FTRK 10-Q Quarterly Report Feb. 28, 2010 | Alphaminr
SAUER ENERGY, INC.
ALPHAMINR

FTRK 10-Q Quarter ended Feb. 28, 2010

Balance Sheet
Cash Flow
Income Statement
10-Q 1 form10q.htm FORM 10Q form10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2010
or
£
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ________

Commission File Number:  000-53598

BCO Hydrocarbon Ltd.
(Exact name of registrant as specified in its charter)

Nevada
26-3261559
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

8520 NE 25 th Street, Clyde Hill, WA
98004-1645
(Address of principal executive offices)
(Zip Code)
(888) 211-7181
(Registrant’s  telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

(1) Yes [X] No [  ]
(2) 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).
(1) 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.

Large accelerated filer
[  ]
Accelerated filer
[  ]
Non-accelerated filer
[  ]
Smaller reporting company
[X]
(Do not check if a smaller reporting company)

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

(1) Yes [  ] No [X]



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
42,750,000 common shares outstanding as of March 15, 2010

BCO HYDROCARBON LTD.
TABLE OF CONTENTS

Page
PART I
Item 1.   Financial Statements
3
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
4
Item 3.   Quantitative and Qualitative Disclosures About Market Risk
6
Item 4T.   Controls and Procedures
6
PART II
Item 1.   Legal Proceedings
8
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
8
Item 3.   Defaults Upon Senior Securities
9
Item 4.   Submission of Matters to a Vote of Security Holders
9
Item 5.   Other Information
9
Item 6.   Exhibits
10
Signatures
11


i

PART I
ITEM 1.                                FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  All such adjustments are of a normal recurring nature.  Operating results for the six month period ended February 28, 2010, are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2010.  For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2009.
Page
Unaudited Financial Statements
Balance Sheets
F-1
Statements of Operations
F-2
Statements of Cash Flows
F-3
Notes to Unaudited Financial Statements
F-4 to F-7

3


BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Balance Sheets
(Unaudited)
February 28, 2010
August 31, 2009
ASSETS
Current Assets
Cash
$ 19,511 $ 39,375
Prepaid expense
- -
Total Current Assets
19,511 39,375
Oil and gas properties:
Undeveloped, unproven properties (Note 3)
10,000 10,000
Total other assets
10,000 10,000
Total Assets
$ 29,511 $ 49,375
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses
$ 10,264 $ 5,385
Total Current Liabilities
10,264 5,385
Stockholders' Equity
Common stock, $0.001 par value, 200,000,000 shares authorized, 42,750,000 shares issued and outstanding on February 28, 2010 and August 31, 2009.
4,275 4,275
Additional paid-in capital
69,521 69,521
Deficit accumulated during the exploration stage
(54,549 ) (29,806 )
Total Stockholders' Equity
19,247 43,990
Total Liabilities and Stockholders'  Equity
$ 29,511 $ 49,375

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

F-1

BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Statements of Operations
For the three and six months ended February 28, 2010 and 2009 and for the period
from Inception (August 19, 2008) to February 28, 2010
(Unaudited)
Three months ended
February 28,
Six months ended
February 28,
Inception
August 19, 2008
Through
February 28, 2010
2010
2009
2010
2009
Revenues
$ - $ - $ - $ - $ -
General and administrative expense:
Organizational expenses
- - - - 1,250
Professional expenses
9,025 3,574 22,331 7,844 44,566
Other Administrative expenses
588 1,019 2,412 2,759 8,733
9,613 4,593 24,743 10,603 54,549
(Loss) from operations
(9,613 ) (4,593 ) (24,743 ) (10,603 ) (54,549 )
Provision for income taxes
- - - - -
Net (Loss)
$ (9,613 ) $ (4,593 ) $ (24,743 ) $ (10,603 ) $ (54,549 )
Net (Loss) per Common Share, basic and diluted
$ (- ) $ (- ) $ (- ) $ (- )
Weighted Average Number of Common Shares Used in Calculation
42,750,000 37,830,000 42,750,000 35,493,373

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

F-2
BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Statements of Cash Flows
For the six months ended February 28, 2010 and 2009 and for the period
from Inception (August 19, 2008) to February 28, 2010
(Unaudited)
Six months ended
February 28,
Inception
August 19, 2008
Through
February 28, 2010
2010
2009
Cash From Operating Activities:
Net (loss)
$ (24,743 ) $ (10,603 ) $ (54,549 )
Reconciling adjustments:
Changes in operating assets and liabilities:
Accounts payable and accrued expenses
4,879 (6,763 ) 10,264
Net Cash Flows Used In Operating Activities
(19,864 ) (17,366 ) (44,285 )
Cash From Investing Activities:
Acquisition of undeveloped, unproven property
- (5,000 ) (10,000 )
Net Cash Flows Used In Investing Activities
- (5,000 ) (10,000 )
Cash From Financing Activities:
Proceeds from issuance of common stock, net of costs
- 80,000 73,796
Net Cash Flows Provided By Financing Activities
- 80,000 73,796
Net change in cash and cash equivalents
(19,864 ) 57,634 19,511
Cash at beginning of period
39,375 1 -
Cash at end of period
$ 19,511 $ 57,635 $ 19,511
Supplemental disclosure of cash flow information:
Cash paid for:
Interest
$ - $ - $ -
Income taxes
$ - $ - $ -
The accompanying notes are an integral part of these financial statements.


F-3

BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Notes to the Financial Statements for the six months ended February 28, 2010
(Unaudited – Prepared by Management)

Note 1 - Organization and Summary of Significant Accounting Policies:

Following is a summary of our organization and significant accounting policies:

Organization and nature of business – BCO Hydrocarbon Ltd. (identified in these footnotes as “we” “our” or the “Company”) is a Nevada corporation incorporated on August 19, 2008. We currently hold oil and gas assets in Calgary, Alberta, Canada. We intend to operate in the U.S. and Canada.

August 31 is our fiscal year end.

We are a natural resource exploration stage company and anticipate acquiring, exploring, and if warranted and feasible, developing natural resource assets.  We currently hold the right to acquire a 50% working interest in an oil and gas lease in Alberta, Canada.

We filed a Form S-1 Registration Statement which was declared effective by the U.S. Securities and Exchange Commission on November 12, 2008.  We completed our offering on February 10, 2009 raising a total of $77,500 under our prospectus registration.   We applied for and received approval for quotation on the OTC Bulletin Board and our trading symbol is BCOZ.

We are currently reviewing our present oil and gas assets and we are aggressively seeking additional oil and gas assets to increase our operations.  In the current exploration stage, we anticipate incurring operating losses as we implement our business plan.

Basis of presentation - The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles applicable to exploration stage enterprises.

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

Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.

Fair value of financial instruments and derivative financial instruments - The carrying amounts of cash, receivables, and current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of our foreign exchange, commodity price or interest rate market risks.

F-4


BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Notes to the Financial Statements for the six months ended February 28, 2010 - continued
(Unaudited – Prepared by Management)

Note 1 - Organization and Summary of Significant Accounting Policies (continued):

Oil and gas properties – We use the successful efforts method of accounting for oil and gas properties.
Under that method:
a.
Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are charged to expense when incurred since they do not result in the acquisition of assets.
b.
Costs incurred to drill exploratory wells and exploratory-type stratigraphic test wells that do not find proved reserves are charged to expense when it is determined that the wells have not found proved reserves.
c.
Costs incurred to acquire properties and drill development-type stratigraphic test wells, successful exploratory wells, and successful exploratory-type stratigraphic wells are capitalized.
d.
Capitalized costs of wells and related equipment are amortized, depleted, or depreciated using the unit-of-production method.
e.
Costs of unproved properties are assessed periodically to determine if an impairment loss should be recognized.

Other long-lived assets – Property and equipment are stated at cost less accumulated depreciation computed principally using accelerated methods over the estimated useful lives of the assets.  Repairs are charged to expense as incurred.  Impairment of long-lived assets is recognized when the fair value of a long-lived asset is less than its carrying value.  At the end of the current year, no impairment of long-lived assets had occurred, in management’s opinion.

Net income per share of common stock – We have adopted applicable FASC 260-10-20 Earnings per Share , which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements, basic loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

Note 2 – Going Concern

At February 28, 2010, we were not generating revenues and expect to incur exploration stage operating losses until revenues commence, and for a period of time thereafter. We rely on our officers and directors to perform essential functions without compensation until revenues can be commenced, and hire consultants as required.  We do not currently have sufficient capital to implement our business plan. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-5

BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Notes to the Financial Statements for the six months ended February 28, 2010 - continued
(Unaudited – Prepared by Management)

Note 3 – Oil and Gas Properties:

On August 29, 2008, we executed a Farm-in Letter Agreement with Unitech Energy Resources, Inc. (“Unitech”), of Calgary, Alberta, Canada.  Under the agreement, we can acquire a 50% working interest in Alberta, Canada Petroleum and Natural Gas Agreement Numbers 0050505090500 and 0050506060517 (collectively the “Lease”), which Lease is held by Unitech, and which comprises approximately 640 acres of petroleum and natural gas exploitation rights from the surface to the base of the Belly River formation, and which Lease is located in central Alberta, Canada, at section 30, Township 57, Range 8, W5 which is approximately 70 miles northwest of Edmonton, Alberta in the area known as “Paddle River”. The Lease is registered with the Government of Alberta, under the name of Unitech, our working interest partner that would retain the other 50% working interest.

To earn our working interest, we must pay Unitech $10,000 comprised of a $5,000 initial payment upon the signing of the Agreement, which amount was paid in September 2008.  The balance of $5,000 was due within 30 days of the closing of BCO financing pursuant to a registration statement filed on Form S-1 and was paid on February 17, 2009. In addition, we must expend a minimum of $25,000 on exploration expenses on or before January 1, 2010.  The operator has advised they do not intend to undertake any exploration at this time due to the uncertainty in oil and gas prices. We have negotiated an extension with the operator due to the fact that the decision not to proceed was made by the operator, the extension will run until the leases expired or until earlier terminated by us or by the operator if the operator should determine to proceed with the prior planned exploration and we do not have sufficient funds to fund such program.  The Farm-in Letter Agreement requires that, up to $25,000, we pay 100% of all costs associated with all seismic activity, drilling, completing, and testing, and thereafter both Parties will pay their respective 50% share of any go-forward costs.

Unitech is not affiliated with our Company. Unitech purchased a 100% working interest in the Lease at an Alberta Government auction on September 21, 2005 for the sum of Cdn$94,703 (0050505090500) and Cdn$18,671 (0050506060517), for a total of Cdn$113,374. The Lease is for 5 years and expires on September 22, 2010 (0050505090500) and June 15, 2011 (0050506060517) unless continued by the production of hydrocarbons, in which case the Lease will be continued until the Lease is abandoned. Unitech has performed initial geological analysis to try to determine the aerial extent of the anomalies but the results have been inconclusive. We plan to do additional work to more definitively delineate the aerial extent of the anomalies so that we can make a more informed determination of the exploration process going forward.  We have not yet retained a geologist or a firm of geologists to undertake this exploration program.  We plan to interview and retain a qualified consulting geologist at such time as we determine it is opportune to commence exploration on our lease.

Note 4 – Issuance of Shares:

As of February 28, 2010, the Company had issued shares of its $.0001 par value common stock as follows:

Price Per
Date
Description
Shares
Share
Amount
08/19/08
Shares sold for cash
100 $ .01 $ 1
09/18/08
Shares sold for cash
34,999,900 0.0005 17,500
11/24/08
Shares sold for cash
1,600,000 0.01 16,000
02/10/09
Shares sold for cash
6,150,000 0.01 61,500
02/28/10
Cumulative Totals
42,750,000 95,001
Less Offering Costs
(21,205 )
Net Equity Proceeds
$ 73,796

F-6

BCO HYDROCARBON LTD.
(An exploration stage enterprise)
Notes to the Financial Statements for the six months ended February 28, 2010 - continued
(Unaudited – prepared by Management)

Note 5 - New Accounting Pronouncements:

In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855), "Subsequent Events", SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140", SFAS No. 167 (ASC Topic 810), "Amendments to FASB Interpretation No. 46(R)", and SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162" were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2010-11 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued.

These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Note 6 – Related Party Transactions

On September 5, 2008, Malcolm Albery, our President, sold all of his 100 shares to Daniel Brooks, our Secretary, for the sum of $1 in cash.

On September 18, 2008, Daniel Brooks, our Secretary, subscribed for 34,999,900 shares of our common stock in return for $17,500. This subscription was accepted on September 19, 2008, with cash being received at that time.

On September 24, 2009, Daniel Brooks sold a total of 16,250,000 shares of which a total of 12,250,000 shares were purchased by Malcolm Albery, a Director and Officer of the Company.

Note 7 – Subsequent Events

The Company is currently undertaking a private placement by way of a units offering at $0.10 per unit, each unit consisting of one share of common stock and two share purchase warrants, being Class A and Class B warrants; Class A warrants to purchase an additional share of Class A common stock at US$0.200 per share within one (1) calendar year; Class B warrants to purchase an additional share of Class B common stock at $0.50 per share within two (2) calendar years.  Class B warrants are exercisable upon the holder having exercised the Class A warrants and will be cancelled at the end of the first calendar year should the Class A warrants expire unexercised.  The Company has not yet received any funds under this offering.
The Company has evaluated subsequent events from the balance date and determined that there are no other items that require disclosure.

F-7

ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This current report contains forward-looking statements relating to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  You should not place undue reliance on these statements, which speak only as of the date that they were made.  These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares of our capital stock.

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

As used in this current report and unless otherwise indicated, the terms “we”, “us”, the “Company” and “BCO Hydrocarbon” refer to BCO Hydrocarbon Ltd.

General Overview

We were incorporated on August 19, 2008, in the State of Nevada.  We are a natural resource exploration company and anticipate acquiring, exploring, and if warranted and feasible, developing natural resource assets.  We began our business operations by acquiring a right to earn a 50% working interest in an Alberta, Canada petroleum and natural gas lease (the “Farm-In Agreement”).  Our planned work program was to carry out exploration work on this lease in order to ascertain whether it possesses hydrocarbon reserves in commercial quantities. We had budgeted a total of $40,000 from funds raised under our prospectus offering for oil and gas exploration, of which a total of $25,000 is required to fund exploration on our existing oil and gas leases. We had planned to use the funds raised to undertake work on the leases in an attempt to identify the water-hydrocarbon contact point so that we can make an informed determination of the exploration process going forward to ascertain whether the lease possesses hydrocarbon reserves in commercial quantities.  There can be no assurance that our lease contains a commercially viable hydrocarbon reserve until appropriate exploratory work is completed and an evaluation based on that work concludes further work programs are justified.  Should we determine not to undertake further work on the lease after the exploratory work and evaluation, we will seek other exploration and development prospects in the Province of Alberta, Canada and we may decide to seek exploration and development prospects outside of Canada.  At present we do not have sufficient funds to complete the exploration and maintain our current reporting status. The operator has advised they do not intend to undertake any exploration at this time due to the uncertainty in oil and gas prices. We have negotiated an extension with the operator due to the fact that the decision not to proceed was made by the operator, the extension will run until the leases expire or until earlier terminated by us or by the operator if the operator should determine to proceed with the prior planned exploration and we do not have sufficient funds to fund such program.  We will need to raise additional capital in order to fund operations either by way of loans or equity.

On November 8, 2009, the Company entered into a Letter of Intent ( the “LOI”) with Mr. Andrew Krieger, whereby the Company would  acquire oil and gas lands, leases and royalties totaling 186 acres of property held by way of a leasehold with Chesapeake Appalachia LLC and 720 acres of property held by Mr. Krieger, both properties in the town of Livingston Manor, New York ( the “Property Interests”).   The Company was unable to successfully negotiate the terms of a definitive agreement with Mr. Krieger and therefore will not be proceeding on this acquisition.

4
We are an exploration stage company.  We currently have no revenue and one asset as per the Farm-In Agreement as noted above.

Liquidity and Capital Resources

As of February 28, 2010, we have a total of $19,511 cash on hand.  This amount is the cash remaining from the $61,500 (net of offering expense) initial proceeds raised under our prospectus offering, completed in February 2009.

We do not have sufficient funds to undertake the exploration expenditures required to be made on our oil and gas assets, should the operator determine to proceed with the exploration program or to meet our working capital requirements through this fiscal year.  We will require a minimum of $25,000 to be expended on our  existing leases to assist in determining their commercial viability.  However, based on the outcome of our initial exploration activities we may be required to raise additional capital to continue operations. The Company is currently undertaking a private placement by way of a units offering at $0.10 per unit, each unit consisting of one share of common stock and two share purchase warrants, being Class A and Class B warrants; Class A warrants to purchase an additional share of Class A common stock at US$0.200 per share within one (1) calendar year; Class B warrants to purchase an additional share of Class B common stock at $0.50 per share within two (2) calendar years.  Class B warrants are exercisable upon the holder having exercised the Class A warrants and will be cancelled at the end of the first calendar year should the Class A warrants expire unexercised.    We have not raised any funds yet under this offering.  There can be no assurance that we will be able to raise funds under this financing or any other financing on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we may be forced to cease the operation of our business.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining successful exploration results from our Farm-in Agreement or other oil and gas operations that we may undertake, and achieving a profitable level of operations.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Results of Operations

The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended August 31, 2009.

Our operating results for the six months ended February 28, 2010 compared to the six month period ended February 28, 2009 are described below.

Revenue

We have not earned any revenue since our inception and we do not anticipate earning revenues until such time as we have obtained successful exploration results from our Farm-in Agreement or other oil and gas operations that we may undertake.

Expense

Our net loss for the six months ended February 28, 2010 was $24,743, as compared to a net loss totaling $10,603 in the prior six month period ended February 28, 2009.  The increase in loss for the six months ending February 28, 2010 over 2009  is due to increases in expenses for professional fees to $22,331  in 2010 as compared to $7,844 in 2009 due to increased legal fees for our review of potential acquisitions and fees related to legal and accounting to maintain our regulatory filings.  Our administration expenses decreased to $2,412 for 2010 as compared  to $2,759 for 2009.
Basic and diluted losses per share for the period ended February 28, 2010 were $nil (2008 - $nil).

5
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
ITEM 3.                               QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T.                            CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Chief Executive Officer, Mr. Daniel Brooks and the Chief Financial Officer, Mr. Malcolm Albery, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of February 28, 2010, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report On Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.  In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of February 28, 2010.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.   Based on its assessment, management concluded that, as of February 28, 2010, the Company’s internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of February 28, 2010:

1.           Lack of an independent audit committee or audit committee financial expert, and no independent directors.  We do not have any members of the Board who are independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;

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2.           Inadequate staffing and supervision within our bookkeeping operations.  We have one consultant involved in bookkeeping functions, who provides two staff members.  The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews which may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;

3.           Outsourcing of the accounting operations of our Company.   Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management.  This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the firm;

4.           Insufficient installation of information technology to assist in our accounting functions.  Because of a lack of working capital and personnel, we do not have any information technology software and hardware to assist in providing effective controls;

5.           Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;

6.           Ineffective controls over period end financial disclosure and reporting processes.

Changes in Internal Control Over Financial Reporting

As of February 28, 2010, management assessed the effectiveness of our internal control over financial reporting and based on that evaluation, they concluded that during the quarter ended and to date, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.

Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses.  We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so.   We will implement further controls as circumstances, cash flow, and working capital permit.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the period ended February 28, 2010, fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size.   Management believes these weaknesses did not have an effect on our financial results.

We are committed to improving our financial organization.   As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements as necessary and as funds allow.

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.

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There were no changes in our internal control over financial reporting during the quarter ended February 28, 2010, 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

The Company is not a party to any legal proceedings and is not aware of any pending legal proceedings as of the date of this Form 10-Q.
ITEM 2.                               UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the six month period ending February 28, 2010.

Use of Proceeds from First Registration Statement

On November 12, 2008 our Registration Statement on Form S-1 under Commission file number 333-154877 was declared effective, enabling us to offer up to 7,750,000 shares of common stock of our company at a price of $0.01 per share. On November 24, 2008 we accepted subscriptions for a total of 1,600,000 common shares from one investor for cash proceeds of $16,000.  On February 10, 2009 we accepted subscriptions for a total of 6,150,000 common shares from various investors for cash proceeds of $61,500. No commissions were paid on the issuance.

Following is the use of proceeds for actual expenses incurred for our account in connection with the issuance and distribution of the securities.   Proceeds used were both from existing working capital $8,540 and from the funds raised under the offering of $12,665:

Expense
Amount of direct or indirect payments to directors, officers, general partners, 10% shareholders or affiliates of the Issuer
$
Amount of direct or indirect payments to others
$
Transfer agent
0 0
Legal and Accounting
0 4,843
Costs of the offering
0 15,000
Office and Administration
0 1,362
Total
0 21,205

Following is a table detailing the use of net offering proceeds of $64,835 expended to date after deduction of funds paid in connection with the costs of the offering.
Expenses
Amount of direct or indirect payments to directors, officers, general partners, 10% shareholders or affiliates of the Issuer
$
Amount of direct or indirect payments to others
$
Exploration and development activities
0 0
Acquisition undeveloped, unproved property
0 5,000
Legal and Accounting
0 31,077
Consulting
0 3,674
Administration Expenses
0 5,573
TOTAL
0 45,324

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We do not have sufficient proceeds on hand to fund our operations as described in the S-1 offering document incorporated for reference herein.  We have used a portion of  the funds reserved for exploration to maintain our reporting status.

ITEM 3.                                DEFAULTS UPON SENIOR SECURITIES

The Company does not have any senior securities as of the date of this Form 10-Q.

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

The Annual General Meeting of Shareholders was held on December 18, 2009, at which the following items were voted upon:

a) To set the number of directors at to and to elect the following directors to the board of directors to hold such position until the next annual meeting of the shareholders or until their successor is duly elected and qualified:

Voting Results
Elected or Re-elected
For
Withhold
Daniel Brooks
Re-elected
37,468,643
0
Malcolm Albery
Re-elected
37,468,643
0

b) The shareholders ratified the  re-appointment of Child, Van Wagoner & Bradshaw, PLLC as the Company’s auditors for the fiscal year 2010, and authorized the Board of Directors to approve the auditor’s remuneration.

Voting Results
For
Against
Abstain
To re-appoint Child, Van Wagoner & Bradshaw, PLLC as the Company’s auditors, and have the Board approve remuneration
37,468,643
0
0

c) The shareholders approved the 2009 Stock Option and Stock Award Plan (the “Plan”) of up to 4,000,000 shares of the Company’s common stock in the form of stock options and stock awards as compensation to employees, officers, directors and/or consultants of the Company.

Voting Results
For
Against
Abstain
To approve the 2009 Stock Option and Stock Award Plan
37,468,643
0
0

No other business came before the meeting.

There were no abstentions or broker non-votes on any matters put before the Annual Meeting.

ITEM 5.                                OTHER INFORMATION

None

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ITEM 6.                           EXHIBITS

3.1
Articles of Incorporation
Incorporated by reference to the Exhibits attached to the Company's Form S-1 filed with the SEC on October 30, 2008
3.2
Bylaws
Incorporated by reference to the Exhibits attached to the Company's Form S-1 filed with the SEC on October 30, 2008
10.1
Farm-In Agreement dated August 29, 2008 between Unitech Energy Resources Inc. and BCO Hydrocarbon Ltd.
Incorporated by reference to the Exhibits attached to the Company's Form S-1 filed with the SEC on October 30, 2008
10.2
Letter of Intent between the Company and Andrew Krieger dated November 8, 2009
Incorporated by reference to the Exhibits attached to the Company’s Form 8-K filed with the SEC on November 13, 2009.
31.1
Section 302 Certification- Principal Executive Officer
Filed herewith
31.2
Section 302 Certification- Principal Financial Officer
Filed herewith
32.1
Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith
32.2
Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith


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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.

BCO Hydrocarbon Ltd.
Date:   March 17, 2010
/s/Daniel Brooks
Name: Daniel Brooks
Title: Principal Executive Officer
Date:   March 17, 2010
/s/Malcolm Albery
Name: Malcolm Albery
Title: Principal Financial Officer

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