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

FORM 10-Q
(Mark One)

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

For Quarterly Period Ended September 30, 2010
or

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from _______________ to ______________

Commission File Number 000-53952

ANTE5, INC.
(Name of registrant in its charter)

Delaware
(State or other jurisdiction of incorporation or
organization)
27-2345075
(I.R.S. Employer Identification No.)

One Hughes Drive, Suite 606, Las Vegas, Nevada 89169
(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (323) 330-9881
 
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
x

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 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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

The number of shares of registrant’s common stock outstanding as of October 29, 2010 was 26,303,614.



 
 

 

 
TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
 
 
   
 2
     
 2
     
 3
     
 4
     
 5
     
 6
   
13
   
21
   
21
 
PART II - OTHER INFORMATION
 
 
   
21
   
21
   
22
   
22
   
22
   
22
     
22
 
 
 

 
PART I – FINANCIAL INFORMATION

ITEM 1.

 
(DEVELOPMENT STAGE COMPANY)
 
CONDENSED BALANCE SHEET
 
(Unaudited)
 
       
   
September 30,
 
   
2010
 
ASSETS
     
       
Current assets:
     
Cash and cash equivalents
  $ 1,345,439  
Accounts receivable
    7,217  
Prepaid expenses
    15,234  
Current portion of contingent consideration receivable
    435,000  
Total current assets
    1,802,890  
         
Contingent consideration receivable, net of current portion
    6,956,620  
         
Property and equipment, net
    2,724  
         
Total assets
  $ 8,762,234  
         
LIABILITIES AND STOCKHOLDERS' EQUITY
       
         
Current liabilities:
       
Accounts payable
  $ 406,693  
Royalties payable
    405,706  
Accrued expenses
    29,546  
Note payable
    500,000  
Current portion of deferred tax liability
    211,700  
Total current liabilities
    1,553,645  
         
Deferred tax liability, net of current portion
    2,932,700  
         
Total liabilities
    4,486,345  
         
Stockholders' equity:
       
Preferred stock, $0.001 par value, 20,000,000 shares
       
authorized, no shares issued and outstanding
    -  
Common stock, $0.001 par value, 100,000,000 shares
       
authorized, 21,292,333 shares issued and outstanding
    21,292  
Additional paid-in capital
    4,610,056  
(Deficit) accumulated during development stage
    (355,459 )
Total stockholders' equity
    4,275,889  
         
Total liabilities and stockholders' equity
  $ 8,762,234  
         
See Accompanying Notes to Financial Statements.
 

 
2


 
(DEVELOPMENT STAGE COMPANY)
 
CONDENSED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
             
             
   
For the three
   
April 9, 2010
 
   
months ended
   
(Inception) to
 
   
September 30, 2010
   
September 30, 2010
 
             
Revenue
  $ -     $ -  
                 
Operating expenses:
               
General and administrative
    104,404       175,184  
Officer salary
    12,500       22,917  
Professional fees
    31,160       289,493  
Depreciation
    743       1,362  
Total operating expenses
    148,807       488,956  
                 
Net operating loss
    (148,807 )     (488,956 )
                 
Other income (expense):
               
Other income
    140,882       140,882  
Interest expense
    (2,889 )     (11,429 )
Interest income
    1,988       4,044  
Total other income (expense)
    139,981       133,497  
                 
Loss before provision for income taxes
    (8,826 )     (355,459 )
                 
Provision for income taxes
    -       -  
                 
Net (loss)
  $ (8,826 )   $ (355,459 )
                 
                 
Weighted average number of common shares
               
outstanding - basic and fully diluted
    21,292,333       21,292,333  
                 
Net (loss) per share - basic and fully diluted
  $ -     $ (0.02 )
                 
See Accompanying Notes to Financial Statements.
 
 
 
3

 
 
(DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF STOCKHOLDERS' EQUITY
 
(Unaudited)
 
                                           
                                           
                                 
Deficit
       
                                 
accumulated
       
                           
Additional
   
during
   
Total
 
   
Preferred shares
   
Common shares
   
paid-in
   
development
   
stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
equity
 
                                           
Issuance from spin-off of Ante4, Inc.
    -     $ -       21,292,333     $ 21,292     $ 4,629,087     $ -     $ 4,650,379  
                                                         
Net indemnified costs incurred from the spin-off from Ante4, inc.
    -       -       -       -       (19,031 )     -       (19,031 )
                                                         
Net loss from April 9, 2010
                                                       
(Inception) to September 30, 2010
    -       -       -       -       -       (355,459 )     (355,459 )
                                                         
Balance, September 30, 2010
    -     $ -       21,292,333     $ 21,292     $ 4,610,056     $ (355,459 )   $ 4,275,889  
                                                         
See Accompanying Notes to Financial Statements.
 
 
 
4


 
 
(DEVELOPMENT STAGE COMPANY)
 
CONDENSED STATEMENT OF CASH FLOWS
 
(Unaudited)
 
       
       
   
April 9, 2010
 
   
(Inception) to
 
   
September 30, 2010
 
CASH FLOWS FROM OPERATING ACTIVITIES
     
Net (loss)
  $ (355,459 )
Adjustments to reconcile net (loss)
       
to net cash used in operating activities:
       
Depreciation
    1,362  
Loss on sale of debt securities
    8,363  
Common stock options granted
    58,425  
Decrease (increase) in assets:
       
Accounts receivable
    (11,633 )
Prepaid expenses
    (15,234 )
Contingent consideration receivable
    141,365  
Increase (decrease) in liabilities:
       
Accounts payable
    (23,378 )
Royalties payable
    (9,294 )
Accrued expenses
    29,546  
         
Net cash used in operating activities
    (175,937 )
         
CASH FLOWS FROM INVESTING ACTIVITIES
       
Cash acquired in spin-off from Ante4, Inc.
    258,712  
Proceeds from sale of short term investments
    3,700,000  
         
Net cash provided by investing activities
    3,958,712  
         
CASH FLOWS FROM FINANCING ACTIVITIES
       
Principal payments on line of credit
    (2,437,336 )
         
Net cash used in financing activities
    (2,437,336 )
         
NET CHANGE IN CASH
    1,345,439  
CASH AT BEGINNING OF YEAR
    -  
CASH AT END OF YEAR
  $ 1,345,439  
         
         
SUPPLEMENTAL INFORMATION:
       
Interest paid
  $ 6,854  
Income taxes paid
  $ -  
         
See Accompanying Notes to Financial Statements.
 

 
5

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)
 
Note 1 – Basis of Presentation

The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading.

These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed financial statements be read in conjunction with the financial statements prior to the spin-off of the Company for the fiscal year ended January 3, 2010 and notes thereto included in the Company's Form 10-12/A. The Company follows the same accounting policies in the preparation of interim reports.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (the “ASC”). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (“GAAP”) recognized by the FASB in the preparation of financial statements. The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (“SEC”), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company. The Company adopted the ASC upon inception on April 9, 2010. The ASC does not change GAAP, and did not have an effect on the Company’s financial position, results of operations or cash flows.

Results of operations for the interim periods are not indicative of annual results.
 
Note 2 – Spin-Off

On April 16, 2010, the Company, formerly a wholly-owned subsidiary of Ante4, Inc., was spun-off. As a result, on June 14, 2010 the Company distributed a total of 21,292,333 shares to holders of record of Ante4, Inc. as of the close of trading on April 15, 2010 on a 1:1 basis.

The following table summarizes the fair value of assets acquired and liabilities assumed:

Assets acquired
     
Cash
  $ 258,712  
Accounts receivable
    33,708  
Investment in debt securities and related put rights
    3,708,363  
Contingent consideration receivable
    7,532,985  
Property and Equipment
    15,706  
Less: accumulated depreciation and depletion
    (11,620 )
Total assets acquired
    11,537,854  
Liabilities assumed
       
Accounts payable
    449,164  
Royalties payable
    415,000  
Line of credit
    2,437,336  
Notes payable
    500,000  
Deferred tax liability
    3,144,400  
Total fair value of assets and liabilities acquired
  $ 4,591,954  

 
6

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Note 3 – Related Party

Our President, Chief Executive Officer, Chief Financial Officer and Secretary, Steve Lipscomb, will receive 5% of the royalty stream on the contingent consideration receivable from Peerless Media Ltd. in perpetuity as a result of an incentive arrangement with Mr. Lipscomb that was approved by Ante4’s Board of Directors in February 2009.

Mr. Lipscomb also receives an annual salary of $50,000.

In accordance with the spin-off on April 16, 2010, each option to purchase shares of Ante4, Inc. (“Ante4”) common stock that was held by a director, officer or employee of Ante4 and was outstanding on the distribution date (an “Original Ante4 Option”) was replaced with both an adjusted Ante4 stock option and a stock option to purchase one share of Ante5 common stock for each share of Ante4 common stock underlying the original Ante4 stock option. The terms are generally intended to preserve the intrinsic value of the original option. As such, the strike prices were adjusted using the ratio of the FMV of one share of Ante5 common stock that was distributed to the FMV of each share of Ante4 common stock at the time of the spin-off. The ratio of the intrinsic value on the first trading day for Ante5, July 1, 2010, relative to the closing share price on the day preceding the distribution of Ante4 resulted in an allocation of 6.35% of the original strike prices of the Ante4 options to the Ante 5 options. The following Ante5 options as originally issued by Ante4 are held by directors of Ante5, Inc.:

   
Number
   
Strike
       
Holder
 
of options
   
price
 
Expiration date
 
Vesting terms
Director
    12,000     $ 0.51  
August 9, 2014
 
Fully vested
Director
    12,000     $ 0.33  
May 31, 2016
 
Fully vested
Director
    4,000     $ 0.29  
May 30, 2017
 
Fully vested
Director
    4,000     $ 0.29  
May 30, 2017
 
Fully vested
Director
    4,000     $ 0.08  
May 22, 2018
 
Fully vested
Director
    4,000     $ 0.08  
May 22, 2018
 
Fully vested
Director
    4,000     $ 0.05  
May 20, 2019
 
Fully vested
Director
    4,000     $ 0.05  
May 20, 2019
 
Fully vested
CEO
    125,000     $ 0.03  
February 20, 2019
 
Fully vested

On April 26, 2010 the Company granted 100,000 stock options as compensation for service on the Board of Directors in 2010 to each of its three Directors. The options vest annually over three years and are exercisable until April 25, 2020 at an exercise price of $0.30 per share based on the average of the bid and ask price of the Company’s common stock over the five day period beginning on the first day the common stock was traded on the “Pink Sheets”. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 204% and a call option value of $0.1947, was $58,425.
 
Note 4 – Contingent Consideration Receivable

As a result of a transaction between Ante4, Inc. (Ante4”) and Peerless Media Ltd. (“Buyer”) during fiscal year 2009, pursuant to which, Ante4 sold substantially all of its operating assets (the “Transaction”), Ante5, Inc. (the “Company”) as a result of the spin-off on April 16, 2010, is entitled to receive, in perpetuity, 5% of gross gaming revenue and 5% of other revenue of the Buyer generated by Ante4’s former business and assets that were sold to Buyer in the Transaction. Buyer has guaranteed a minimum payment to us of $3 million for such revenue over the three-year period following the closing of the Transaction. The Company prepared a discounted cash flow model to determine an estimated fair value of this portion of the purchase price as of November 2, 2009. This value is recorded on the balance sheet as of September 30, 2010. In connection with the spin-off described above, on April 16, 2010 Ante4 distributed this asset to a wholly-owned subsidiary, Ante5, Inc., which was immediately spun-off and a registration statement was filed on Form 10-12/A, along with an Information Statement with the Securities and Exchange Commission for the purpose of spinning off the Ante5 shares from Ante4, Inc. to its stockholders of record on April 15, 2010.

 
7

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Note 5 – Fair Value of Financial Instruments

The Company adopted FASB ASC 820-10 upon inception at April 9, 2010. Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company’s financial instruments that must be measured under the new fair value standard consist of cash and cash equivalents and note payable. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following table provides a summary of the fair values of assets and liabilities:
 
     
Fair Value Measurements
at September 30, 2010
 
 
Carrying
             
 
Value
             
 
September 30, 2010
 
Level 1
 
Level 2
   Level 3  
Assets:
                   
Cash and cash equivalents
  $ 1,345,439     $ 1,345,439     $ -     $ -  
Total
  $ 1,345,439     $ 1,345,439     $ -     $ -  
                                 
Liabilities:
                               
Note payable
  $ 500,000     $ -     $ -     $ 500,000  
Total
  $ 500,000     $ -     $ -     $ 500,000  
 
Note 6 – Accrued Expenses

As of September 30, 2010 accrued expenses included the following:

   
September 30, 2010
 
Accrued Payroll, Officer
  $ 22,917  
Accrued Payroll Taxes
    2,054  
Accrued Interest
    4,575  
    $ 29,546  
 
 
8

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)
Note 7 – Note Payable

Note payable consists of the following at September 30, 2010:

   
September 30, 2010
 
       
Unsecured debenture from Ante4, Inc. bearing interest at 2%, due on April 16, 2011
  $ 500,000  

Accrued interest on the above promissory note totaled $4,575 at September 30, 2010.

Interest expense totaled $11,429 for the period from April 9, 2010 (inception) to September 30, 2010, of which $4,575 was incurred from the note payable. Interest expense of $6,854 was incurred on the line of credit from UBS.

The line of credit from UBS was paid in full and closed with the proceeds of the sale of our auction rate securities on July 1, 2010.
 
Note 8 – Stockholders’ Equity

Preferred Stock
On April 9, 2010 (inception) the Company authorized 20,000,000 shares of $0.001 par value preferred stock. No shares have been issued to date.

Common Stock
On April 9, 2010 (inception) the Company authorized 100,000,000 shares of $0.001 par value common stock.

Stock Distribution
On June 14, 2010, Ante4, Inc. distributed 21,292,333 shares of the common stock of the Company among Ante4, Inc.’s shareholders pursuant to the spin-off of the Company from Ante4, Inc. Each shareholder of record on April 15, 2010 was issued one share of Ante5, Inc. common stock for each share of Ante4, Inc. common stock owned by the shareholder.
 
Note 9 – Warrants and Options

Options and Warrants Granted
In accordance with the spin-off on April 16, 2010, each option to purchase shares of Ante4, Inc. (“Ante4”) common stock that was held by a director, officer or employee of Ante4 and was outstanding on the distribution date (an “Original Ante4 Option”) was replaced with both an adjusted Ante4 stock option and a stock option to purchase one share of Ante5 common stock for each share of Ante4 common stock underlying the original Ante4 stock option. The terms are generally intended to preserve the intrinsic value of the original option. As such, the strike prices were adjusted using the ratio of the intrinsic value of one share of Ante5 common stock that was distributed to the intrinsic value of each share of Ante4 common stock at the time of the spin-off. The ratio of the closing share prices on the first trading day for Ante5, July 1, 2010, relative to the closing share price of Ante4 preceding the distribution date of June 14, 2010 resulted in an allocation of 6.35% of the original strike prices of the Ante4 options to the Ante 5 options. A total of 269,000 options were carried over in the spin-off with strike prices between $0.03 and $0.92 per share, exercisable over ten years, expiring from August 9, 2014 through May 20, 2019. All options that were carried over were fully vested.

On April 26, 2010 the Company granted 100,000 stock options as compensation for service on the Board of Directors in 2010 to each of its three Directors. The options vest annually over three years and are exercisable until April 25, 2020 at an exercise price of $0.30 per share based on the average of the bid and ask price of the Company’s common stock over the five day period beginning on the first day the common stock was traded on the “Pink Sheets”. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 204% and a call option value of $0.1947, was $58,425.

 
9

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)
 
Options and Warrants Cancelled
No options or warrants were cancelled during the period from April 9, 2010 (inception) to September 30, 2010.

Options and Warrants Expired
No options or warrants expired during the period from April 9, 2010 (inception) to September 30, 2010.

Options Exercised
No options were exercised during the period from April 9, 2010 (inception) to September 30, 2010.

The following is a summary of information about the Stock Options outstanding at September 30, 2010.
 
   
Shares Underlying Options Outstanding
 
Shares Underlying
Options Exercisable
     
                       
       
Weighted
             
     
Shares
Average
 
Weighted
 
Shares
 
Weighted
     
     
Underlying
Remaining
 
Average
 
Underlying
 
Average
     
 
Range of
 
Options
Contractual
 
Exercise
 
Options
 
Exercise
     
 
Exercise Prices
 
Outstanding
Life
 
Price
 
Exercisable
 
Price
     
                           
  $
0.03 - $0.92
     
569,000
 
8.65 years
 
$
0.25
     
369,000
   
$
0.25
 

The fair value of each option and warrant grant are estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

   
September 30,
 2010
     
Average risk-free interest rates
   
1.68
%
Average expected life (in years)
   
5
 
Volatility
   
204
%

The Black-Scholes option pricing model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. During the period from April 9, 2010 (inception) to September 30, 2010, there were no options granted with an exercise price below the fair value of the underlying stock at the grant date.

The weighted average fair value of options granted with exercise prices at the current fair value of the underlying stock during the period from April 9, 2010 (inception) to September 30, 2010 was $0.30 per option.

The following is a summary of activity of outstanding stock options:

         
Weighted
Average
 
   
Number
   
Exercise
 
   
of Shares
   
Price
 
             
Balance, April 9, 2010 (Inception)
    -0-     $ -0-  
Options expired
    -0-       -0-  
Options cancelled
    -0-       -0-  
Options granted
    569,000       0.25  
Options exercised
    -0-       -0-  
                 
Balance, September 30, 2010
    569,000       0.25  
                 
Exercisable, September 30, 2010
    369,000     $ 0.25  

 
10

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Note 10 – Other Income

On August 22, 2010 the Company received $140,861 as part of a termination and release agreement with Poker Royalty, LLC (“Poker Royalty”).  The settlement, in which we maintained our right to audit, released Poker royalty from its obligations under a May 15, 2004 marketing agreement that was part of the WPT interests that were spun-off to us from Ante4, Inc.
 
Note 11 – Income Taxes

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company does not expect to be able to utilize any net operating loss carry forwards earned prior to the spin-off on April 16, 2010. Current losses recorded during the period from April 9 (inception) to September 30, 2010 as well as additional losses expected for the remainder of 2010 can be used to offset future tax liabilities. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. We have not provided a valuation allowance against our deferred tax liability. As of September 30, 2010, the Company recognized a deferred tax liability of $3,144,400 related to tax deferrals on the gain from the sale of assets to Party Gaming during 2009. There were no recorded unrecognized tax benefits at the end of the reporting period.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.
 
Note 12 – Contingencies

The Company is involved in various inquiries, administrative proceedings and litigation relating to matters arising in the normal course of business. The Company is not currently a defendant in any material litigation and is not aware of any threatened litigation that could have a material effect on the Company. Management is not able to estimate the minimum loss to be incurred, if any, as a result of the final outcome of these matters but believes they are not likely to have a material adverse effect upon the Company’s financial position or results of operations and, accordingly, no provision for loss has been recorded.

In connection with the transfer of the Ante5 assets to us, we assumed certain liabilities of Ante4 relating to the previous WPT business. We also agreed to indemnify Ante4 and related individuals from (a) liabilities and expenses relating to operations of Ante4 prior to the effective date of the merger between Ante4, Inc. and Plains Energy Investments, Inc., (b) operation or ownership of Ante5’s assets after the merger effective date, and (c) certain tax liabilities of Ante4. Ante5’s obligation to indemnify Ante4 with respect to its former operations and certain tax liabilities is limited to $2.5 million in the aggregate.

The Company periodically maintains cash balances at banks in excess of federally insured amounts. The extent of loss, if any, to be sustained as a result of any future failure of a bank or other financial institution is not subject to estimation at this time.
 
 
11

Ante5, Inc.
Notes to Condensed Financial Statements
(Unaudited)
 
Note 13 – Subsequent Events

On October 7, 2010, we entered into an asset purchase agreement (the “APA”) with Twin City Technical, LLC, a North Dakota limited liability company, and Irish Oil and Gas, Inc., a Nevada corporation (collectively, the “Sellers”), to acquire Sellers’ right, title, and interest in certain mineral leases (“Mineral Leases”) in consideration for a total of $2,969,648 of cash, payable in full at the closing, plus 5,011,281 shares of our common stock, plus assignment to the Sellers (or in Sellers’ sole discretion, reservation by the Sellers in their assignment to the Company) of a 2% overriding royalty interest in the Mineral Leases, effective on the closing.  The closing of the purchase and sale of assets will occur upon the satisfaction or waiver of the conditions set forth in the APA, but no later than October 29, 2010 unless Sellers and the Company mutually agree in writing to extend the closing date. Notwithstanding the foregoing, the Company has the right, exercisable in its sole discretion, to unilaterally extend the closing date by up to fifteen (15) more days.  The Company has exercised its right to extend the closing date for fifteen days in accordance with the APA.

In accordance with ASC 855-10, all subsequent events have been reported through the filing date.
 
 
 
 
 
 
 
12

 
ITEM 2:

Cautionary Statements

This Form 10-Q contains financial projections and other “forward-looking statements,” as that term is used in federal securities laws, about Ante5, Inc.’s (“we,” “us,” or the “Company”) financial condition, results of operations and business. These statements include, among others, statements concerning the potential for revenues and expenses and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important facts that could prevent the Company from achieving its stated goals include, but are not limited to, the following:

 
(a)
volatility or decline of the Company’s stock price;
 
 
(b)
low trading volume and illiquidity of our common stock, and possible application of the SEC’s penny stock rules;
 
 
(c)
we are subject to certain contingent liabilities of our former parent company, and we have an indemnification obligation of up to $2.5 million of liabilities, if any, that our former parent company may incur to a third party arising from pre-spin-off operations;
 
 
(d)
potential fluctuation in quarterly results;
 
 
(e)
failure of the Company to earn revenues or to monetize certain claims that it has for payments owed to it;
 
 
(f)
material defaults on monetary obligations owed to the Company, resulting in unexpected losses;
 
 
(g)
inadequate capital to continue business;
 
 
(h)
dissipation of existing assets and failure to acquire or grow a new business;
 
 
(i)
lower royalty income than anticipated or the absence of royalty income due to default, or to the absence of revenue, or lower revenue than expected, earned by the Company’s licensees;
 
 
(j)
litigation with or legal claims and allegations by outside parties;
 
 
(k)
we do not own an operating business and may not be able to acquire one in the future;
 
 
(l)
business acquisitions that may be made by us in the future, if any, may not be profitable and may result in substantial losses; and
 
 
(m)
the Company may be deemed to be an “investment company” under the Investment Company Act of 1940, as amended, which would impose substantial additional regulatory costs and requirements.

Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. The Company cautions you not to place undue reliance on the statements, which speak only as of the date of this Form 10-Q. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.

The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

The following discussion should be read in conjunction with our financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking information that involves risks and uncertainties.
 
 
13

 
Overview and Outlook

The Company is formerly a wholly-owned subsidiary of Ante4, Inc. (“Ante4”), which, on June 14, 2010, spun off the Company to its shareholders of record on April 15, 2010. Ante4 formerly operated as WPT Enterprises, Inc. when it created internationally branded entertainment and consumer products driven by the development, production and marketing of televised programming based on gaming themes (the “WPT Business”).

On November 2, 2009, Ante4 closed a transaction (the “Party Transaction”) with Peerless Media Ltd., a subsidiary of PartyGaming, PLC (“Party”). In the Party Transaction, Ante4 sold to Party substantially all of Ante4’s operating assets other than cash, investments and certain excluded assets (the “Party Transaction”). As a result of closing the Party Transaction, Ante4 no longer operated the substantial portion of the WPT Business. In connection with the Party Transaction, Ante4 retained the rights to a future royalty stream from the operation of the WPT Business, and certain other assets. Ante4 then transferred substantially all of its non-cash assets and some cash for working capital (together, the “Ante5 assets”) to the Company when it was a wholly-owned subsidiary of Ante4.

As the owner of the Ante5 assets, we have succeeded to Ante4’s rights relating to the WPT Business, which we intend to monetize and manage. The principal Ante5 assets that were spun off consisted of the following:

 
5% of gross gaming revenue and 5% of other revenue of Party generated by the WPT Business and other assets Ante4 sold to Party in the Party Transaction (the “Royalty Stream”). Party has guaranteed a minimum payment to us of $3 million for such Royalty Stream over the three-year period following the closing of the Party Transaction. The Royalty Stream is an obligation only of Peerless Media Ltd. and its immediate parent company, ElektraWorks Ltd., and does not represent a financial obligation of PartyGaming, PLC. Through November 2, 2011, 20% of the proceeds from the Royalty Stream must be deposited in an escrow account to secure Ante4’s indemnification obligations under the purchase agreement for the Party Transaction.

 
Cash and cash equivalents of approximately $259,000 as of April 16, 2010. Accounts payable of approximately $449,000 as of April 16, 2010, and an additional approximately $140,000 in accounts payable was accrued since that date. Furthermore, we must repay $500,000 borrowed from Ante4 pursuant to a promissory note due April 16, 2011, which accrues interest at a rate of two percent (2%) per annum.

 
The right to receive all of the proceeds received by Ante4 with respect to auction rate securities in the amount of approximately $3,700,000 held by Ante4 in its account with UBS Financial Services. Ante5 received those proceeds in full, net of the repayment of a line of credit with UBS Financial Services in the amount of approximately $2,435,999, periodically through July 3, 2010, which resulted in net cash proceeds to us of approximately $1.3 million.

 
Contingent claims and interests relating to (a) payments previously owed to Ante4 by Xyience, Inc., a former sponsor of the WPT television series; (b) WPT China, a business segment of Ante4 for which most activities were shut down in March 2009; (c) Cecure Gaming, for which Ante4 was entitled to 50% of the net revenues and an 8% ownership interest, but whose business is currently in receivership in the British equivalent of a bankruptcy proceeding; and (d) a lawsuit currently pending against Ante4’s former auditors, Deloitte & Touche, LLP.

 
Ante4’s 25% royalty participation, in perpetuity, in the net proceeds of Poker Royalty, LLC, a poker talent management company.

In connection with the transfer of the Ante5 assets to us, we assumed certain liabilities of Ante4 relating to the previous WPT business. We also agreed to indemnify Ante4 and related individuals from (a) liabilities and expenses relating to operations of Ante4 prior to the effective date of the spin-off, (b) operation or ownership of the Ante5 assets after the effective date of the spin-off, which was on or about April 16, 2010, and (c) certain tax liabilities of Ante4. The Company’s obligation to indemnify Ante4 for Ante4’s pre-spin-off operations and such tax liabilities is limited to $2.5 million in the aggregate.

On October 7, 2010, we entered into an asset purchase agreement (the “APA”) with Twin City Technical, LLC, a North Dakota limited liability company, and Irish Oil and Gas, Inc., a Nevada corporation (collectively, the “Sellers”), to acquire Sellers’ right, title, and interest in certain mineral leases (“Mineral Leases”) in consideration for a total of $2,969,648 of cash, payable in full at the closing, plus 5,011,281 shares of our common stock, plus assignment to the Sellers (or in Sellers’ sole discretion, reservation by the Sellers in their assignment to the Company) of a 2% overriding royalty interest in the Mineral Leases, effective on the closing.  The closing of the purchase and sale of assets will occur upon the satisfaction or waiver of the conditions set forth in the APA, but no later than October 29, 2010 unless Sellers and the Company mutually agree in writing to extend the closing date, or the Company unilaterally extends the closing date for fifteen days by notifying the sellers in writing.  The Company has exercised its right to extend the closing date for fifteen days in accordance with the APA.
 
 
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Commensurate with the closing of this acquisition, our new focus will be in the oil & gas industry.  We plan to engage in the exploration, production and development of oil and gas reserves, initially in the Williston Basin in North Dakota targeting the Bakken and Three Forks Formations.

Assuming the closing of the acquisition, the Company’s principal investment objectives will be to:

 
1.
Engage in oil and gas drilling and production through the development of properties we are currently acquiring in North Dakota, and other oil and gas properties we may acquire in the future.
 
 
2.
Monetize and mange the Ante5 Assets.
 
 
3.
Provide capital appreciation and liquidity for investors.
 
 
 
 
 
 
 
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Application of Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Black Scholes option pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that our estimates, including those for the above-described items, are reasonable.

Use of Estimates

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to recording net revenue, collectability of accounts receivable, useful lives and impairment of tangible and intangible assets, accruals, income taxes, inventory realization, stock-based compensation expense and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Fair Value of Financial Instruments

Our cash, cash equivalents, investments, accounts receivable and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments. In January 2010, the FASB issued an amendment to the accounting standards related to the disclosures about an entity’s use of fair value measurements. Among these amendments, entities will be required to provide enhanced disclosures about transfers into and out of the Level 1 (fair value determined based on quoted prices in active markets for identical assets and liabilities) and Level 2 (fair value determined based on significant other observable inputs) classifications, provide separate disclosures about purchases, sales, issuances and settlements relating to the tabular reconciliation of beginning and ending balances of the Level 3 (fair value determined based on significant unobservable inputs) classification and provide greater disaggregation for each class of assets and liabilities that use fair value measurements. Except for the detailed Level 3 roll-forward disclosures, the new standard is effective for the Company for interim and annual reporting periods beginning after December 31, 2009. The requirement to provide detailed disclosures about the purchases, sales, issuances and settlements in the roll-forward activity for Level 3 fair value measurements is effective for the Company for interim and annual reporting periods beginning after December 31, 2010. The Company does not expect that the adoption of this new standard will have a material impact to its financial statements.

Revenue Recognition

The Company recognizes its revenue in accordance with FASB ASC 605. As a development stage company we have not yet recognized revenues. We recognize revenue when collectability is reasonably assured and measurable.
 
 
16

 
Results of Operations for the Three Months Ended September 30, 2010

The following table summarizes selected items from the statement of operations for the three months ended September 30, 2010.

Revenue:

The Company was established on April 9, 2010 (inception) and had no operations during the three and nine month periods ending September 30, 2009. As such, there were no comparative revenues. As a development stage company, we have not yet commenced operations or recognized revenues. Our proceeds from the sale of assets prior to the spin-off on April 15, 2010 were recognized by Ante4, Inc.

Expenses:

   
For the Three
Months Ended
September 30, 2010
 
General and administrative
  $ 104,404  
Officer salary
    12,500  
Professional fees
    31,160  
Depreciation
    743  
         
Net operating loss
    148,807  
         
Other (income) expenses
    (139,981 )
         
Net loss
  $ 8,826  

The Company was established on April 9, 2010 (inception) and had no operations during the three and nine month periods ending September 30, 2009. As such, there were no comparative expenses.

General and administrative expenses

General and administrative expenses for three months ended September 30, 2010 were $104,404. Our general and administrative expenses consisted primarily of approximately $1,500 of bank fees, $18,500 of health and directors’ and officer’s insurance, $10,000 of travel costs, $10,000 of general office expenses, and $65,500 of stock support services, primarily due to printing costs associated with the filing of our Form 10/A.

Officer salary

Officer salary expense for the three months ended September 30, 2010 was $12,500. Officer salary was a result of the accrual of our CEO’s salary. None of the officer’s annual salary of $50,000 has been paid as of the date of this filing.

Professional fees

Professional fees for the three months ended September 30, 2010 were $31,160. Our professional fees were a result of the legal and accounting costs to maintain our books and records and file our financial reports as necessary with the Securities and Exchange Commission (SEC).

Depreciation

Depreciation expense for the three months ended September 30, 2010 was $743. We anticipate quarterly depreciation of $743 through the remainder of the year for 2010.
 
 
17

 
Net operating loss

The net operating loss for the three months ended September 30, 2010 was $148,807. Our net operating loss consisted primarily of professional fees and stocks services expense as we established our business and executed the spin-off from Ante4, Inc.

Other (income) and expenses

Other (income) and expenses for the three months ended September 30, 2010 was ($139,981) on a net basis. The net other income consisted of $2,889 of interest expense related to accrued interest on our promissory note payable to Ante4, Inc., as well as $1,988 of interest income earned on the proceeds from auction rate securities that matured on July 1, 2010.  Our line of credit was also paid in full on July 1, 2010 with the proceeds of the sale of these securities.  We also received $140,861 as part of a termination and release agreement with Poker Royalty, LLC (“Poker Royalty”).  The settlement released Poker royalty from its obligations under a May 15, 2004 marketing agreement that was part of the WPT interests that were spun-off to us from Ante4, Inc.

Net loss

The net loss for the three months ended September 30, 2010 was $8,826. Our net loss consisted primarily of professional fees, officer salary and stock support services expense, netted against our other income, as we established our business.

Results of Operations for the Period from April 9, 2010 (Inception) to September 30, 2010

The following table summarizes selected items from the statement of operations for the period from April 9, 2010 (inception) to September 30, 2010.

Revenue:

The Company was established on April 9, 2010 (inception) and had no operations during the three and nine month periods ending September 30, 2009. As such, there were no comparative revenues. As a development stage company, we have not yet commenced operations or recognized revenues. Our proceeds from the sale of assets prior to the spin-off on April 15, 2010 were recognized by Ante4, Inc.

Expenses:

   
For the Period from
April 9, 2010
(Inception) to
September 30, 2010
 
General and administrative
  $ 175,184  
Officer salary
    22,917  
Professional fees
    289,493  
Depreciation
    1,362  
         
Net operating loss
    488,956  
         
Other (income) expenses
    (133,497 )
         
Net loss
  $ 355,459  

The Company was established on April 9, 2010 (inception) and had no operations during the three and nine month periods ending September 30, 2009. As such, there were no comparative expenses.

General and administrative expenses

General and administrative expenses for the period from April 9, 2010 (inception) to September 30, 2010 were $175,184. Our general and administrative expenses consisted primarily of approximately $3,500 of bank fees, $20,000 of health, and directors’ and officer’s insurance, $14,000 of travel costs, $11,000 of general office expenses, and $68,000 of stock support services, primarily due to printing costs associated with the filing of our Form 10/A., as well as, $58,425 attributed to costs incurred with respect to the issuance of common stock options to our Board of Directors.
 
 
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Officer salary

Officer salary expense for the period from April 9, 2010 (inception) to September 30, 2010 was $22,917. Officer salary was a result of the accrual of our CEO’s salary. None of the officer’s annual salary of $50,000 has been paid as of the date of this filing.

Professional fees

Professional fees for the period from April 9, 2010 (inception) to September 30, 2010 were $289,493. Our professional fees were a result of the legal and accounting costs incurred to establish our business and execute the spin-off and file our financial reports as necessary with the Securities and Exchange Commission (SEC).

Depreciation

Depreciation expense for the period from April 9, 2010 (inception) to September 30, 2010 was $1,362. We anticipate quarterly depreciation of $743 through the remainder of the year for 2010.

Net operating loss

The net operating loss for the period from April 9, 2010 (inception) to September 30, 2010 was $488,956. Our net operating loss consisted primarily of professional fees and stocks services expense as we established our business and executed the spin-off from Ante4, Inc.

Other (income) and expenses

Other (income) and expenses for the period from April 9, 2010 (inception) to September 30, 2010 was ($133,497) on a net basis. The net other income consisted of $11,429 of interest expense, comprised of $4,575 of accrued interest on our promissory note payable to Ante4, Inc. and $6,854 of interest on our line of credit, as well as $4,044 of interest income earned on the proceeds from auction rate securities that matured on July 1, 2010.  Our line of credit was also paid in full on July 1, 2010 with the proceeds of the sale of these securities.  We also received $140,861 as part of a termination and release agreement with Poker Royalty, LLC (“Poker Royalty”).  The settlement released Poker royalty from its obligations under a May 15, 2004 marketing agreement that was part of the WPT interests that were spun-off to us from Ante4, Inc.

Net loss

The net loss for the period from April 9, 2010 (inception) to September 30, 2010 was $355,459. Our net loss consisted primarily of professional fees, officer salary and stock support services expense, netted against our other income, as we established our business.

Liquidity and capital resources

The following table summarizes total current assets, liabilities and working capital at September 30, 2010.

   
September 30,
2010
 
       
Current Assets
  $ 1,802,890  
         
Current Liabilities
  $ 1,553,645  
         
Working Capital
  $ 249,245  
 
 
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While we have raised capital to meet our working capital and financing needs in the past, additional financing may be required in order to meet our current and projected cash flows from operations and development of alternative revenue sources. As of September 30, 2010, we had working capital of $249,245. Upon the spin-off from Ante4, Inc., we assumed a line of credit with an outstanding balance of $2,437,336 which was subsequently repaid on July 1, 2010, and a promissory note of $500,000 payable to Ante4, Inc., our parent company prior to the spin-off. As such, we have not obtained credit or issued securities to fund operations subsequent to the spin-off distribution.

Should we not be able to continue to secure additional financing when needed, we may not be able to grow and may be required to reduce the scope of our current operations, any of which would have a material adverse effect on our business.

Our future capital requirements will depend on many factors, including the identification of new investment and expansion opportunities, the cost and availability of third-party financing for development, and administrative and legal expenses.

We anticipate that we may incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, potential failure to earn revenues or to sufficiently monetize certain claims that we have for payments that are owed to us; an inability to identify investment and expansion targets; and dissipation of existing assets. To address these risks, we must, among other things, seek out growth opportunities through investment and acquisitions, effectively monitor and manage our claims for payments that are owed to us, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.

Satisfaction of our cash obligations for the next 12 months.

As of September 30, 2010, our balance of cash and cash equivalents was $1,345,439. Our plan for satisfying our cash requirements for the next twelve months is through proceeds from our contingent consideration receivable related to the sales transaction with Party Gaming, sale of shares of our common stock, third party financing, and/or traditional bank financing. We anticipate generating sufficient proceeds from our contingent consideration receivable to meet our working capital requirements; however, due to the contingent nature of these proceeds we cannot be certain the proceeds will be sufficient to meet our cash requirements over the next twelve months. In the event these proceeds are insufficient, or we identify expansion or investment opportunities, we may need to make appropriate plans to secure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.

Summary of product and research and development that we will perform for the term of our plan.

We are not anticipating significant research and development expenditures in the near future.

Expected purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment as such items are not required by us at this time.

Significant changes in the number of employees.

As of September 30, 2010, we had no employees, other than our CEO, Steven R. Lipscomb. Currently, there are no organized labor agreements or union agreements and we do not anticipate any in the future.

Assuming we are able to pursue new opportunities, we anticipate an increase of personnel and may need to hire employees. In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate. We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.

 
20


Off-Balance Sheet Arrangements

In connection with the transfer of the Ante5 assets to us, we assumed certain liabilities of Ante4 relating to the previous WPT business. We also agreed to indemnify Ante4 and related individuals from (a) liabilities and expenses relating to operations of Ante4 prior to the effective date of the merger between Ante4 and Plains Energy Investments, Inc., (b) operation or ownership of Ante5’s assets after the merger effective date, and (c) certain tax liabilities of Ante4. Ante5’s obligation to indemnify Ante4 for operations before the merger and such tax liabilities is limited to $2.5 million in the aggregate.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Our management, under the direction of our Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2010. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation our management, including the Company’s Chief Executive Officer and Principal Financial Officer, has concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2010.

Internal Control over Financial Reporting

The Company’s Chief Executive Officer and Principal Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation of it that occurred during the period from April 9, 2010 (inception) through September 30, 2010 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

 
21


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.
 
ITEM 4. (REMOVED AND RESERVED).
 
ITEM 5. OTHER INFORMATION.

Entry into a Material Agreement

On October 7, 2010, we entered into an asset purchase agreement (the “APA”) with Twin City Technical, LLC, a North Dakota limited liability company, and Irish Oil and Gas, Inc., a Nevada corporation (collectively, the “Sellers”), to acquire Sellers’ right, title, and interest in certain mineral leases (“Mineral Leases”) in consideration for a total of $2,969,648 of cash, payable in full at the closing, plus 5,011,281 shares of our common stock, plus assignment to the Sellers (or in Sellers’ sole discretion, reservation by the Sellers in their assignment to the Company) of a 2% overriding royalty interest in the Mineral Leases, effective on the closing.  The closing of the purchase and sale of assets will occur upon the satisfaction or waiver of the conditions set forth in the APA, but no later than October 29, 2010 unless Sellers and the Company mutually agree in writing to extend the closing date. Notwithstanding the foregoing, the Company has the right, exercisable in its sole discretion, to unilaterally extend the closing date by up to fifteen (15) more days.  The preceding description of the Agreement is qualified in its entirety by the terms of the Agreement, a copy of which is attatched as an exhibit to our report on Form 8-K, dated October 7, 2010, as filed with the Securities and Exchange Commission.

ITEM 6. EXHIBITS.

Exhibit
Description
31.1
Section 302 Certification of Chief Executive Officer
31.2
Section 302 Certification of Chief Financial Officer
32.1
Section 906 Certification of Chief Executive Officer
32.2
Section 906 Certification of Chief Financial Officer

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
ANTE5, INC.
   
     
 Dated: October 29, 2010   By: /s/Steven R. Lipscomb  
   
Steven R. Lipscomb, Chairman of the Board and
Chief Executive Officer (Principal Executive Officer)
     
     
 Dated: October 29, 2010  By: /s/Steven R. Lipscomb  
    Steven R. Lipscomb, Chief Financial Officer (Principal Financial Officer)
     
                                                                                                                                    
 

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