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REGENT TECHNOLOGIES INC
0000319200
10-Q
2012-09-30
false
--12-31
No
No
Yes
Smaller Reporting Company
Q3
2012
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 1. ORGANIZATION AND NATURE OF OPERATIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><u>Organization and Development Stage Activities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Regent Technologies, Inc. (the "Company" or "Regent"),
formerly Regent Petroleum Corporation, was incorporated under the laws of the State of Colorado on January 18, 1980. During 1999,
the Company's subsidiary companies were divested in the ordinary course of business and effective January 1, 1999, the Company
had re-entered the development stage. Accordingly, all of the Company's operating results and cash flows reported in the accompanying
consolidated financial statements from that date are considered to be those related to development stage activities and represent
the 'cumulative from inception' amounts from its development stage activities reported pursuant to ASC No. 915, "Development
Stage Activities" ("ASC 915") of the "Financial Accounting Standards Codification ("Codification"
or "ASC") and the Hierarchy of Generally Accepted Accounting Principles."</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u></u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Nature of Operations</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">During the third quarter of 2010, Regent restructured its management
team and focused its core business objectives and strategy on energy development. The Company's subsidiary (the "Subsidiary")
was approved for a name change on September 30, 2010 to Regent Natural Resources Co. ("Regent NRCo"). Regent NRCo is
a Texas based independent exploration and production company engaged in the acquisition and development of producing oil and natural
gas properties. Our results of operations and capital resources are highly dependent upon prevailing market prices of, and demand
for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of
factors that are beyond our control. These factors include the level of global supply and demand for oil and natural gas, market
uncertainties, weather conditions, domestic governmental regulations and taxes, political and economic conditions in oil producing
countries, price and availability of alternative fuels, and overall domestic and foreign economic conditions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><u>Principles of Consolidation and Presentation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The consolidated financial statements include the accounts of the
Company and our wholly-owned Subsidiary, Regent NRCo. All significant intercompany balances and transactions have been eliminated.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported assets,
liabilities, revenues and expenses. These estimates are based on information that is currently available to us and on various assumptions
that we believe to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions
and conditions. Unless otherwise specified or the context otherwise requires, all references in these notes to "Regent,"
"we," "us" or "our" are to Regent Technologies, Inc. and its Subsidiary.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">These unaudited consolidated financial statements reflect, in the
opinion of our management, all adjustments, consisting only of normal and recurring adjustments, necessary to state fairly our
financial position as of, and results of operations for, the periods presented.  These financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial
statements prepared in conformity with accounting principles generally accepted in the United States of America.  Interim
period results are not necessarily indicative of results of operations or cash flows for a full year. Notes to the consolidated
financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements
as reported in the 2011 Form 10-K have been omitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Critical accounting policies are defined as those significant accounting
policies that are most critical to an understanding of a company's financial condition and results of operations. We consider an
accounting estimate or judgment to be critical if (i) it requires assumptions to be made that were uncertain at the time the estimate
was made, and (ii) changes in the estimate or different estimates that could have been selected, could have a material impact on
our results of operations or financial condition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Revenue Recognition </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Oil and gas revenue is recorded when production is sold. The Company
accrues revenue for oil and gas production sold but not paid. See Receivables below.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Oil and Gas Revenue Receivable </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Receivables consist of accrued oil and gas receivables due from
either purchasers of oil and gas or operators in oil and natural gas wells for which the Company owns an interest. Oil and natural
gas sales are generally unsecured and such amounts are generally due within 30 days after the month of sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Dependence on Oil and Gas Prices</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">As an independent oil and gas producer, our revenue, profitability
and future rate of growth are substantially dependent on prevailing prices for oil and gas.  Historically, the energy
markets have been very volatile, and there can be no assurance that oil and gas prices will not be subject to wide fluctuations
in the future.  A substantial or extended decline in oil or gas prices could have a material adverse effect on our financial
position, results of operations, cash flows and access to capital and on the quantities of oil and gas reserves that we can economically
produce.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u></u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Oil and Gas Properties</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">We use the full cost method of accounting for our oil and gas producing
activities.  Under this method, all costs incurred in the acquisition, exploration and development of oil and gas properties,
including salaries, benefits and other internal costs directly attributable to these activities, are capitalized into cost centers
that are established on a property basis. Interest expense related to unproved properties is also capitalized into oil and gas
properties. No interest expense has been capitalized through the current period because the amount is nominal.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Other Accounting Policies</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The remaining significant accounting policies of the Company are
described in Note 2 to the consolidated financial statements of the 2011 Form 10-K. In management's opinion, the accounting policies
and estimates presented in the 2011 Form 10-K have not changed and therefore the unaudited consolidated financial statements herein
should be read in conjunction with the Company's audited report on Form 10-K for the period ended December 31, 2011, which was
previously filed with the Securities and Exchange Commission. There were other accounting standards and interpretations issued
in 2010 and 2011, all of which have been determined to not be applicable or significant by management and are not expected to have
a material impact on the financial position, operations or cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 4. OIL AND GAS ASSETS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><u>Property and Equipment</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Property and equipment, net are comprised for the periods indicated
as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>September 30, 2012</b></td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>December 31, 2011</b></td></tr>
<tr style="vertical-align: bottom">
<td>Evaluated Oil and Gas Properties (1) (2) (3)</td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">192,941 </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">114,634 </td></tr>
<tr style="vertical-align: bottom">
<td>Unevaluated Oil and Gas Properties (1)</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">3,080 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">3,080 </td></tr>
<tr style="vertical-align: bottom">
<td>Net Profits Production Interest (1) </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">5,695 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">5,695 </td></tr>
<tr style="vertical-align: top">
<td>Furniture and Equipment </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">12,649 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">12,649 </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">214,365 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">136,058 </td></tr>
<tr style="vertical-align: top">
<td>Accumulated Depreciation, Depletion and Amortization</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(13,161)</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(12,363)</td></tr>
<tr style="vertical-align: top">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">201,204 </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">123,695 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) Because the oil and gas assets and the net profits interest
were acquired from related parties (see Note 8), the properties were recorded at the basis of the related parties in the amount
of $85,595 as the capitalized costs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(2) The full cost capitalized costs for 2012 and 2011 were increased
by $78,307 and $32,614, respectively, for the construction of oil and gas flow line and the acquisition and installation of oil
production equipment related to the oil interests acquired in 2010. In the second quarter of 2012, the increase includes $31,153
for the acquisition of a disposal well and related pump equipment (see Note 8).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(3) The capitalized costs include $10,400 for asset retirement obligation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Asset Retirement Obligation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company accounts for asset retirement obligations based on the
guidance of ASC 410 which addresses accounting and reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. ASC 410 requires that the fair value of a liability for a retirement obligation
be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the
related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depreciated
over the estimated useful life of the related asset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">We have included estimated future costs of abandonment and dismantlement
in our amortization base and amortize these costs as a component of our depreciation, depletion, and accretion expense. The Company
increased the amount of our asset retirement obligations by $5,200 to account for the disposal well. There was no amortization
to the Company's asset retirement obligation for the current period because the amount is nominal.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 8. RELATED PARTY TRANSACTIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><u>Property Acquisitions</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On September 29, 2010, Regent RNCo executed a Property Transfer
Agreement (the "Transfer Agreement") with related party SIG Partners, LC ("SIG") and Mr. Nelson, CEO and Chairman
of the Registrant. The consideration for the transfer of oil and gas interests was the forgiveness of a $70,000 note payable and
13,500,000 shares of restricted common stock of the Company. After the consummation of the agreement, Mr. Nelson controlled approximately
80% of the outstanding common stock of the Registrant.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On December 30, 2010, Regent RNCo purchased a 50% net profits interest
from SIG in producing leaseholds located in Hill County, Texas. The consideration was $91,750, with $10,000 paid upon execution
and the balance payable under a promissory note for $81,750. The Transfer Agreement includes an option to acquire operations from
SIG and the related equipment and disposal well for the market value of the equipment and well. During the second quarter 2012,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Regent RNCo acquired from SIG the disposal well and related disposal
pump equipment plus various oilfield equipment including a submersible pump for the total consideration of $31,153.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Stock Sales</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">During 2011, the Subsidiary completed three sales of MacuCLEAR common
stock at $12 per share. Two sales for a total of 3,500 shares were made to a qualified fund controlled by the spouse of the CEO.
The sale of 3,000 shares was made to a preferred shareholder of the Subsidiary. The share price for each sale was based on sales
of comparable securities to new investors in MacuCLEAR Preferred Stock during 2011. During the first quarter of 2012, the Subsidiary
completed a sale of 1,725 shares of MacuCLEAR common stock at $12 per share to a qualified fund controlled by the CEO.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Notes Payable and Accrued Liabilities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Beginning in 2005, the Company borrowed various amounts for general
corporate purposes under a note payable to NR Partners, a partnership comprised of the CEO and director Dr. David Ramsour. For
the current period, the promissory note is an unsecured demand note in the principal amount of $1,900 and pays interest at 5% per
annum. As of the date of this filing, the Company has borrowed an additional $5,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In connection with the net profits production interest acquisition
in December 2010, the Subsidiary executed a promissory note for $81,750 to SIG Partners, LC. The interest rate on the note is 7%
per annum. The promissory note is secured by the interest conveyed. As of the date of this filing, the monthly payments have been
paid when due and the outstanding principal balance is $13,800.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition, as of September 30, 2012, the Subsidiary has accrued
liabilities of $41,322 to SIG, the operator of our oil and gas interests, for capital expenditures attributable to our oil and
gas interests. This amount includes $3,000 for SIG consulting services for the second quarter 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 6. NOTES PAYABLE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">Pursuant to the net profits production interest
acquisition in December 2010, Regent NRCo executed a promissory note for $81,750 payable to SIG Partners, LC, a related party
(see Note 8). The interest rate on the note is 7% with principal payments of $3,400 per month beginning February 2011. At September
30, 2012, the payment schedule is current and the principal balance outstanding is $13,800. The promissory note is secured by
the oil and gas property interest conveyed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Beginning in 2005, the Company has borrowed various amounts for
general corporate purposes under promissory notes to NR Partners, a related party (see Note 8). The outstanding amount of $1,900
owed to NR Partners at the end of the current period bears interest at the rate of 5% per annum and is due upon demand. In October
2012, the Company borrowed an additional $5,000 from NR Partners. All borrowings are for general corporate purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
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145340
0
0
0
0
262760
261
261
4639
-262760
20000
46700
14000
24790
9300
2409
27072
685
-5110
-1400
11768
-2738
45735
55
-379
25144
-3838
-33618
-222968
1967
4800
79892
103704
66000
321304
1656
73107
25122
115721
350000
30597
40878
-146073
22222
123225
427500
20000
-33650
-27200
-199275
-33650
-4978
371450
-6891
2282
2409
0
0
193840
0
0
135000
0
0
-70000
0
0
81750
0
0
80795
5200
0
10400
0
0
70000
0
0
150000
0
0
148500
0
0
1500
0
0
510960
22360233
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 5. FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Company has adopted ASC 820 which defines
fair value and the framework for using fair value to measure assets and liabilities, and expands disclosures about fair value
measurements. The fair value statement applies whenever other statements require or permit assets or liabilities to be measured
at fair value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Fair value is the amount that would be received from the sale of
an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified
at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability
with the creditor. ASC 820 established the following fair value hierarchy that prioritizes the inputs used to measure fair value:</p>
<ul style="list-style-type: disc">
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 -- Unadjusted quoted prices in active markets
for identical, unrestricted assets or liabilities that are accessible at the measurement date;</font></li>
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 -- Quoted prices which are not active, or
inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and</font></li>
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 -- Significant unobservable inputs that reflect
the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.</font></li>
</ul>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company is responsible for the valuation process and as part
of this process may use data from outside sources in establishing fair value. The Company performs due diligence to understand
the inputs used or how the data was calculated or derived. The Company corroborates the reasonableness of external inputs in the
valuation process. Cash, accounts payable, and other current liabilities are carried at book value amounts which approximate fair
value due to the short-term maturity of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">We used the following fair value measurements for certain of our
assets and liabilities during the current period and for the year ended December 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Level 3 Classification: Investment - MacuCLEAR Preferred Stock</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">As of this quarterly filing, the Company's Subsidiary held 107,986
shares of MacuCLEAR Preferred Stock, of which 95,858 shares are beneficially held for the holders of the Subsidiary's Preferred
Stock and 12,128 shares are available for sale. During the second quarter, 2012, the Company's Subsidiary sold 8,642 shares of
its holdings for $12.00 per share. Under the process defined for Level 3 assets, the Company has determined the fair value for
the MacuCLEAR Preferred Stock to be $12.00 per share based on new sales by MacuCLEAR of Series A-1 Preferred Stock for $12.00 per
share throughout 2011 and 2012. The Series A-1 Preferred Stock has the same designations as the Series A Preferred Stock held by
the Company. The Company's beneficial holdings which are not available for sale have not been increased beyond the original cost
of $2.595 per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following tables present the fair value measurement of the holdings
of MacuCLEAR Preferred Stock, beneficial and direct, as of September 30, 2012 and December 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td colspan="7" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Fair Value Measurements Using</b></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>September 30, 2012</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 1</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 2</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 3</b></td></tr>
<tr style="vertical-align: bottom">
<td>MacuCLEAR Preferred Stock at fair value</td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">394,288 </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>December 31, 2011</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td>MacuCLEAR Preferred Stock at fair value </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">497,992 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
0.01
0.01
0.10
0.10
0.10
0.10
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 7. STOCKHOLDERS' EQUITY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><u>Common and Preferred Stock</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company's capital structure is complex and consists of preferred
stock and a general class of common stock. The Company is authorized to issue 130,000,000 shares of stock, of which 30,000,000
have been designated as preferred shares with a par value per share of $.10, and 100,000,000 have been designated as common shares
with a par value per share of $.01. As of the date of this filing, there is no preferred stock outstanding and there are 22,360,233
shares of common stock outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Holders of Regent's common stock are entitled to one vote for each
share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore,
holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders
of the Regent's common stock representing a majority of the voting power of Regent's capital stock issued, outstanding and entitled
to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the
holders of a majority of Regent's outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation,
merger or an amendment to Regent's articles of incorporation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Holders of Regent's common stock are entitled to share in all dividends
that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution
or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities
and after providing for each class of stock, if any, having preference over the common stock. Regent's common stock has no pre-emptive
rights, no conversion rights and there are no redemption provisions applicable to Regent's common stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Stock Options</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">No options, warrants or similar rights are outstanding as of this
report date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Subsidiary Preferred Stock</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On April 18, 2007, our Subsidiary accepted purchase agreements in
a total amount of $150,000 received from four purchasers of a private offering of shares of Series A Convertible Preferred Stock
at $5.00 per share. The stock was sold under a private placement offering to sell $50,000 units convertible into 10,000 shares
of common stock of the Subsidiary plus 4,800 shares of common stock of MacuCLEAR common stock. Including the initial sales, our
Subsidiary has accepted purchase agreements from investors for $497,500. If all of the unconverted shares of the Series A Preferred
Stock were to be converted to common stock of the Subsidiary, the Company's ownership of the Subsidiary would be diluted to approximately
90%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
179
0
537
1292
31878
41322
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note 9. SUBSEQUENT EVENTS</b></font></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">We have evaluated events and transactions
that occurred after the balance sheet date of September 30, 2012 and have determined that there is no event or transaction which
has occurred that would require recognition beyond the disclosures herein.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
0
145536
9444
41322
44713
-0.00
-0.00
-0.00
-0.00
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">These unaudited consolidated financial statements reflect, in the
opinion of our management, all adjustments, consisting only of normal and recurring adjustments, necessary to state fairly our
financial position as of, and results of operations for, the periods presented.  These financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial
statements prepared in conformity with accounting principles generally accepted in the United States of America.  Interim
period results are not necessarily indicative of results of operations or cash flows for a full year. Notes to the consolidated
financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements
as reported in the 2011 Form 10-K have been omitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Critical accounting policies are defined as those significant accounting
policies that are most critical to an understanding of a company's financial condition and results of operations. We consider an
accounting estimate or judgment to be critical if (i) it requires assumptions to be made that were uncertain at the time the estimate
was made, and (ii) changes in the estimate or different estimates that could have been selected, could have a material impact on
our results of operations or financial condition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The remaining significant accounting policies of the Company are
described in Note 2 to the consolidated financial statements of the 2011 Form 10-K. In management's opinion, the accounting policies
and estimates presented in the 2011 Form 10-K have not changed and therefore the unaudited consolidated financial statements herein
should be read in conjunction with the Company's audited report on Form 10-K for the period ended December 31, 2011, which was
previously filed with the Securities and Exchange Commission. There were other accounting standards and interpretations issued
in 2010 and 2011, all of which have been determined to not be applicable or significant by management and are not expected to have
a material impact on the financial position, operations or cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Principles of Consolidation and Presentation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The consolidated financial statements include the accounts of the
Company and our wholly-owned Subsidiary, Regent NRCo. All significant intercompany balances and transactions have been eliminated.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported assets,
liabilities, revenues and expenses. These estimates are based on information that is currently available to us and on various assumptions
that we believe to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions
and conditions. Unless otherwise specified or the context otherwise requires, all references in these notes to "Regent,"
"we," "us" or "our" are to Regent Technologies, Inc. and its Subsidiary.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Oil and Gas Revenue Receivable </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Receivables consist of accrued oil and gas receivables due from
either purchasers of oil and gas or operators in oil and natural gas wells for which the Company owns an interest. Oil and natural
gas sales are generally unsecured and such amounts are generally due within 30 days after the month of sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Revenue Recognition </u></p>
<p style="margin: 0"> </p>
<p style="margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Oil and gas revenue is recorded when production is sold. The Company
accrues revenue for oil and gas production sold but not paid. See Receivables below. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company has adopted ASC 820 which defines fair value and the
framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. The fair
value statement applies whenever other statements require or permit assets or liabilities to be measured at fair value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Fair value is the amount that would be received from the sale of
an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified
at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability
with the creditor. ASC 820 established the following fair value hierarchy that prioritizes the inputs used to measure fair value:</p>
<ul style="list-style-type: disc">
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 -- Unadjusted quoted prices in active markets
for identical, unrestricted assets or liabilities that are accessible at the measurement date;</font></li>
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 -- Quoted prices which are not active, or
inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and</font></li>
<li style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 -- Significant unobservable inputs that reflect
the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.</font></li>
</ul>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company is responsible for the valuation process and as part
of this process may use data from outside sources in establishing fair value. The Company performs due diligence to understand
the inputs used or how the data was calculated or derived. The Company corroborates the reasonableness of external inputs in the
valuation process. Cash, accounts payable, and other current liabilities are carried at book value amounts which approximate fair
value due to the short-term maturity of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><b>Note 3. GOING CONCERN UNCERTAINTIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">As of the date of this quarterly report,
there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow
to fund our business operations and material commitments. Our future success and viability, therefore, are dependent upon our
ability to generate capital financing. We are optimistic that we will be successful in our new business operations and capital
raising efforts; however, there can be no assurance that we will be successful in generating revenue or raising additional capital.
The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company
and our shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">These consolidated financial statements do not give effect to any
adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize
its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected
in these consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">As of the date of this quarterly report, there is substantial doubt
regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations
and material commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing.
We are optimistic that we will be successful in our new business operations and capital raising efforts; however, there can be
no assurance that we will be successful in generating revenue or raising additional capital. The failure to generate sufficient
revenues or raise additional capital may have a material and adverse effect upon the Company and our shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">These consolidated financial statements do not give effect to any
adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize
its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected
in these consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Dependence on Oil and Gas Prices</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">As an independent oil and gas producer, our revenue, profitability
and future rate of growth are substantially dependent on prevailing prices for oil and gas.  Historically, the energy
markets have been very volatile, and there can be no assurance that oil and gas prices will not be subject to wide fluctuations
in the future.  A substantial or extended decline in oil or gas prices could have a material adverse effect on our financial
position, results of operations, cash flows and access to capital and on the quantities of oil and gas reserves that we can economically
produce.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Oil and Gas Properties</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">We use the full cost method of accounting for our oil and gas producing
activities.  Under this method, all costs incurred in the acquisition, exploration and development of oil and gas properties,
including salaries, benefits and other internal costs directly attributable to these activities, are capitalized into cost centers
that are established on a property basis. Interest expense related to unproved properties is also capitalized into oil and gas
properties. No interest expense has been capitalized through the current period because the amount is nominal.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Asset Retirement Obligation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company accounts for asset retirement obligations based on
the guidance of ASC 410 which addresses accounting and reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. ASC 410 requires that the fair value of a liability for a retirement obligation
be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of
the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depreciated
over the estimated useful life of the related asset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -44pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Property and Equipment</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Property and equipment, net are comprised for the periods indicated
as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>September 30, 2012</b></td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>December 31, 2011</b></td></tr>
<tr style="vertical-align: bottom">
<td>Evaluated Oil and Gas Properties (1) (2) (3)</td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">192,941 </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">114,634 </td></tr>
<tr style="vertical-align: bottom">
<td>Unevaluated Oil and Gas Properties (1)</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">3,080 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">3,080 </td></tr>
<tr style="vertical-align: bottom">
<td>Net Profits Production Interest (1) </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">5,695 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">5,695 </td></tr>
<tr style="vertical-align: top">
<td>Furniture and Equipment </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">12,649 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">12,649 </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">214,365 </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">136,058 </td></tr>
<tr style="vertical-align: top">
<td>Accumulated Depreciation, Depletion and Amortization</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(13,161)</td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(12,363)</td></tr>
<tr style="vertical-align: top">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">201,204 </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">123,695 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(1) Because the oil and gas assets and the net profits interest
were acquired from related parties (see Note 8), the properties were recorded at the basis of the related parties in the amount
of $85,595 as the capitalized costs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(2) The full cost capitalized costs for 2012 and 2011 were increased
by $78,307 and $32,614, respectively, for the construction of oil and gas flow line and the acquisition and installation of oil
production equipment related to the oil interests acquired in 2010. In the second quarter of 2012, the increase includes $31,153
for the acquisition of a disposal well and related pump equipment (see Note 8).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(3) The capitalized costs include $10,400 for asset retirement obligation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -44pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -44pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -44pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -44pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following tables present the fair value measurement of the holdings
of MacuCLEAR Preferred Stock, beneficial and direct, as of September 30, 2012 and December 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td colspan="7" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Fair Value Measurements Using</b></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>September 30, 2012</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 1</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 2</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>Level 3</b></td></tr>
<tr style="vertical-align: bottom">
<td>MacuCLEAR Preferred Stock at fair value</td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">394,288 </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center"><b>December 31, 2011</b></td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td>
<td style="text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td>MacuCLEAR Preferred Stock at fair value </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">- </td>
<td style="text-align: right"> </td>
<td style="text-align: right">$</td>
<td style="text-align: right">497,992 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
30
12649
12649
136058
214365
12363
13161
85595
78307
32614
31153
31153
0
0
0
0
394288000
497992000
95858
12128
107986
8642
12.00
12.00
2.595
December 2010
2005
0.07
0.05
81750
Monthly
3400
February 2011
Secured by the oil and gas property interest conveyed
13800
1900
2007-04-18
5.00
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On April 18, 2007, our Subsidiary accepted purchase agreements in
a total amount of $150,000 received from four purchasers of a private offering of shares of Series A Convertible Preferred Stock
at $5.00 per share. The stock was sold under a private placement offering to sell $50,000 units convertible into 10,000 shares
of common stock of the Subsidiary plus 4,800 shares of common stock of MacuCLEAR common stock. Including the initial sales, our
Subsidiary has accepted purchase agreements from investors for $497,500. If all of the unconverted shares of the Series A Preferred
Stock were to be converted to common stock of the Subsidiary, the Company's ownership of the Subsidiary would be diluted to approximately
90%.</p>
Regent Natural Resources Co.
497500
0.90
3000
13500000
70000
0.80
10000
81750
3000
3500
1725
12
12
12
5000
October 2012
Because the oil and gas assets and the net profits interest were acquired from related parties (see Note 8), the properties were recorded at the basis of the related parties in the amount of $85,595 as the capitalized costs.
The full cost capitalized costs for 2012 and 2011 were increased by $78,271 and $32,614, respectively, for the construction of oil and gas flow line and the acquisition and installation of oil production equipment related to the oil interests acquired in 2010. In the current period, the increase includes $31,153 for the acquisition of a disposal well and related pump equipment (see Note 8).
The capitalized costs include $10,400 for asset retirement obligation.