form10ka.htm
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K\A
(Amendment No. 1)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended March 31, 2010
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
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Commission File Number: 333-152160
IMPERIAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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83-0512922
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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106 E. 6th St., Suite 900, Austin, TX 78701
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(Address of principal executive offices)
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(512) 332-5740
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(Issuer’s telephone number)
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.
Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (do not check if smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
The aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 30, 2009 was $37,625. For purposes of this computation, it has been assumed that the shares beneficially held by directors and officers of registrant were “held by affiliates”; this assumption is not to be deemed to be an admission by such persons that they are affiliates of registrant.
As of July 1, 2010, there were outstanding 40,000,000 shares of registrant’s common stock, par value $0.001 per share.
TABLE OF CONTENTS
Parts of this Amendment No. 1 to the Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. Many of the forward-looking statements are located in "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled "Risk Factors" under Part I, Item 1A of the Form 10-K for the years ended March 31, 2010 and 2009 that was filed with the Securities and Exchange Commission on July 9, 2010. All information presented herein is based on the Company's fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to the Company's fiscal years ended in March and the associated quarters of those fiscal years. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Explanatory Note
Imperial Resources, Inc. (the “Company,” “we,” “us,” or “our) is filing this Amendment No. 1 to the Annual Report on Form 10-K (the "Form 10-K/A") to amend its Annual Report on Form 10-K for the years ended March 31, 2010 and 2009, which was filed with the Securities and Exchange Commission ("SEC") on July 9, 2010 (the "Original Filing" and together with the Form 10-K/A, the "Form 10-K").
The Company was notified by the SEC on January 11, 2011, that the Public Accounting Oversight Board had revoked the registration of the Company’s former independent registered public accounting firm. While the Company’s current independent registered public accounting firm issued a report dated June 25, 2010, with regards to the Consolidated Balance Sheets of Imperial Resources, Inc. and subsidiary (Exploration stage company) at March 31, 2010, and the related Consolidated Statements of operations, changes in stockholders' equity, and cash flows for the year then ended, and for period from August 2, 2007 (date of inception) to March 31, 2010., they relied solely on the prior auditors report dated June 23, 2009, and their opinion insofar as it related to the amounts included in the financial statements of Imperial Resources, Inc. at March 31, 2009, and for the year then ended was based solely on the report of the other auditors.
The Company engaged its current independent auditors to perform the work necessary to express an opinion on both the Consolidated Balance Sheets of Imperial Resources, Inc. and subsidiary (Exploration stage company) at March 31, 2010 and 2009, and the related Consolidated Statements of operations, changes in stockholders' equity, and cash flows for the years then ended and for period from August 2, 2007 (date of inception) to March 31, 2010.
As amended by this Form 10-K/A, the Form 10-K reflects a new report by our current independent auditors. The previous report issued by other auditors was unqualified with an explanatory paragraph due to the Company’s uncertainty regarding its ability to continue as a going concern. The new report issued herein is also unqualified with and an explanatory paragraph due to the Company’s uncertainty regarding its ability to continue as a going concern.
The amounts previously presented in the Consolidated Balance Sheets at March 31, 2010 and 2009, and the related Consolidated Statements of operations, changes in stockholders' equity, and cash flows for the year ended March 31, 2010 and 2009, and for the period from August 2, 2007 (date of inception) to March 31, 2010, did not change from amounts previously presented, with the following exceptions:
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-
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We adjusted stockholders’ equity to not give retroactive effect to share cancellations. Retroactive effect is only being given for the November 3, 2009 stock dividend.
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-
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We reclassified exploration costs to impairment loss on mineral claim to follow our related accounting policy whereby we capitalize mineral claim acquisition costs, and subsequently assess these costs for impairment.
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Related to the reclassification adjustment described above, we adjusted our cash flows statement to show the impairment loss in the operating activities section, with the acquisition costs being shown in the investing section.
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We updated Footnote 2 for recent accounting pronouncements.
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We have updated the footnotes to replace FASB references with the related codification references.
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Page
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PART II
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ITEM 8.
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Financial Statement and Supplementary Data.
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3
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ITEM 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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3
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PART IV
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ITEM 15.
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Exhibits, Financial Statement Schedules
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4
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SIGNATURES
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5
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This Form 10-K/A includes only items amended. This Form 10-K/A does not attempt to modify or update the disclosures in any other items set forth in the Original Filing. This Form 10-K/A speaks as of March 31, 2010 and 2009, unless otherwise noted. The Original Filing sets forth the annual disclosures that are unaffected by the new audit opinion. Accordingly, this Form 10-K/A should be read in conjunction with the Original Filing and all filings made with the SEC subsequent to the date of the Original Filing.
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the financial statements, the reports of our independent registered public accounting firm, and the notes thereto of this report, which financial statements, reports, and notes are incorporated herein by reference.
See Item 15 a (1).
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
a) On January 27, 2011, Imperial Resources, Inc. (“Imperial or the Company”) was notified by the SEC that the Public Accounting Oversight Board (“PCAOB”) had revoked the registration of J. Crane CPA, P.C. (“J. Crane”) on January 19, 2011. J. Crane was the Company’s former independent registered public accounting firm for the year ended March 31, 2009.
On June 17, 2009, J. Crane was dismissed as the Company’s Independent Auditor.
Between August 2, 2007, (the date of engagement) and June 17, 2009 (the date of resignation) there were no disagreements with J. Crane on any matter of accounting principles or practices, financial statement disclosure, or auditing procedure, other than an audit scope modification due to Company’s uncertainty regarding its ability to continue as a going concern for the period from August 7, 2007 to March 31, 2008, and for the year ended March 31, 2009.
The Company furnished J. Crane with a copy of this disclosure at the last known address of 47 Third Street, Suite 301, Cambridge Massachusetts, 02141. Taking into account the detail of the revocation of J. Crane’s registration order dated January 19, 2011 issued by the PCAOB, which states that J. Crane prevented PCAOB inspections and failed to provide inspection materials to the PCAOB during 2009 and 2010, and based on the fact that the Company is unable to contact J. Crane, we do not anticipate receipt of a response from J. Crane.
b) On June 17, 2009, upon the authorization and approval of the board of directors, the Company engaged Madsen & Associates, CPA’s INC., Certified Public Accountant (“Madsen”) as its independent registered public accounting firm.
No consultations occurred between the Company and Madsen during the period from inception August 2, 2007 through June 17, 2009, regarding either (i) the application of accounting principles to a specific completed or contemplated transaction, the type of audit opinion that might be rendered on the Company’s financial statements, or other information provided that was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue, or (ii) any matter that was the subject of disagreement requiring disclosure under Item 304(a)(1)(iv) of Regulation S-K or reportable event requiring disclosure under Item 304(a)(1)(v) of Regulation S-K.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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Exhibit Number
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Description
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Page
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(a) (1)
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Financial Statements.
The following financial statements are included in this report:
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Report of Madsen & Associates CPA’s Inc.
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6
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Consolidated Balance Sheet as at March 31, 2010 and 2009
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7
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Consolidated Statement of Operations for the years ended March 31, 2010 and 2009 and for the period from August 2, 2007 (date of inception) to March 31, 2010
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8
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Consolidated Statement of Changes in Stockholders’ Deficiency for period from August 2, 2007 (date of inception) to March 31, 2010
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9
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Consolidated Statement of Cash Flows for the years ended March 31, 2010 and 2009 and for the period from August 2, 2007 (date of inception) to March 31, 2010
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10
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Notes to Consolidated Financial Statements
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11
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31.1
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Certification of Principal Executive Officer Pursuant to 18 U.S.C., Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Principal Financial Officer Pursuant to 18 U.S.C., Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Pursuant to the requirements of Section 13 and 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized
IMPERIAL RESOURCES, INC.
(Registrant)
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Dated: May 16, 2011
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/s/ Rob Durbin
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By: Rob Durbin
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Its: President, Chief Executive Officer and Director
(Principal Executive Officer)
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Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
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Signature
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Capacity
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Date
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/s/ Rob Durbin
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President, Chief Executive Officer and Director
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May 16, 2011
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Rob Durbin
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(Principal Executive Officer)
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/s/ Mike Mackey
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Chief Financial Officer
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May 16, 2011
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Mike Mackey
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(Principal Financial Officer and Principal Accounting Officer)
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| /s/Tom Barr |
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Director |
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May 16, 2011 |
| Tom Barr |
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MADSEN & ASSOCIATES, CPA’s INC.
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684 East Vine Street, #3
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Murray, Utah, 84107
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Telephone: 801-268-2632
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Fax: 801-262-3978
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Board of Directors
Imperial Resources, Inc. and subsidiary (an Exploration Stage Company)
Carson City, Nevada
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of Imperial Resources, Inc. and Subsidiary (an Exploration stage company) as of March 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' deficiency, and cash flows for each of the years in the two-year period ended March 31, 2010, and the period from August 2, 2007 (date of inception) to March 31, 2010. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness for the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Imperial Resources, Inc. and Subsidiary (an Exploration Stage Company) as of March 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2010, and the period from August 2, 2007 (date of inception) to March 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company will need additional working capital for its planned activities and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Murray, Utah
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/s/ “Madsen & Associates, CPA’s Inc.”
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May 12, 2011
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IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
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March 31,
2010
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March 31,
2009
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ASSETS
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CURRENT ASSETS
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Cash
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$
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-
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$
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57
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Accounts receivable
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29,724
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-
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Total Current Assets
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29,724
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57
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OIL AND GAS LEASE (Note 3)
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898,712
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-
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Total Assets
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$
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928,436
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$
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57
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
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CURRENT LIABILITIES
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Accounts payable
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$
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41,563
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$
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16,568
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Advances – related parties
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31,340
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20,943
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Total Current Liabilities
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72,903
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37,511
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NOTE PAYABLE (Note 4)
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900,000
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-
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Total Liabilities
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972,903
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37,511
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STOCKHOLDERS’ DEFICIENCY
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Common stock
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500,000,000 shares authorized, at $0.001 par value;
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40,000,000 shares issued and outstanding
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40,000
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40,000
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Capital in excess of par value
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39,625
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24,025
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Deficit accumulated during the development stage
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(124,092
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)
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(101,479
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)
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Total Stockholders’ Deficiency
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(44,467
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)
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(37,454
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)
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Total Liabilities and Stockholders’ Deficiency
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$
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928,436
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$
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57
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The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
For the years ended March 31, 2010 and 2009 and for the period from August 2, 2007 (date of inception) to March 31, 2010
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Year
ended
March 31, 2010
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Year
ended
March 31, 2009
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From August 2, 2007
(date of inception)
to March 31, 2010
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REVENUE
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Oil and gas revenue
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$
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29,724
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$
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-
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$
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29,724
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Less: Depletion
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(1,288
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)
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-
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(1,288
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)
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Operating costs
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(13,620
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)
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-
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(13,620
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Net loss on oil and gas revenue
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14,816
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-
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14,816
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ADMINISTRATIVE EXPENSES
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Accounting and audit
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10,400
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18,397
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41,318
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Consulting
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-
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12,500
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20,000
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Edgarizing
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788
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2,362
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3,150
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Impairment loss on mineral claim
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-
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-
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11,217
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Filing fees
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-
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50
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50
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Incorporation costs
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625
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-
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1,479
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Legal
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-
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4,238
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8,913
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Management fees
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12,000
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12,000
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30,000
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Office
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748
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1,373
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1,630
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Rent
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2,400
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2,400
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6,000
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Telephone
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1,200
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1,200
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3,000
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Transfer agent fees
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515
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1,410
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1,924
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Travel
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-
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-
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1,474
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Total administrative expenses
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28,676
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55,930
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130,155
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LOSS FROM OPERATIONS
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(13,860
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)
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(55,930
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)
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(115,339
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)
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OTHER EXPENSES
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Interest on promissory note
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(8,753
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)
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-
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(8,753
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)
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NET LOSS
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$
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(22,613
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)
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$
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(55,930
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$
|
(124,092
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE OUTSTANDING SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
40,000,000
|
|
|
|
40,000,000
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
Period from August 2, 2007 (date of inception) to March 31, 2010
| |
|
Common
Shares
|
|
|
Stock
Amount
|
|
|
Capital in
Excess of
Par Value
|
|
|
Accumulated
Deficit
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance August 2, 2007
|
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares on October 31, 2007
|
|
|
198,000,000 |
|
|
|
198,000 |
|
|
|
(195,000 |
) |
|
|
- |
|
|
|
3,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares on December 31, 2007
|
|
|
49,665,000 |
|
|
|
49,665 |
|
|
|
(12,040 |
) |
|
|
- |
|
|
|
37,625 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions – expenses
|
|
|
- |
|
|
|
- |
|
|
|
7,800 |
|
|
|
- |
|
|
|
7,800 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period from August 7, 2007 to March 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(45,549 |
) |
|
|
(45,549 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2008
|
|
|
247,665,000 |
|
|
|
247,665 |
|
|
|
(199,240 |
) |
|
|
(45,549 |
) |
|
|
2,876 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions – expenses
|
|
|
- |
|
|
|
- |
|
|
|
15,600 |
|
|
|
- |
|
|
|
15,600 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended March 31, 2009
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(55,930 |
) |
|
|
(55,930 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2009
|
|
|
247,665,000 |
|
|
|
247,665 |
|
|
|
(183,640 |
) |
|
|
(101,479 |
) |
|
|
(37,454 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions – expenses
|
|
|
- |
|
|
|
- |
|
|
|
15,600 |
|
|
|
- |
|
|
|
15,600 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares – October 22, 2009
|
|
|
(168,300,000 |
) |
|
|
(168,300 |
) |
|
|
168,300 |
|
|
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock dividend – 65:1 – November 3, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares – January 27, 2010
|
|
|
(29,465,000 |
) |
|
|
(29,465 |
) |
|
|
29,465 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended March 31, 2010
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(22,613 |
) |
|
|
(22,613 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2010
|
|
|
49,900,000 |
|
|
$ |
49,900 |
|
|
$ |
29,725 |
|
|
$ |
(124,092 |
) |
|
$ |
(44,467 |
) |
The accompanying notes are an integral part of these consolidated financial statements
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended March 31, 2010 and 2009 and for the period from August 2, 2007 (date of inception) to March 31, 2010
| |
|
Year ended
March 31, 2010
|
|
|
Year ended
March 31, 2009
|
|
|
From August 2, 2007
(date of inception) to
March 31, 2010
|
|
| |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(22,613
|
)
|
|
$
|
(55,930
|
)
|
|
$
|
(124,092
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on mineral claim
|
|
|
|
|
|
|
|
|
|
|
11,217
|
|
|
Capital contributions – expenses
|
|
|
15,600
|
|
|
|
15,600
|
|
|
|
39,000
|
|
|
Depletion expense
|
|
|
1,288
|
|
|
|
-
|
|
|
|
1,288
|
|
|
Changes in accounts receivable
|
|
|
(29,724
|
)
|
|
|
-
|
|
|
|
(29,724
|
)
|
|
Changes in accounts payable
|
|
|
24,995
|
|
|
|
3,664
|
|
|
|
41,563
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) in Operating Activities
|
|
|
(10,454
|
)
|
|
|
(36,666
|
)
|
|
|
(60,748
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of mineral claim
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,217
|
)
|
|
Purchase of oil and gas lease
|
|
|
(900,000
|
)
|
|
|
-
|
|
|
|
(900,000
|
)
|
|
Net Cash (Used) in Investing Activities
|
|
|
(900,000
|
)
|
|
|
-
|
|
|
|
(911,217)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances from related party
|
|
|
10,397
|
|
|
|
18,260
|
|
|
|
31,340
|
|
|
Note payable – purchase of oil and gas leases
|
|
|
900,000
|
|
|
|
-
|
|
|
|
900,000
|
|
|
Proceeds from issuance of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
40,625
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
910,397
|
|
|
|
18,260
|
|
|
|
971,965
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash
|
|
|
(57
|
)
|
|
|
(18,406
|
)
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at Beginning of Period
|
|
|
57
|
|
|
|
18,463
|
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$
|
-
|
|
|
$
|
57
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these consolidated financial statements
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
The Company, Imperial Resources, Inc., was incorporated under the laws of the State of Nevada on August 2, 2007 with the authorized capital stock of 500,000,000 shares at $0.001 par value. The Company organized its wholly-owned subsidiary, Imperial Oil & Gas Inc. (“Imperial Oil”) under the laws of the State of Delaware on January 8, 2010.
The Company was organized for the purpose of acquiring and exploring a mineral property and later abandoned it. The Company has decided to focus its core activities on development and exploration of oil and gas assets in the United States through its wholly-owned subsidiary.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Accounting Methods
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Basic and Diluted Net Income (loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidulutive and then the basic and diluted per share amounts are the same.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Imperial Resources, Inc. (parent) and its subsidiary, Imperial Oil & Gas Inc., from their inception. All significant intercompany accounts and balances have been eliminated in consolidation.
Oil and gas leases
The Company intends to drill for oil and natural gas on their leases. Drilling costs will be treated as work in progress until such time as the well has been finished and its commercial potential evaluated.
The Company follows the successful efforts method of accounting and will capitalize successful wells and related leasehold costs. These costs will be amortized using the unit of production method. Dry hole and related leasehold costs will be expensed. On March 31, 2010, the Company had one producing gas well.
Impairment of Long-Lived Assets
The Company reviews and evaluates long-term assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 932-360-35-8 Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Term Assets.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
On March 31, 2010 the Company had a net operating loss carry forward of $124,092 for income tax purposes. The tax benefit of approximately $37,000 from the loss carry forward has been fully offset by a valuation reserve because the future tax benefit is undeterminable since the Company is unable to establish a predictable projection of operating profits for future years. Losses will begin to expire in 2027.
Foreign Currency Translations
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.
Revenue Recognition
Revenue is recognized on the sale and delivery of a product or the completion of a service provided.
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
Environmental Requirements
At the report date, environmental requirements related to the oil and gas leases acquired are unknown and therefore any estimate of any future cost cannot be made.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
Recent Accounting Pronouncements
On December 31, 2008, the SEC issued the final rule, “Modernization of Oil and Gas Reporting” (“Final Rule”). The Final Rule adopts revisions to the SEC’s oil and gas reporting disclosure requirements and is effective for annual reports on Form 10-K for years ending on or after December 31, 2009. Early adoption of the Final Rule is prohibited. The revisions are intended to provide investors with a more meaningful and comprehensive understanding of oil and gas reserves to help investors evaluate their investments in oil and gas companies. The amendments are also designed to modernize the oil and gas disclosure requirements to align them with current practices and changes in technology. Revised requirements in the SEC’s Final Rule include, but are not limited to:
| |
●
|
Oil and gas reserves must be reported using the average price over the prior 12 month period, rather than the year-end prices;
|
| |
●
|
Companies will be allowed to report, on an optional basis, probable and possible reserves;
|
| |
●
|
Non-traditional reserves, such as oil and gas extracted from coal and shales, will be included in the definition of “oil and gas producing activities”;
|
| |
●
|
Companies will be permitted to use new technologies to determine proven reserves, as long as those technologies have been demonstrated empirically to lead to reliable conclusions with respect to reserve volumes;
|
| |
●
|
Companies will be required to disclose, in narrative form, additional details on their proved undeveloped reserves (PUDs), including to total quantity of PUDs at year end, any material changes in PUDs that occurred during the year, investment and progress made to convert PUDs to developed oil and gas reserves and an explanation of the reasons why material concentrations of PUDs in individual fields or countries have remained undeveloped for five years or more after disclosure as PUDs;
|
| |
●
|
Companies will be required to report the qualifications and measures taken to assure the independence and objectivity of any business entity or employee primarily responsible for preparing or auditing the reserve estimates.
|
In January 2010, the FASB issued ASC Topic No. 932 to amend existing oil and gas reserve accounting and disclosure guidance (formerly FASB Staff Position No. 69), Extractive Activities-Oil and Gas, to align its requirements with the SEC’s Modernization of Oil and Gas Reporting rule. The significant revisions involve revised definitions of oil and gas producing activities, changing the pricing used to estimate reserves at period end to a twelve month arithmetic average of the first day of the month prices and additional disclosure requirements. In contrast to the SEC rule, the FASB does not permit the disclosure of probable and possible reserves in the supplemental oil and gas information in the notes to the financial statements. The amendments are effective for annual reporting periods ending on or after December 31, 2010. Application of the revised rules is prospective and companies are not required to change prior period presentation to conform to the amendments. Application of the amended guidance has only resulted in changes to the prices used to determine proved reserves at December 31, 2010 and 2009, respectively. The new guidelines have expanded the definition of proved undeveloped reserves that can be recorded from an economic producer. The opportunity to prove reasonable certainty for spacing areas located more than one direct development spacing area from economic producer did not impact the Company’s proved developed or undeveloped reserves. The adoption of the Topic did not have a material impact on our consolidated financial statement disclosures.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
In January 2010, the FASB issued Accounting Standard Update (“ASU”) 2010-6, Improving Disclosures About Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures, which are effective for annual periods beginning after December 15, 2010. The adoption of ASU 2010-6 did not have a material impact on our consolidated financial statement disclosures.
| |
On January 20, 2010, Coach Capital, LLC (“Coach”), an unrelated company, assigned to the Company’s wholly owned subsidiary a 14.9% working interest in the oil, gas and mineral leases in the Greater Garwood hydrocarbon exploration project located in Colorado County, Texas (the “Project”). The assignment was made subject to the terms and conditions of the leases and that certain unrecorded Participation Agreement dated November 5, 2008 between El Paso E & P Company, L.P. and Baytor Energy LLC, and the Carry Agreement dated October 27, 2009 between Baylor Energy LLC and Coach.
|
| |
On January 19, 2010, Imperial Oil borrowed $900,000 from Coach pursuant to a promissory note issued to Coach. The outstanding balance under the note will accrue interest at 5% per annum and is due in full on January 19, 2013. If the note and accrued interest are not repaid in full between one year and three years after January 19, 2010, Coach will be paid 75% of the production revenue received by Imperial Oil from the lease, excluding the interest in the Cochran #1 well. If the note and accrued interest are not repaid in full after three years from January 19, 2010, Coach will be paid 100% of the net production revenue received by Imperial Oil from the lease, excluding the interest in the Cochran #1 well.
|
| |
The interest on the Note for the period from issuance to March 31, 2010 is $8,753 and has been credited to accounts payable.
|
|
5.
|
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
|
Officers-directors and their families own no shares in the Company, have made no interest, demand advances to the Company of $31,340, and have made contributions to capital of $39,000 in the form of expenses paid for the Company.
| |
On January 19, 2010, Imperial Oil entered into a Net Profit Agreement whereby Imperial agreed to share profits from certain mutually beneficial oil and gas exploration and development opportunities in Canada and the continental United States (“Prospects”). Pursuant to the this Agreement, Imperial Oil granted Mara Energy, LLC (“Mara”), a Delaware corporation, an interest in the Prospects by way of a Net Profit Interest. The Net Profit Interest is an interest in the Prospects that entitles Imperial Oil to receive a monthly amount equal to 50% of the Net Proceeds resulting from the sale of petroleum substances obtained from the Prospects.
|
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
Consulting Service Agreement
| |
On April 1, 2010, Imperial Oil & entered into a Consulting Service Agreement with Mara Energy, LLC. whereby Mara will provides services associated with any future development of Imperial Oil’s working interest in both the Greater Garwood oil and gas development exploration assets and the producing Cochran #1.
|
Mr. Robert Durbin, Imperial Oil’s Chief Executive Officer and Chairman of the Board, owns a 15% interest in Mara.
Royalty Agreement
On April 1, 2010, Imperial Oil entered into an Assignment of Overriding Royalty Interest Agreement whereby Imperial Oil agrees to pay Sydney Oil & Gas, LLC, a Texas limited liability company owned by Mr. Robert Durbin, a gross overriding royalty of 6.6% of 8/8 for each lease or working interest acquired by Imperial Oil.
On October 31, 2007, Company completed a private placement consisting of 198,000,000 post dividend common shares sold to directors and officers for a total consideration of $3,000. On December 31, 2007, the Company completed a private placement of 49,665,000 post dividend common shares a total consideration of $37,625. On November 3, 2009, the Company issued a stock dividend to shareholders of record whereby the Company issued sixty-five shares of its common stock for each share of common stock held by such investors (all share references in these consolidated financial statements have been retroactively adjusted for this stock dividend). On October 22, 2009, 168,300,000 post dividend common shares were returned to Treasury and cancelled, and on January 27, 2010, a further 29,465,000 post dividend common shares were returned to Treasury and cancelled, leaving an outstanding balance at March 31, 2010 of 49,900,000 common shares.
|
7.
|
CONTRACTUAL COMMITMENTS
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On January 19, 2010, Imperial Oil entered into a Net Profit Agreement whereby Imperial agreed to share profits from certain mutually beneficial oil and gas exploration and development opportunities in Canada and the continental United States (“Prospects”). Pursuant to the this Agreement, Imperial Oil granted Mara Energy, LLC (“Mara”), a Delaware corporation, an interest in the Prospects by way of a Net Profit Interest. The Net Profit Interest is an interest in the Prospects that entitles Imperial Oil to receive a monthly amount equal to 50% of the Net Proceeds resulting from the sale of petroleum substances obtained from the Prospects.
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Mr. Robert Durbin, Imperial Oil’s Chief Executive Officer and Chairman of the Board, owns a 15% interest in Mara.
The Company intends to seek business opportunities that will provide a profit. However, the Company does not have the working capital necessary to be successful in this effort and to service its debt, which raises substantial doubt about its ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional loans from related parties, and equity funding, which will enable the Company to operate for the coming year.
IMPERIAL RESOURCES, INC. AND SUBSIDIARY
(Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
Consulting Service Agreement
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On April 1, 2010, Imperial Oil & entered into a Consulting Service Agreement with Mara Energy, LLC. whereby Mara will provides services associated with any future development of Imperial Oil’s working interest in both the Greater Garwood oil and gas development exploration assets and the producing Cochran #1.
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Royalty Agreement
On April 1, 2010, Imperial Oil entered into an Assignment of Overriding Royalty Interest Agreement whereby Imperial Oil agrees to pay Sydney Oil & Gas, LLC, a Texas limited liability company owned by Mr. Robert Durbin, a gross overriding royalty of 6.6% of 8/8 for each lease or working interest acquired by Imperial Oil.
On April 29, 2010, a stockholder of the Company returned 9,900,000 shares of the Company’s common stock to treasury for cancellation.