RDWQS 10-Q Quarterly Report June 30, 2010

RIDGEWOOD ENERGY Q FUND LLC

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10-Q 1 b72810110q.htm FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010 b72810110q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

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 No. 000-51927

RIDGEWOOD ENERGY Q FUND, LLC

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

84-1689138

(I.R.S. Employer

Identification No.)

14 Philips Parkway, Montvale, NJ 07645

(Address of principal executive offices) (Zip code)

(800) 942-5550

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

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

As of July 29, 2010 the Fund had 830.5577 shares of LLC Membership Interest outstanding.

Table of Contents

			Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements		1
		Unaudited Condensed Balance Sheets as of June 30, 2010 and December 31, 2009	1
		Unaudited Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2010 and 2009	2
		Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2010 and 2009	3
	Notes to Unaudited Condensed Financial Statements		4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		16
Item 4.	Controls and Procedures		16

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		16
Item 1A.	Risk Factors		16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 3.	Defaults Upon Senior Securities		16
Item 4.	(Removed and Reserved)		16
Item 5.	Other Information		16
Item 6.	Exhibits		17

	SIGNATURES		17

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RIDGEWOOD ENERGY Q FUND, LLC

UNAUDITED CONDENSED BALANCE SHEETS

(in thousands, except share data)

	June 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	8,063		$	3,497
Short-term investments in marketable securities		-			6,999
Production receivable		296			298
Insurance receivable		4,629			7,127
Other current assets		536			246
Total current assets		13,524			18,167

Salvage fund		1,158			1,145
Oil and gas properties:
Advances to operators for working interests and expenditures		77			-
Proved properties		15,760			13,561
Less: accumulated depletion and amortization		(2,333	)		(1,459	)
Total oil and gas properties, net		13,504			12,102
Total assets	$	28,186		$	31,414

LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Due to operators	$	76		$	490
Accrued expenses		68			57
Total current liabilities		144			547
Asset retirement obligations		469			429
Total liabilities		613			976

Commitments and contingencies (Note 9)
Members' capital:
Manager:
Distributions		(3,648	)		(3,520	)
Retained earnings		865			744
Manager's total		(2,783	)		(2,776	)

Shareholders:
Capital contributions (1,335 shares authorized;
830.5577 issued and outstanding)		123,037			123,037
Syndication costs		(14,070	)		(14,070	)
Distributions		(20,667	)		(19,941	)
Accumulated deficit		(57,944	)		(55,812	)
Shareholders' total		30,356			33,214
Total members' capital		27,573			30,438
Total liabilities and members' capital	$	28,186		$	31,414

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

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RIDGEWOOD ENERGY Q FUND, LLC

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Revenue
Oil and gas revenue	$	588		$	563		$	1,375		$	917

Expenses
Depletion and amortization		435			366			874			555
Dry-hole costs		(259	)		276			(347	)		9,830
Impairment of proved properties		-			-			-			341
Management fees to affiliate (Note 7)		-			432			-			933
Casualty loss		2,498			-			2,498			344
Operating expenses		94			171			140			309
General and administrative expenses		194			91			293			244
Total expenses		2,962			1,336			3,458			12,556

Loss from operations		(2,374	)		(773	)		(2,083	)		(11,639	)
Other (loss) income
Interest income		11			73			22			157
Derivative instrument (loss) income		(53	)		-			50			-
Total other (loss) income		(42	)		73			72			157

Net loss		(2,416	)		(700	)		(2,011	)		(11,482	)
Other comprehensive loss
Unrealized loss on marketable securities		-			(42	)		-			(100	)
Total comprehensive loss	$	(2,416	)	$	(742	)	$	(2,011	)	$	(11,582	)

Manager Interest
Net income (loss)	$	12		$	(15	)	$	121		$	(182	)

Shareholder Interest
Net loss	$	(2,428	)	$	(685	)	$	(2,132	)	$	(11,300	)
Net loss per share	$	(2,923	)	$	(825	)	$	(2,567	)	$	(13,605	)

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

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RIDGEWOOD ENERGY Q FUND, LLC

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

	Six months ended June 30,
	2010			2009

Cash flows from operating activities
Net loss	$	(2,011	)	$	(11,482	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depletion and amortization		874			555
Dry-hole costs		(347	)		9,830
Impairment of proved properties		-			341
Casualty loss		2,498			344
Accretion expense		7			5
Amortization of premium		-			165
Interest earned on marketable securities		(2	)		(9	)
Derivative instrument income		(50	)		-
Derivative instrument settlements		39			-
Changes in assets and liabilities:
Decrease (increase) in production receivable		2			(220	)
(Increase) decrease in other current assets		(6	)		104
Increase in due to operators		20			30
Increase in accrued expenses		11			24
Settlement of asset retirement obligation		-			(140	)
Net cash provided by (used in) operating activities		1,035			(453	)

Cash flows from investing activities
Payments to operators for working interests and expenditures		(77	)		-
Capital expenditures for oil and gas properties		(2,526	)		(7,550	)
Proceeds from insurance recovery		-			3,205
Proceeds from the maturity of investments		7,001			5,046
Interest reinvested in salvage fund		(13	)		(13	)
Net cash provided by investing activities		4,385			688

Cash flows from financing activities
Distributions		(854	)		(146	)
Net cash used in financing activities		(854	)		(146	)
Net increase in cash and cash equivalents		4,566			89
Cash and cash equivalents, beginning of period		3,497			6,513
Cash and cash equivalents, end of period	$	8,063		$	6,602

Supplemental schedule of disclosures of cash flow information
Advances used for capital expenditures in oil and gas properties reclassified to dry-hole costs	$	-		$	1,233

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

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RIDGEWOOD ENERGY Q FUND, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. Organization and Purpose

The Ridgewood Energy Q Fund, LLC (the "Fund"), a Delaware limited liability company, was formed on August 16, 2005 and operates pursuant to a limited liability company agreement (the “LLC Agreement") dated as of September 6, 2005 by and among Ridgewood Energy Corporation (the "Manager") and the shareholders of the Fund. The Fund was organized to acquire interests in oil and gas properties located in the United States offshore waters of Texas, Louisiana, and Alabama in the Gulf of Mexico.

The Manager has direct and exclusive control over the management of the Fund’s operations. With respect to project investments, the Manager locates potential projects, conducts due diligence, negotiates with operators and completes the transactions in which the investments are made. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for Fund operations. Such services include, without limitation, the administration of shareholder accounts, shareholder relations and the preparation, review and dissemination of tax and other financial information. In addition, the Manager provides office space, equipment and facilities and other services necessary for Fund operations. The Manager also engages and manages the contractual relations with unaffiliated custodians, depositories, accountants, attorneys, broker-dealers, corporate fiduciaries, insurers, banks and others as required. See Notes 2, 7 and 9.

2. Summary of Significant Accounting Policies

Basis of Presentation

These unaudited interim condensed financial statements have been prepared by the Fund’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Fund’s financial position, results of operations and cash flows for the periods presented. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in these unaudited interim condensed financial statements. The results of operations, financial position, and cash flows for the periods presented herein are not necessarily indicative of future financial results. These unaudited interim condensed financial statements should be read in conjunction with the Fund’s December 31, 2009 financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Manager reviews its estimates, including those related to the fair value of financial instruments, property balances, determination of proved reserves, impairments and asset retirement obligations. Actual results may differ from those estimates.

Cash and Cash Equivalents

All highly liquid investments with maturities, when purchased, of three months or less, are considered cash and cash equivalents. At times, deposits may be in excess of federally insured limits. Federally insured limits of the Fund’s deposits are $250 thousand per insured financial institution. At June 30, 2010, the Fund’s bank balances exceeded federally insured limits by $4.7 million, of which $3.2 million was invested in money market accounts that invest solely in U.S. Treasury bills and notes.

Investments in Marketable Securities

At times, the Fund may invest in U.S. Treasury bills and notes. These investments are considered short-term when their maturities are one year or less, and long-term when their maturities are greater than one year. Held-to-maturity investments are those securities that the Fund has the ability and intent to hold until maturity, and are recorded at cost plus accrued income, adjusted for the amortization of premiums and discounts, which approximates fair value. The Fund had no short-term held-to-maturity investments at June 30, 2010.

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For all investments, interest income is accrued as earned and amortization of premium or discount, if any, is included in interest income.

Salvage Fund

The Fund deposits in a separate interest-bearing account, or salvage fund, money to provide for the dismantling and removal of production platforms and facilities and plugging and abandoning its wells at the end of their useful lives, in accordance with applicable federal and state laws and regulations. At June 30, 2010, the Fund had investments in U.S. Treasury securities within its salvage fund that are classified as held-to-maturity, totaling $1.0 million, which mature in February 2012. Interest earned on the account will become part of the salvage fund. There are no restrictions on withdrawals from the salvage fund.

Oil and Gas Properties

The Fund invests in oil and gas properties, which are operated by unaffiliated entities that are responsible for drilling, administering and producing activities pursuant to the terms of the applicable operating agreements with working interest owners. The Fund’s portion of exploration, drilling, operating and capital equipment expenditures is billed by operators.

The successful efforts method of accounting for oil and gas producing activities is followed. Acquisition costs are capitalized when incurred. Other oil and gas exploration costs, excluding the costs of drilling exploratory wells, are charged to expense as incurred. The costs of drilling exploratory wells are capitalized pending the determination of whether the wells have discovered proved commercial reserves. If proved commercial reserves have not been found, exploratory drilling costs are expensed to dry-hole expense. Costs to develop proved reserves, including the costs of all development wells and related facilities and equipment used in the production of oil and gas, are capitalized. Expenditures for ongoing repairs and maintenance of producing properties are expensed as incurred.

Upon the sale or retirement of a proved property, the cost and related accumulated depletion and amortization will be eliminated from the property accounts, and the resultant gain or loss is recognized. Upon the sale or retirement of an unproved property, gain or loss on the sale is recognized.

Capitalized acquisition costs of producing oil and gas properties are depleted by the units-of-production method.

At June 30, 2010 and December 31, 2009, amounts recorded in due to operators totaling $38 thousand and $0.5 million, respectively, related to capital expenditures for oil and gas properties.

Advances to Operators for Working Interests and Expenditures

The Fund’s acquisition of a working interest in a well or a project requires it to make a payment to the seller for the Fund’s rights, title and interest. The Fund may be required to advance its share of estimated cash expenditures for the succeeding month’s operation. The Fund accounts for such payments as advances to operators for working interests and expenditures. As drilling costs are incurred, the advances are reclassified to unproved properties.

Asset Retirement Obligations

For oil and gas properties, there are obligations to perform removal and remediation activities when the properties are retired. When a project reaches drilling depth and is determined to be either proved or dry, an asset retirement obligation is incurred. Plug and abandonment costs associated with unsuccessful projects are expensed as dry-hole costs. As indicated above, the Fund maintains a salvage fund to provide for the funding of future asset retirement obligations. The following table presents changes in asset retirement obligations for the six months ended June 30, 2010 and the year ended December 31, 2009.

	June 30, 2010		December 31, 2009
	(in thousands)
Balance, beginning of period	$	429	$	392
Liabilities incurred		33		147
Liabilities settled		-		(178	)
Accretion expense		7		11
Revisions to previous estimates		-		57
Balance, end of period	$	469	$	429

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Syndication Costs

Syndication costs are direct costs incurred by the Fund in connection with the offering of the Fund’s shares, including professional fees, selling expenses and administrative costs payable to the Manager, an affiliate of the Manager and unaffiliated broker-dealers, which are reflected on the Fund’s balance sheet as a reduction of shareholders’ capital.

Revenue Recognition and Imbalances

Oil and gas revenues are recognized when oil and gas is sold to a purchaser at a fixed or determinable price, when delivery has occurred and title has transferred, and if collectibility of the revenue is probable. The Fund uses the sales method of accounting for gas production imbalances. The volumes of gas sold may differ from the volumes to which the Fund is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the properties’ estimated remaining reserves net to the Fund will not be sufficient to enable the underproduced owner to recoup its entitled share through production. The Fund’s recorded liability, if any, would be reflected in other liabilities. No receivables are recorded for those wells where the Fund has taken less than its share of production.

Derivative Instruments

The Fund may periodically utilize derivative instruments to manage the price risk attributable to its oil and gas production. Derivatives are carried on the balance sheet at fair value and recorded as either an asset or liability. Changes in the fair value of the derivatives are recorded currently in earnings unless specific hedge accounting criteria are met. At this time, the Fund has elected not to use hedge accounting for its derivatives and, accordingly, the derivatives are marked-to-market each quarter with fair value gains and losses recognized currently as derivative instrument income on the statement of operations. The related cash flow impact of the derivative activities are reflected as cash flows from operating activities on the statement of cash flows. See Note 4. “Derivative Instruments,” for more information.

Impairment of Long-Lived Assets

The Fund reviews the value of its oil and gas properties whenever management determines that events and circumstances indicate that the recorded carrying value of properties may not be recoverable. Impairments of producing properties are determined by comparing future net undiscounted cash flows to the net book value at the time of the review. If the net book value exceeds the future net undiscounted cash flows, the carrying value of the property is written down to fair value, which is determined using net discounted future cash flows from the producing property. The Fund provides for impairments on unproved properties when it determines that the property will not be developed or that a permanent impairment in value has occurred. The fair value determinations require considerable judgment and are sensitive to change. Different pricing assumptions, reserve estimates or discount rates could result in a different calculated impairment. Given the volatility of oil and natural gas prices, it is reasonably possible that the Fund’s estimate of discounted future net cash flows from proved oil and natural gas reserves could change in the near term. If oil and natural gas prices decline significantly, even if only for a short period of time, it is possible that write-downs of oil and gas properties could occur. The Fund did not record any impairments during the three and six months ended June 30, 2010 or during the three months ended June 30, 2009. During the six months ended June 30, 2009, the Fund recorded impairments of $0.3 million related to additional retirement obligations for Main Pass 30 well #1, which was determined to be fully depleted at December 31, 2008. The fair value of the impaired well was determined based on level 3 inputs, which include projected income from proved and probable reserves utilizing forward price curves, net of anticipated costs, discounted.

Depletion and Amortization

Depletion and amortization of the cost of proved oil and gas properties are calculated using the units-of-production method. Proved developed reserves are used as the base for depleting capitalized costs associated with successful exploratory well costs. The sum of proved developed and proved undeveloped reserves is used as the base for depleting or amortizing leasehold acquisition costs, the costs to acquire proved properties and platform and pipeline costs.

Income Taxes

No provision is made for income taxes in the financial statements. The Fund is a limited liability company, and as such, the Fund’s income or loss is passed through and included in the tax returns of the Fund’s shareholders.

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Income and Expense Allocation

Profits and losses are allocated 85% to shareholders in proportion to their relative capital contributions and 15% to the Manager, except for interest income and certain expenses such as dry-hole costs, trust fees, depletion and amortization, which are allocated 99% to shareholders and 1% to the Manager.

3. Recent Accounting Standards

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance on improving disclosures about fair value measurements. This guidance has new requirements for disclosures related to recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements in a rollforward reconciliation of Level 3 fair-value measurements. This guidance was effective for the Fund beginning January 1, 2010. The adoption of this guidance did not have a material impact on the Fund’s financial statements. The Level 3 reconciliation disclosures are effective for fiscal years beginning after December 15, 2010, which will be effective for the Fund December 31, 2011. The adoption of the guidance is not expected to have a material impact on the Fund’s financial statements.

4. Derivative Instruments

In January 2010, the Fund entered into a derivative contract for put options relating to the pricing of gas for a portion of its anticipated production. The use of such derivative instruments limits the downside risk of adverse price movements. The Fund has elected not to use hedge accounting for these derivatives and consequently, the derivatives are marked-to-market each quarter with fair value gains and losses recognized currently as derivative instrument income on the statement of operations. The estimated fair value of these contracts is based upon closing exchange prices on the New York Mercantile Exchange (“NYMEX”). See Note 8. “Fair Value Measurements.” The Fund has exposure to credit risk to the extent the derivative instrument counterparty is unable to satisfy its settlement commitment. The Fund actively monitors the creditworthiness of each counterparty and assesses the impact, if any, on its derivative positions.

The put options are carried at their fair value on the balance sheet within “Other current assets” and are settled based upon reported prices on the NYMEX. The Fund recognizes all unrealized and realized gains and losses related to these contracts on a mark-to-market basis in the statement of operations under the caption “Derivative instrument income.” Settlements of derivative contracts are reflected in operating activities on the statement of cash flows.

At June 30, 2010, the Fund had outstanding derivative contracts with respect to its future production of gas that are not designated for hedge accounting as detailed in the following table. The Fund had no derivative financial instruments prior to January 2010.

Production Period

Type of

Contract

Volume in

mmbtus

NYMEX

Contract

Price per

mmbtu

Estimated

Fair Value

Asset

(in thousands)

July 1, 2010 - October 31, 2010

Put Options

89,200

4.90

During the three months ended June 30, 2010, the Fund’s recorded derivative instrument losses of $53 thousand included unrealized losses of $89 thousand. During the six months ended June 30, 2010, the Fund’s recorded derivative instrument income of $50 thousand included unrealized gains of $18 thousand.

5. Oil and Gas Properties

Leasehold acquisition and exploratory drilling costs are capitalized pending determination of whether the well has found proved reserves. Unproved properties are assessed on a quarterly basis by evaluating and monitoring if sufficient progress is made on assessing the reserves. At June 30, 2010, the Fund had no unproved properties with capitalized exploratory well costs in excess of one year.

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Capitalized exploratory well costs are expensed as dry-hole costs in the event that reserves are not found or are not in sufficient quantities to complete the well and develop the field. At times, the Fund receives credits on certain wells from their respective operators upon review and audit of the wells’ costs. Dry-hole costs, inclusive of such credits, are detailed in the following table.

	Three months ended June 30,						Six months ended June 30,
Lease Block	2010			2009			2010			2009
	(in thousands)
Main Pass 221/222	$	(188	)	$	35		$	(231	)	$	(46	)
Eagle Project		(65	)		-			(65	)		-
Main Pass 30 wells		(1	)		(459	)		(42	)		6,777
Neptune Project		(5	)		700			(9	)		3,099
	$	(259	)	$	276		$	(347	)	$	9,830

6. Distributions

Distributions to shareholders are allocated in proportion to the number of shares held. The Manager determines whether available cash from operations, as defined in the LLC Agreement, will be distributed. Such distributions are allocated 85% to the shareholders and 15% to the Manager, as required by the LLC Agreement.

Available cash from dispositions, as defined in the LLC Agreement, will be paid 99% to shareholders and 1% to the Manager until the shareholders have received total distributions equal to their capital contributions. After shareholders have received distributions equal to their capital contributions, 85% of available cash from dispositions will be distributed to shareholders and 15% to the Manager.

7. Related Parties

The LLC Agreement provides that the Manager render management, administrative and advisory services. For such services, the Manager is entitled to an annual management fee, payable monthly, of 2.5% of total capital contributions, net of cumulative dry-hole and related well costs incurred by the Fund. During 2009, the Manager reduced, then waived its management fee for the remaining life of the Fund. Management fees for the three and six months ended June 30, 2009 were $0.4 million and $0.9 million, respectively. The Fund recorded costs relating to services provided by the Manager for accounting and investor relations. Such costs, included within general and administrative expenses, were approximately $20 thousand and $40 thousand for the three and six months ended June 30, 2010, respectively.

At times, short-term payables and receivables, which do not bear interest, arise from transactions with affiliates in the ordinary course of business.

None of the compensation paid to the Manager has been derived as a result of arm’s length negotiations.

The Fund has working interest ownership in certain projects to acquire and develop oil and natural gas projects with other entities that are likewise managed by the Manager.

8. Fair Value Measurements

At June 30, 2010 and December 31, 2009, cash and cash equivalents, short-term investments in marketable securities, production receivable, salvage fund and accrued expenses approximate fair value. At June 30, 2010, derivative instruments are recorded at fair value based on Level 2 inputs, as the instrument is an over-the-counter derivative with a third party.

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9. Commitments and Contingencies

Capital Commitments

The Fund has entered into multiple agreements for the drilling and development of its investment properties. The estimated capital expenditures associated with these agreements vary depending on the stage of development on a property-by-property basis. As of June 30, 2010, the Fund had committed to spend an additional $3.9 million related to its investment properties, all of which is expected to be incurred during the next twelve months.

Environmental Considerations

The exploration for and development of oil and natural gas involves the extraction, production and transportation of materials which, under certain conditions, can be hazardous or cause environmental pollution problems. The Manager and operators of the Fund’s properties are continually taking action they believe appropriate to satisfy applicable federal, state and local environmental regulations and do not currently anticipate that compliance with federal, state and local environmental regulations will have a material adverse effect upon capital expenditures, results of operations or the competitive position of the Fund in the oil and gas industry. However, due to the significant public and governmental interest in environmental matters related to those activities, the Manager cannot predict the effects of possible future legislation, rule changes, or governmental or private claims. At June 30, 2010 and December 31, 2009, there were no known environmental contingencies that required the Fund to record a liability.

Insurance Coverage

The Fund is subject to all risks inherent in the exploration for and development of oil and natural gas. Insurance coverage as is customary for entities engaged in similar operations is maintained, but losses may occur from uninsurable risks or amounts in excess of existing insurance coverage. The occurrence of an event that is not insured or not fully insured could have an adverse impact upon earnings and financial position. Moreover, insurance is obtained as a package covering all of the funds managed by the Manager. Claims made by other funds managed by the Manager can reduce or eliminate insurance for the Fund.

During 2006, the Fund acquired a 45.0% working interest in Main Pass 30 from Chevron U.S.A., Inc. (“Chevron”), the operator. The Fund has participated in the drilling of three wells in the Main Pass 30 lease block.

The third well in the Main Pass 30 project began drilling in October 2007. In December 2007, Chevron encountered a mechanical problem, or underground “blowout”, caused by a small pocket of gas, necessitating the completion of a sidetrack. In March 2009, drilling resumed on the sidetrack, which ultimately resulted in a dry-hole determination. During 2008, the Fund filed an insurance claim for the total estimated cost of the sidetrack. As of June 30, 2010, the Fund has collected $4.5 million related to this claim. During the three months ended June 30, 2010, the Fund adjusted its estimate related to the insurance receivable to $4.6 million based upon its final settlement with the insurance provider, resulting in an additional charge to casualty loss of $2.5 million. The Fund expects to receive final payment from its insurance provider in August 2010.

10. Subsequent Events

The Fund has assessed the impact of subsequent events through the date of issuance of its financial statements, and has concluded that there were no such events that require adjustment to, or disclosure in, the notes to the financial statements.

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

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q (“Quarterly Report”) and the documents Ridgewood Energy Q Fund, LLC (the “Fund”) has incorporated by reference into this Quarterly Report, other than purely historical information, including estimates, projections, statements relating to the Fund’s business plans, strategies, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 that are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. You are therefore cautioned against relying on any such forward-looking statements. Forward-looking statements can generally be identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “target,” “pursue,” “may,” “will,” “will likely result,” and similar expressions and references to future periods. Examples of events that could cause actual results to differ materially from historical results or those anticipated include weather conditions, such as hurricanes, changes in market conditions affecting the pricing of oil and natural gas, the cost and availability of equipment, and changes in governmental regulations. Examples of forward-looking statements made herein include statements regarding future projects, investments and insurance. Forward-looking statements made in this document speak only as of the date on which they are made. The Fund undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Critical Accounting Policies and Estimates

The following discussion and analysis of the Fund’s financial condition and operating results is based on its financial statements. The preparation of this Quarterly Report requires the Fund to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Fund’s financial statements, and the reported amount of revenue and expense during the reporting period. Actual results may differ from those estimates and assumptions. See “Notes to Unaudited Condensed Financial Statements” in Part I of this Quarterly Report for a presentation of the Fund’s significant accounting policies. No changes have been made to the Fund’s critical accounting policies and estimates disclosed in its 2009 Annual Report on Form 10-K.

Overview of the Fund’s Business

The Fund is a Delaware limited liability company formed on August 16, 2005 to acquire interests in oil and gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico. Ridgewood Energy Corporation (“Ridgewood Energy” or the “Manager”) a Delaware corporation, is the Manager. As the Manager, Ridgewood Energy has direct and exclusive control over the management of the Fund’s operations. The Fund’s primary investment objective is to generate cash flow for distribution to its shareholders by generating returns across a portfolio of exploratory or development stage shallow water or deepwater projects. However, the Fund is not required to make distributions to shareholders except as provided in the LLC Agreement.

The Manager performs certain duties on the Fund’s behalf including the evaluation of potential projects for investment and ongoing management, administrative and advisory services associated with these projects. For these services, the Manager is entitled to an annual management fee. During 2009, the Manager reduced, then waived its management fee for the remaining life of the Fund. The Fund does not currently, nor is there any plan to operate any project in which the Fund participates. The Manager enters into operating agreements with third-party operators for the management of all exploration, development and producing operations, as appropriate. The Manager also participates in distributions.

Revenues are subject to market pricing for oil and natural gas, which has been extremely volatile, and is likely to continue to be volatile in the future. This volatility is caused by numerous factors and market conditions that the Fund cannot control or influence. Therefore, it is impossible to predict the future price of oil and natural gas with any certainty. Low commodity prices could have an adverse affect on the Fund’s future profitability.

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Business Update

Information regarding the Fund’s current projects is provided in the following table.

				Total Spent		Total
	Working			through		Estimated
	Interest			June 30, 2010		Budget		Status
(in thousands)
Future Projects
Emerald Project well #3		12.5	%	$	-	$	2,624	Drilling date to be determined; currently
								expected in first quarter 2011.
Non-producing Properties
Carrera Project		2.0	%	$	2,316	$	3,168	Completion efforts are ongoing.
								Production expected fourth quarter 2010.
Producing Properties
Liberty Project		2.0	%	$	3,071	$	3,135	Well completed and production commenced
								July 2010.

Emerald Project well #1		12.5	%	$	8,221	$	8,221	Production commenced in February 2009.

Emerald Project well #2		12.5	%	$	1,777	$	2,130	Well completed and production commenced
								July 2010.

On April 20, 2010 in the Gulf of Mexico, as reported in the press, an explosion and fire occurred on the Deepwater Horizon drilling rig, which was engaged related to a BP-operated project, with which the Fund has no affiliation. As a result of the explosion and resultant oil spill, the U.S. government has placed a six month moratorium on deepwater drilling operations in the Gulf of Mexico. On June 22, 2010, a federal judge ruled against the U.S. government and lifted the moratorium and the 5 th Circuit Court of Appeals recently affirmed the lower court’s ruling. However, as of the date of this filing, there have been no deepwater drilling permits issued by the Bureau of Ocean Management, Regulation and Enforcement (“BOE”) (formerly the Minerals Management Service). In compliance with the court’s ruling, the Secretary of the Interior re-issued the moratorium and ordered it in place until the end of November 2010. As of the date of this filing, neither the Fund’s producing properties nor the completion efforts for the Carrera project have been impacted by the moratorium. The extent to which these recent events may impact the Fund’s future results is uncertain. The Fund cannot predict how federal and state authorities will further respond to the incident or whether additional changes in laws and regulations governing oil and gas operations in the Gulf of Mexico will result. Such changes, if any, may impact the way the Fund conducts business and may increase the Fund’s cost of doing business. A prolonged interruption may adversely impact the Fund’s financial position, results of operations and cash flows.

Results of Operations

The following table summarizes the Fund’s results of operations for the three and six months ended June 30, 2010 and 2009, and should be read in conjunction with the Fund’s financial statements and notes thereto included within Item 1 “Financial Statements” in Part I of this Quarterly Report.

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	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
	(in thousands)
Revenue
Oil and gas revenue	$	588		$	563		$	1,375		$	917

Expenses
Depletion and amortization		435			366			874			555
Dry-hole costs		(259	)		276			(347	)		9,830
Impairment of proved properties		-			-			-			341
Management fees to affiliate		-			432			-			933
Casualty loss		2,498			-			2,498			344
Operating expenses		94			171			140			309
General and administrative expenses		194			91			293			244
Total expenses		2,962			1,336			3,458			12,556
Loss from operations		(2,374	)		(773	)		(2,083	)		(11,639	)

Other (loss) income
Interest income		11			73			22			157
Derivative instrument (loss) income		(53	)		-			50			-
Total other (loss) income		(42	)		73			72			157

Net loss		(2,416	)		(700	)		(2,011	)		(11,482	)
Other comprehensive loss
Unrealized loss on marketable securities		-			(42	)		-			(100	)
Total comprehensive loss	$	(2,416	)	$	(742	)	$	(2,011	)	$	(11,582	)

Overview. During the three and six months ended June 30, 2010 and 2009, the Fund had one producing well, the Emerald Project well #1, which commenced production in February 2009, thereby impacting the Fund’s revenue, depletion, amortization and lease operating expenses upon production. Additionally, during the three and six months ended June 30, 2009, Main Pass 30 well #1, which had been fully depleted as of December 31, 2008, produced small amounts of gas, which impacted the Fund’s revenue and lease operating expenses.

Oil and Gas Revenue. Oil and gas revenue for the three months ended June 30, 2010 was $0.6 million, a $25 thousand increase from the three months ended June 30, 2009. The increase is attributable to the impact of increased average prices totaling $0.1 million, partially offset by decreased sales volumes totaling $0.1 million.

Oil sales volumes were 1 thousand barrels for both the three months ended June 30, 2010 and 2009. The Fund’s oil prices averaged $78 per barrel during the three months ended June 30, 2010 compared to $52 per barrel during the three months ended June 30, 2009.

Gas sales volumes were 106 thousand mcf and 140 thousand mcf for the three months ended June 30, 2010 and 2009, respectively. The Fund’s gas prices averaged $4.17 per mcf during the three months ended June 30, 2010 compared to $3.70 per mcf during the three months ended June 30, 2009.

Oil and gas revenue for the six months ended June 30, 2010 was $1.4 million, a $0.5 million increase from the six months ended June 30, 2009. The increase is attributable to the impact of increased sales volumes totaling $0.2 million coupled with the impact of increased average prices totaling $0.3 million.

Oil sales volumes were 2 thousand barrels for both the six months ended June 30, 2010 and 2009. The Fund’s oil prices averaged $75 per barrel during the six months ended June 30, 2010 compared to $47 per barrel during the six months ended June 30, 2009.

Gas sales volumes were 233 thousand mcf and 208 thousand mcf for the six months ended June 30, 2010 and 2009, respectively. The Fund’s gas prices averaged $4.43 per mcf during the six months ended June 30, 2010 compared to $3.78 per mcf during the six months ended June 30, 2009.

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The decrease in gas volumes for the three months ended June 30, 2010 was attributable to a decrease in well production for the Emerald Project well #1. In May 2010, a workover was completed on this well in an effort to increase its rate of production. The increase in gas volumes for the six months ended June 30, 2010 was attributable to an increase in well production days due to the timing of the onset of production for the Emerald Project. The volume variances were also impacted by the reduction in volumes for the Main Pass 30 wells, as such wells reached the end of their productive life. See “Overview” above for additional discussion.

Depletion and Amortization. Depletion and amortization for the three and six months ended June 30, 2010 was $0.4 million and $0.9 million, respectively, an increase of $0.1 million and $0.3 million from the three and six months ended June 30, 2009, respectively. The increase in the three month period resulted from an increase in average depletion rates totaling $0.1 million, partially offset by a decrease in production volumes totaling $0.1 million. The increase in the six month period resulted from an increase in average depletion rates totaling $0.2 million, coupled with an increase in production volumes totaling $0.1 million. The increases in depletion rates were primarily the result of revisions to reserve estimates.

Dry-hole Costs. Dry-hole costs are those costs incurred to drill and develop a well that is ultimately found to be incapable of producing either oil or natural gas in sufficient quantities to justify completion of the well. At times, the Fund receives credits on certain wells from their respective operators upon review and audit of the wells’ costs. Dry-hole costs, inclusive of such credits, are detailed in the following table.

	Three months ended June 30,						Six months ended June 30,
Lease Block	2010			2009			2010			2009
	(in thousands)
Main Pass 221/222	$	(188	)	$	35		$	(231	)	$	(46	)
Eagle Project		(65	)		-			(65	)		-
Main Pass 30 wells		(1	)		(459	)		(42	)		6,777
Neptune Project		(5	)		700			(9	)		3,099
	$	(259	)	$	276		$	(347	)	$	9,830

Impairment of Proved Properties. The Fund recorded impairment expense of $0.3 million for the six months ended June 30, 2009 related to additional retirement obligations for Main Pass 30 well #1, which was fully depleted at December 31, 2008. There was no impairment expense for the three and six months ended June 30, 2010 or for the three months ended June 30, 2009.

Management Fees to Affiliate . Management fees for the three and six months ended June 30, 2009 were $0.4 million and $0.9 million, respectively. The Fund did not incur management fees for the three and six months ended June 30, 2010. In accordance with the LLC agreement, the Manager is entitled to receive an annual management fee, totaling 2.5% of total capital contributions, net of cumulative dry-hole and related well costs incurred by the Fund. During 2009, the Manager reduced, then waived its management fee for the remaining life of the Fund.

Casualty Loss . Casualty losses for the three and six months ended June 30, 2010 were $2.5 million, resulting from changes in estimates related to the final settlement of the Main Pass 30 well #3 insurance claim. For the six months ended June 30, 2009 the Fund recorded a casualty loss of $0.3 million related to the Fund’s portion of the deductible for Main Pass 30 well #3 insurance claim. There was no casualty loss for the three months ended June 30, 2009.

Operating Expenses. Operating expenses include the costs of operating and maintaining wells and related facilities, geological costs and accretion expense, as detailed in the following table.

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
	(in thousands)
Lease operating expense	$	59	$	107	$	101	$	241
Workover costs		31		-		31		-
Accretion expense		3		2		7		5
Geological costs		1		62		1		63
	$	94	$	171	$	140	$	309

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Lease operating expense relates to the Fund’s producing properties during each period as outlined above in “Overview”. For the three and six months ended June 30, 2010, average production cost was $0.46 per mcfe and $0.37 per mcfe, respectively, compared to $0.72 per mcfe and $1.10 per mcfe, respectively, for the three and six months ended June 30, 2009. The decreases were attributable to lower lease operating costs per mcfe for the Emerald Project well #1 as compared to the Main Pass 30 field. Workover costs for the three and six months ended June 30, 2010 was attributable to the Emerald Project well #1, which required additional work in an effort to increase its rate of production. Geological costs for the three and six months ended June 30, 2010 related to geological surveys for the Liberty Project. Geological costs for the three and six months ended June 30, 2009 related to geological surveys for the Emerald Project well #1. Accretion expense is related to the asset retirement obligations established for the Fund’s proved properties.

General and Administrative Expenses. General and administrative expenses represent costs specifically identifiable or allocable to the Fund, as detailed in the following table.

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
	(in thousands)
Insurance expense	$	118	$	30	$	138	$	134
Accounting fees		53		54		108		92
Management reimbursement and other		20	$	-		40		-
Trust fees and other		3		7		7		18
	$	194	$	91	$	293	$	244

Insurance expense represents premiums related to producing well and control of well insurance, which varies dependent upon the number of wells producing or drilling and directors’ and officers’ liability insurance. Accounting fees represent audit and tax preparation fees, quarterly reviews and filing fees incurred by the Fund. Management reimbursement and other expenses relate to reimbursements for various administrative costs incurred on the Fund’s behalf. Trust fees represent bank fees associated with the management of the Fund’s cash accounts.

Interest Income. Interest income is comprised of interest earned on money market accounts and investments in U.S. Treasury securities. Interest income for the three months ended June 30, 2010 was $11 thousand, a $62 thousand decrease from the three months ended June 30, 2009. Interest income for the six months ended June 30, 2010 was $22 thousand, a $0.1 million decrease from the six months ended June 30, 2009. The decreases were the result of a reduction in average outstanding balances earning interest, due to ongoing capital expenditures for oil and gas properties, coupled with lower interest rates earned.

Derivative Instrument (Loss) Income. In January 2010, the Fund entered into a derivative contract for put options relating to the pricing of gas for a portion of its anticipated production. The Fund recognizes all unrealized and realized gains and losses related to these contracts on a mark-to-market basis. During the three months ended June 30, 2010, unrealized losses related to these contracts were $0.1 million and realized gains related to these contracts were $37 thousand. During the six months ended June 30, 2010, unrealized gains related to these contracts were $18 thousand and realized gains related to these contracts were $33 thousand. There was no derivative activity during the three and six months ended June 30, 2009.

Unrealized Loss on Marketable Securities. During 2008, the Fund purchased available-for-sale U.S. Treasury securities, which were sold in October 2009. Unrealized gains and losses related to the securities’ change in fair value are recorded in other comprehensive income until realized. For the three and six months ended June 30, 2009, the Fund recorded an unrealized loss of $42 thousand and $0.1 million, respectively. The Fund did not record an unrealized gain or loss for the three and six months ended June 30, 2010.

Capital Resources and Liquidity

Operating Cash Flows

Cash flows provided by operating activities for the six months ended June 30, 2010 were $1.0 million, primarily related to revenue received of $1.4 million, partially offset by payments for general and administrative expenses of $0.2 million and operating expenses of $0.1 million.

Cash flows used in operating activities for the six months ended June 30, 2009 were $0.5 million, primarily attributable to management fees of $0.9 million, operating expenses of $0.3 million, general and administrative expenses of $0.2 million and asset retirement liabilities settled of $0.1 million. These amounts were partially offset by revenue received of $0.7 million and interest income received of $0.3 million.

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Investing Cash Flows

Cash flows provided by investing activities for the six months ended June 30, 2010 were $4.4 million, primarily related to proceeds from the maturity of U.S. Treasury securities totaling $7.0 million, partially offset by capital expenditures for oil and gas properties totaling $2.6 million, inclusive of advances.

Cash flows provided by investing activities for the six months ended June 30, 2009 were $0.7 million, primarily related to proceeds from the maturity of U.S. Treasury securities totaling $5.0 million and the partial collection of the Main Pass 30 well #3 insurance receivable of $3.2 million, partially offset by capital expenditures for oil and gas properties totaling $7.6 million.

Financing Cash Flows

Cash flows used in financing activities for the six months ended June 30, 2010 were $0.9 million related to manager and shareholder distributions.

Cash flows used in financing activities for the six months ended June 30, 2009 were $0.1 million related to manager and shareholder distributions.

Estimated Capital Expenditures

The Fund has entered into multiple agreements for the acquisition, drilling and development of its investment properties. The estimated capital expenditures associated with these agreements can vary depending on the stage of development on a property-by-property basis. As of June 30, 2010, the Fund had committed to spend an additional $3.9 million related to its investment properties, all of which is expected to be incurred during the next twelve months.

When the Manager makes a decision to participate in an exploratory project, it assumes that the well will be successful and allocates enough capital to budget for the completion of that well and the additional development wells and infrastructure anticipated. If an exploratory well is deemed a dry hole or if it is determined to be un-economical, the capital allocated to the completion of that well and to the development of additional wells is then reallocated to a new project or used to make additional investments.

Capital expenditures for investment properties are funded with the capital raised by the Fund in its private placement offering, which is all the capital it will obtain. The number of projects in which the Fund can invest will be limited, and each unsuccessful project the Fund experiences reduces its ability to generate revenue and exhaust its capital. Typically, the Manager seeks an investment portfolio that combines high and low risk exploratory projects.

Liquidity Needs

The Fund’s primary short-term liquidity needs are to fund its operations and capital expenditures for its investment properties. Operations are funded utilizing operating income, existing cash on-hand, short-term investments and income earned therefrom.

Distributions, if any, are funded from available cash from operations, as defined in the LLC Agreement, and the frequency and amount are within the Manager’s discretion.

Off-Balance Sheet Arrangements

The Fund had no off-balance sheet arrangements at June 30, 2010 and December 31, 2009 and does not anticipate the use of such arrangements in the future.

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Contractual Obligations

The Fund enters into participation and operating agreements with operators. On behalf of the Fund, an operator enters into various contractual commitments pertaining to exploration, development and production activities. The Fund does not negotiate such contracts. No contractual obligations exist at June 30, 2010 and December 31, 2009 other than those discussed in “Estimated Capital Expenditures” above.

Recent Accounting Pronouncements

See Note 3 of Notes to Unaudited Condensed Financial Statements – “Recent Accounting Standards” contained in this Quarterly Report for a discussion of recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

In accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Fund’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Fund’s disclosure controls and procedures were effective as of June 30, 2010.

There has been no change in the Fund’s internal control over financial reporting that occurred during the three months ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 16, 2006, the Manager of the Fund filed a lawsuit against the former independent registered public accounting firm for the Fund, Perelson Weiner, LLP, (“Perelson”) in New Jersey Superior Court, captioned Ridgewood Energy Corporation v. Perelson Weiner, LLP, Docket No. L-6092-06. The suit alleged professional malpractice and breach of contract in connection with audit and accounting services performed for the Fund by Perelson. Thereafter, Perelson filed a counterclaim against the Manager on October 20, 2006, alleging breach of contract due to unpaid invoices in the amount of $326,554. During May 2010, a settlement was reached by the parties at no cost to the Fund. Legal costs related to this claim were borne by the Manager.

ITEM 1A. RISK FACTORS

Not required.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

EXHIBIT
NUMBER	TITLE OF EXHIBIT	METHOD OF FILING

31.1	Certification of Robert E. Swanson, Chief Executive Officer of the Fund, pursuant to Exchange Act Rule 13a-14(a).	Filed herewith
31.2	Certification of Kathleen P. McSherry, Chief Financial Officer of the Fund, pursuant to Exchange Act Rule 13a-14(a).	Filed herewith
32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Robert E. Swanson, Chief Executive Officer of the Fund and Kathleen P. McSherry, Chief Financial Officer of the Fund.	Filed herewith

SIGNATURES

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

				RIDGEWOOD ENERGY Q FUND, LLC
Dated:	July 29, 2010	By:	/s/	ROBERT E. SWANSON
			Name:	Robert E. Swanson
			Title:	Chief Executive Officer
				(Principal Executive Officer)


Dated:	July 29, 2010	By:	/s/	KATHLEEN P. MCSHERRY
			Name:	Kathleen P. McSherry
			Title:	Executive Vice President and Chief Financial Officer
				(Principal Financial Officer)

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Part I - Financial Information Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. (removed and Reserved)Item 5. Other Information Item 6. Exhibits

RDWQS 10-Q Quarter ended June 30, 2010