our deposit of $50,000 for the Osprey Prospect as partial payment of certain costs associated with our interests in the White-tail Prospect in Northern Michigan. The payment of $50,000 and our prior payments for the interests in the White-tail Prospect were not refunded when we entered into the Termination Agreement with Range subsequent to the period ended December 31, 2012, as discussed above in “Recent Developments.”

On November 29, 2012, pursuant to the financial public relations agreement with a consultant dated March 1, 2012, we agreed to pay the consultant for services rendered for the months of July, August, September, October and November 2012 with equity compensation of 300,000 shares of our common stock.

On December 20, 2012, pursuant to the anti-dilution provisions of the Omnibus Agreement with Range dated June 14, 2011, we issued an additional 35,192 shares of our common stock to Range as a result of the share issuance to the above-referenced consultant.

During the six months ended December 31, 2012, the Company incurred approximately $57,000 in legal costs related to responding to requests from the staff of the Securities and Exchange Commission (“SEC”). The staff’s requests have sought, among other things, information related to the Company’s Financing Agreement with the Investor and the accompanying issuances of shares to Investor, information concerning the Company’s communications or dealings with consultants who introduced the Company to Investor and to oil and gas opportunities, information concerning oil and gas-related agreements, and information concerning the Company’s sale of shares in connection with its S-1 registration statement and related shareholder communications. The Company is fully cooperating with the staff’s investigation. At this time, the Company cannot predict reasonably the outcome or timing of this matter as it relates to the Company. The Company has determined that for the time being, it is not advisable to seek additional funding from the Investor and that the pending investigation is having a material impact on the Company’s ability to seek new funding. The Company anticipates it will continue to incur significant legal costs related to these matters.

During 2013, we expect that the following will continue to impact our liquidity:

· significant legal and accounting costs associated with being a public company, ~~which~~and ~~will~~costs ~~continue~~associated towith ~~impact~~responding ~~our liquidity. Those professional fees will continue~~ to ~~increase as~~ the ~~size of our operations increase~~SEC. · ~~anticipated~~ increases in overhead and the use of independent contractors for services to be provided to us. · future payments to Range of our proportional share of costs associated with the wells located on Dansville Prospect ~~as well as the White-tail Prospect~~. · additional expenses related to the acquisition of additional oil and gas rights.

Other than those items specified above, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.

We have cash of $2418,~~908~~696 as of ~~June~~December 3031, 2012. In the opinion of management, available funds will not satisfy our working capital requirements to operate at our current level of activity for the next twelve months. We need additional cash to ~~expand~~continue our operations, ~~including~~and ~~the~~to ~~development~~develop of the Dansville Prospect, ~~the White-tail Prospect~~ and other properties. We cannot guarantee that we will be successful in obtaining sufficient capital to develop any of our properties. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors.

~~Although~~We do not believe we ~~hope~~will be able to continue to drawdown funds from the Financing Agreement ~~as needed~~. Accordingly, we ~~cannot guarantee that we will be able to continue to do so. We~~ have been, and intend to continue, working toward identifying and obtaining new sources of financing. We cannot guarantee that we will be successful in obtaining additional financing or that additional funding will be available on favorable terms. Any future financing that we may obtain may cause significant dilution to existing stockholders. Any debt financing or other financing of securities senior to common stock that we are able to obtain will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a negative impact on our business, prospects, financial condition, results of operations and cash flows.

If we are unable to ~~drawdown funds from the Financing Agreement and we are not able to~~ raise additional capital, we may be required to delay, scale back or eliminate portions of our operations or to obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to certain of our assets. Accordingly, the inability to obtain such financing could result in a significant loss of ownership and/or control of our assets and could also adversely affect our ability to fund our continued operations and our expansion efforts with respect to our oil and gas interests.

We are not currently conducting any research and development activities. We do not anticipate conducting such activities in the near future. We do not currently own any equipment. Our management believes that we will require the services of independent contractors to operate at our current level of activity. Further, as our level of operations increases beyond the level that our current staff can provide, we may need to hire additional employees or independent contractors as well as purchase or lease equipment.

Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective.

Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

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

~~None~~On October 31, 2012, we received an additional $30,000 drawdown (“Sixth Drawdown”) pursuant to the Financing Agreement dated October 3, 2011. In exchange for the Sixth Drawdown, we issued to the Investor 75,000 shares of our common stock at a purchase price of $0.40 per share and common stock purchase warrants to purchase 75,000 shares of common stock at an exercise price of 120% of the purchase price, or $0.48 per share.

All of the above shares were issued in a transaction which we believe satisfies the requirements of that exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Section 4(2) of that act and/or Regulation S promulgated pursuant to that act by the Securities and Exchange Commission.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
32.1	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.ins	XBRL Instance Document
101.sch	XBRL Taxonomy Schema Document
101.cal	XBRL Taxonomy Calculation Linkbase Document
101.def	XBRL Taxonomy Definition Linkbase Document
101.lab	XBRL Taxonomy Label Linkbase Document
101.pre	XBRL Taxonomy Presentation Linkbase Document

2223

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.

	American Energy Development Corp., a Nevada corporation
November 19, 2012	By:	/s/ Herold Ribsskog
March 5, 2013	By:	/s/ Herold Ribsskog
		Herold Ribsskog
	Its:	Chief Executive Officer, President, and a director
		(Principal Executive Officer)
November 19, 2012	By:	/s/ Joel Felix
March 5, 2013	By:	/s/ Joel Felix
		Joel Felix
	Its:	Chief Financial Officer, Secretary, Treasurer, and a director
		(Principal Financial and Accounting Officer)

2324

Filing Compare · American Energy Development Corp.