UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the
Fiscal Year Ended
July 31, 2008
or
[ ] Transition Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number:
333-129664
PETRO-NATIONAL
CORP.
(FORMERLY OUTBACK ENERGY CORPORATION)
(Exact name of
registrant as specified in Its Charter)
Nevada
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98-0470356
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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225 Marine Drive, Suite 210 Blaine, Washington,
98230
(Address of Principal Executive
Offices)
(zip code)
Registrants telephone number, including area code:
(360)
332-0905
Securities registered pursuant to Section 12(b) of the Act:
None
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None
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(Title of each class)
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(Name of each exchange on which registered)
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
YES [
] NO [X]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
YES [
] NO [X]
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
1
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer
or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller
reporting company in Rule 12b-2 of the
Exchange Act.:
Large accelerated filer [ ]
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Accelerated
filer [
]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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(Do not check if a smaller reporting company)
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|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).
YES [ ]
NO [X]
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by
reference to the price at
which the common equity was sold, or the average bid and asked prices of such
common
equity, as of the last business day of the registrants most recently
completed second fiscal quarter: As of January
31, 2008, the aggregate
market value of the Companys common stock held by non-affiliates was
$8,733,396.
As of October 29, 2008, there were 116,623,777 shares of common
stock outstanding
DOCUMENTS INCORPORATED BY REFERENCE
Exhibits incorporated by reference are referred under Part IV.
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TABLE OF CONTENTS
3
PART I
ITEM
1.
DESCRIPTION OF BUSINESS
Outback Energy Corporation (the Company, we, us or our)
was incorporated in the State of Nevada, United States of America, on July 7,
2005 under the name Claron Ventures, Inc. and was engaged in the exploration of
mineral interest located in British Columbia. We have relinquished our rights to
this mineral interest and changed our focus to the oil and gas industry towards
the later half of 2006.
In furtherance of its business goal of acquiring an oil and gas
property, on December 6, 2006, the Company entered into an Agreement with
PetroHunter Energy Corporation (PetroHunter) and its subsidiary, PetroHunter
Energy NT Ltd. (NT), for the Companys acquisition of NT in exchange solely
for the issuance of 5,000,000 preferred shares (the Super Voting Preferred
Stock) of the Company, each preferred share to have the equivalent of 100
common share voting rights and 200,000,000 shares of common stock (in exchange
for all of the issued and outstanding shares of NT) (Agreement). It is
proposed that the Company would effect a recapitalization such that the number
of common shares held by its existing shareholders would not exceed 60,000,000.
Pursuant to the terms of the Agreement, the Company appointed
Matthew R. Silverman and Stephen Schultz as directors concurrently with the
execution of the Agreement. Completion of the transaction was subject to several
conditions, including the completion of satisfactory due diligence by the
parties and NT having raised at least $15,000,000 in a private placement by
January 10, 2007 in order to complete its acquisition of the exploration
permits. Under the terms of the Agreement, investors in the $15,000,000 private
placement would exchange their interests in NT for common shares of the Company.
The Agreement expired as none of the preconditions to closing had been met by
the closing date of January 10, 2007. In May 2007, Mr. Silverman and Mr. Schultz
resigned as directors of the Company.
On December 15, 2006, the Company incorporated a Colorado
subsidiary with the name Outback Energy Corporation and merged with it on
January 16, 2007 for the purpose of effecting a name change. During 2007 and the
beginning of 2008, the Company underwent a complete change in management and its
board of directors. In furtherance of new management, and a new direction for
the Company to pursue overseas oil and gas opportunities, specifically in the
Middle East and East Asia, the Company effected a 2 for 1 forward stock split on
May 22, 2008 and a subsequent 2 for 1 forward stock split on July 8, 2008.
Additionally, the Company incorporated a Nevada subsidiary with the name
PetroNational Corp. and merged with it on July 8, 2008 for the purpose of
effecting a name change.
The Company continues to evaluate new business opportunities in
the overseas oil and gas sector. In order to meet its business objectives, the
Company will need to raise additional funds through equity or convertible debt
financing. There can be no assurance that the Company will be successful in
raising additional funds and, if unsuccessful, its plans for expanding
operations and business activities may have to be curtailed. Any attempt to
raise funds, through debt or equity financing, would likely result in dilution
to existing shareholders.
Our Strategy
Our focus is currently in locating and assessing potential
overseas acquisition targets, including oil and gas rights and oil and gas
companies. We will focus primarily on oil and gas properties for exploration,
secondary recovery and development projects in the Middle East and East Asia.
Each project will be evaluated by us based on sound geology, acceptable risk
levels and total capital requirements to develop. Our officers and directors
expect to travel overseas to evaluate potential acquisitions. Further, our
management will participate in a variety of conferences throughout 2009 to
increase our exposure to potential opportunities.
Our ability to execute our strategy as outlined above is
dependent on several factors including but not limited to: (i) identifying
potential acquisitions of either assets or operational companies with prices,
terms and conditions acceptable to us; (ii) obtaining additional financing for
capital expenditures, acquisitions and working capital either in the form of
equity or debt with terms and conditions acceptable to us; (iii) our success in
developing revenue, profitability and cash flow; (iv) the development of
successful strategic alliances or partnerships; and (v) the extent and
associated efforts and costs of federal, state and local regulations in each of
the industries in which we currently or plan to operate in. There are no
assurances that we will be successful in implementing our strategy as any
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negative result of one or more of the above factors could have
a material adverse effect on our business.
Customers
As of July 31, 2008, we had no customers.
Employees
As of July 31, 2008, we had no full time employees. Officers
and directors are responsible for all planning, developing and operational
duties, and will continue to do so throughout the early stages of growth.
Additionally, we currently utilize temporary contract labor throughout the year
to address business and administrative needs.
ITEM
1A. RISK
FACTORS
With the exception of historical facts stated herein, the
matters
discussed in this report on Form 10-K are forward looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from projected results. Such forward looking statements
include,
but are not necessarily limited to statements regarding
anticipated levels of future revenues and earnings from the operations of the
Company,, projected costs and expenses related to our operations, liquidity,
capital resources, and availability of future equity capital on commercially
reasonable terms. Factors that could cause actual results to differ materially
are discussed below. We disclaim any intent or obligation to publicly update
these forward looking statements, whether as a result of new information,
future events or otherwise.
Risks Relating to our Business
Our limited operating history may not serve as an
adequate basis to judge our future prospects and results of operations.
We have a limited operating history. As such, our historical
operating results may not provide a meaningful basis for evaluating our
business, financial performance and prospects. We may not be able to achieve a
similar growth rate in future periods. Accordingly, you should not rely on our
results of operations for any prior periods as an indication of our future
performance.
We have incurred losses in prior periods and may incur
losses in the future.
We incurred a net loss in all prior financial periods and we
have not yet completed a financial year in our contemplated new business. We
have a history of operating losses, expect to continue to incur losses, and may
never be profitable, and we must be considered to be in the exploration stage.
Further, we have been dependent on sales of our equity securities and debt
financing to meet our cash requirements. We have incurred losses from operations
totaling $310,340 for fiscal year ended July 31, 2008. As of July 31, 2008, we
have an accumulated deficit of $615,431 and a working capital deficit of
$101,736. We do not expect positive cash flow from operations in the near term.
There is no assurance that actual cash requirements will not exceed our
estimates.
We will require additional funding in the future.
Based upon our historical losses from operations, we will
require additional funding in the future. If we cannot obtain capital through
financings or otherwise, our ability to execute our business plan will be
greatly limited. Historically, we have funded our operations through the
issuance of equity and short-term debt financing arrangements. We may not be
able to obtain additional financing on favorable terms, if at all. Our future
cash flows and the availability of financing will be subject to a number of
variables, including potential production and the market prices of oil and
natural gas. Further, debt financing could lead to a diversion of cash flow to
satisfy debt-servicing obligations and create restrictions on business
operations. If we are unable to raise additional funds, it would have a material
adverse effect upon our operations.
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Our acquisitions may not be successful.
As part of our business strategy, we intend to acquire oil and
gas assets. Such acquisitions may pose substantial risks to our Company,
financial condition, and results of operations. In pursuing acquisitions, we
will compete with other companies, many of which have greater financial and
other resources to acquire attractive properties. If any of these events occur,
it would have a material adverse effect upon our operations and results from
operations.
A decline in the price of our common stock could affect
our ability to raise further working capital and adversely impact our
operations.
A decline in the price of our common stock could result in a
reduction in the liquidity of our common stock and a reduction in our ability to
raise additional capital for our operations. Because our operations to date have
been financed through borrowings and through the sale of equity securities, a
decline in the price of our common stock could have an adverse effect upon our
liquidity and our continued operations. A reduction in our ability to raise
equity capital in the future would have a material adverse effect upon our
business plan and operations, including our ability to continue our current
operations. If our stock price declines, we may not be able to raise additional
capital or generate funds from operations sufficient to meet our obligations.
We are a new entrant into the oil and gas industry.
We are a new entrant into the oil and gas industry without
operating history. Since December 2006, our activities have been limited to
acquiring oil and gas assets, organizational efforts and obtaining working
capital. As a result, there is no information regarding potential production or
revenue generation. As a result, our future revenues may be limited.
Properties that we acquire may not produce as projected.
Properties or assets that we buy may not produce as projected
and we may be unable to determine reserve potential, identify liabilities
associated with the properties or obtain protection from sellers against them.
One of our growth strategies is to capitalize on opportunistic acquisitions of
oil and natural gas reserves. However, our reviews of acquired properties are
inherently incomplete because it generally is not feasible to review in depth
every individual property involved in each acquisition. A detailed review of
records and properties may not reveal existing or potential problems, nor will
it permit a buyer to become sufficiently familiar with the properties to assess
fully their deficiencies and potential. Further, environmental problems, such as
ground water contamination, are not necessarily observable even when an
inspection is undertaken. Acquiring properties with liabilities would have a
material adverse effect upon our results of operations.
The potential profitability of oil and gas ventures
depends upon factors beyond our control.
The potential profitability of oil and gas properties is
dependent upon many factors beyond our control. For instance, world prices and
markets for oil and gas are unpredictable, highly volatile, potentially subject
to governmental fixing, pegging, controls, or any combination of these and other
factors, and respond to changes in domestic, international, political, social,
and economic environments. Additionally, due to worldwide economic uncertainty,
the availability and cost of funds for production and other expenses have become
increasingly difficult, if not impossible, to project. These and other changes
and events may materially affect our financial performance.
Adverse weather conditions can also hinder drilling operations.
A productive well may become uneconomic in the event water or other deleterious
substances are encountered which impair or prevent the production of oil and/or
gas from the well. In addition, production from any well may be unmarketable if
it is impregnated with water or other deleterious substances. The marketability
of oil and gas, which may be acquired or discovered, will be affected by
numerous factors beyond our control. These factors include, but are not limited
to, the proximity and capacity of oil and gas pipelines and processing
equipment, market fluctuations of prices, taxes, royalties, land tenure,
allowable production and environmental protection. These factors cannot be
accurately predicted and the combination of these factors may result in us not
receiving an adequate return on our invested capital.
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The oil and gas industry is highly competitive.
The oil and gas industry is highly competitive and there is no
assurance that we will be successful in acquiring assets. We compete with other
companies that have greater resources. Many of these companies not only explore
for and produce oil and natural gas, but also carry on refining operations and
market petroleum and other products on a regional, national or worldwide basis.
These companies may be able to pay more for productive oil and natural gas
properties and exploratory prospects or define, evaluate, bid for and purchase a
greater number of properties and prospects than our financial or human resources
permit. In addition, these companies may have a greater ability to continue
exploration activities during periods of low oil and natural gas market prices.
Our larger competitors may be able to absorb the burden of present and future
federal, state, local and other laws and regulations more easily than we can,
which would adversely affect our competitive position. Our ability to acquire
oil and gas assets and to discover reserves in the future will be dependent upon
our ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. In addition, because we have
fewer financial and human resources than many companies in our industry, we may
be at a disadvantage in bidding for exploratory prospects and producing oil and
natural gas properties.
Our business depends substantially on the continuing
efforts of our executive officers and directors, force, and our business may be
severely disrupted if we lose their services.
Our future success depends substantially on the continued
services of our executive officers and directors. We do not maintain key man
life insurance on our executive officers. If our executive officers are unable
or unwilling to continue in their present positions, we may not be able to
replace them readily, if at all. Therefore, our business may be severely
disrupted, and we may incur additional expenses to recruit and retain new
officers and directors.
Inability of Our Officers and Directors to Devote
Sufficient Time to the Operation of the Business May Limit Our Success.
Presently, the officers and directors of the Company allocate
only a portion of their time to the operation of our business. If the business
requires more time for operations than anticipated or the business develops
faster than anticipated, the officers and directors may not be able to devote
sufficient time to the operation of the business to ensure that it continues as
a going concern. Even if this lack of sufficient time of our management is not
fatal to our existence, it may result in limited growth and success of the
business.
Certain of our officers and directors may be subject to
conflicts of interest.
Our officers and directors may be subject to conflicts of
interest. Our officers and directors serve the Company on a part time basis and
may devote part of their time to other business endeavors. These business
endeavors as well as other business opportunities should be presented to the
Company. Such conflicts include deciding how much time to devote to our affairs,
as well as what business opportunities should be presented to the Company.
Because of these relationships, our officers and directors may be subject to
conflicts of interest.
If we are unable to attract, train and retain technical
personnel, our business may be materially and adversely affected.
Our future success depends, to a significant extent, on our
ability to attract, train and retain technical personnel. Recruiting and
retaining capable personnel, particularly those with expertise in the
intermediate forces industry, are vital to our success. There is substantial
competition for qualified technical personnel, and there can be no assurance
that we will be able to attract or retain our technical personnel. If we are
unable to attract and retain qualified employees, our business may be materially
and adversely affected.
Risks Relating to an Investment in our Securities
We have received a going concern opinion from our
independent auditors.
We have received a going concern opinion from our independent
auditors LBB & Associates Ltd., LLP, concerning our July 31, 2008 and 2007
financial statements. The independent auditor's report accompanying our July 31,
2008 and 2007 financial statements contains an explanatory paragraph raising
substantial doubt about our ability to continue as a going concern. The
financial statements have been prepared "assuming that the Company will continue
7
as a going concern," which contemplates that we will realize
our assets and satisfy our liabilities and commitments in the ordinary course of
business. Our ability to continue as a going concern is dependent on raising
additional capital to fund our operations and ultimately on generating future
profitable operations. There can be no assurance that we will be able to raise
sufficient additional capital or eventually have positive cash flow from
operations to address all of our cash flow needs. If we are not able to find
alternative sources of cash or generate positive cash flow from operations, our
business and shareholders will be materially and adversely affected.
If we grant employee share options and other share-based
compensation in the future, our net income could be adversely affected.
The Company may grant share purchase options to employees in
the future although it does not have a share based compensation plan in place as
of today. If the Company does this, it will account for options granted to our
directors and employees in accordance with FASB Statement No. 123 (Revised
2004), Share-Based Payments, or SFAS 123R, which requires all companies to
recognize, as an expense, the fair value of share options and other share-based
compensation to employees. As a result, if we were to grant options to directors
and employees, we would have to account for compensation costs for all share
options using a fair-value based method and recognize expenses in our
consolidated statement of operations in accordance with the relevant rules under
U.S. GAAP, which may have a material and adverse effect on our reported
earnings. If we try to avoid incurring these compensation costs, we may not be
able to attract and retain key personnel, as share options are an important
employee recruitment and retention tool. If we grant employee share options or
other share-based compensation in the future, our net income could be adversely
affected.
We are subject to corporate governance and internal
control reporting requirements, and our costs related to compliance with, or our
failure to comply with existing and future requirements, could adversely affect
our business.
We face new corporate governance requirements under the
Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by the
SEC and the Public Company Accounting Oversight Board. These laws, rules and
regulations continue to evolve and may become increasingly stringent in the
future. In particular, under rules proposed by the SEC on August 6, 2006 we are
required to include management's report on internal controls as part of our
annual report beginning with the fiscal year ending July 31, 2008 pursuant to
Section 404 of the Sarbanes-Oxley Act. Furthermore, under the proposed rules, an
attestation report on our internal controls from our independent registered
public accounting firm will be required as part of our annual report for the
fiscal year ending July 31, 2010. We are in the process of evaluating our
control structure to help ensure that we will be able to comply with Section 404
of the Sarbanes-Oxley Act. The financial cost of compliance with these laws,
rules and regulations is expected to be substantial. We cannot assure you that
we will be able to fully comply with these laws, rules and regulations that
address corporate governance, internal control reporting and similar matters.
Failure to comply with these laws, rules and regulations could materially
adversely affect our reputation, financial condition and the value of our
securities.
Investors may face significant restrictions on the resale
of our common stock due to federal regulations of penny stock.
As our Common Stock is trading, on the OTC Bulletin Board, it
will be subject to the requirements of Rule 15(g)9, promulgated under the
Securities Exchange Act as long as the price of our common stock is below $4.00
per share. Under such rule, broker-dealers who recommend low-priced securities
to persons other than established customers and accredited investors must
satisfy special sales practice requirements, including a requirement that they
make an individualized written suitability determination for the purchaser and
receive the purchaser's consent prior to the transaction. The Securities and
Exchange Commission also requires additional disclosure in connection with any
trades involving a stock defined as a penny stock. Generally, the Commission
defines a penny stock as any equity security not traded on an exchange or quoted
on NASDAQ that has a market price of less than $5.00 per share. The required
penny stock disclosures include the delivery, prior to any transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
with it. Such requirements could severely limit the market liquidity of the
securities and the ability of purchasers to sell their securities in the
secondary market.
8
Nevada law and our articles of incorporation authorize us
to issue shares of stock, which shares may cause substantial dilution to our
existing shareholders and/or have rights and preferences greater than our common
stock.
Pursuant to our Articles of Incorporation, we have, as of the
date of this Report, 187,500,000 shares of common and 10,000,000 shares of
preferred stock (Preferred Stock) authorized. As of the date of this Report,
we have 116,623,777 shares of common stock issued and outstanding and zero
shares of Preferred Stock issued and outstanding. As a result, our Board of
Directors has the ability to issue a large number of additional shares of common
stock without shareholder approval, which if issued could cause substantial
dilution to our then shareholders.
Additionally, shares of Preferred Stock may be issued by our
Board of Directors without shareholder approval with voting powers, and such
preferences and relative, participating, optional or other special rights and
powers as determined by our Board of Directors, which may be greater than our
common stock. As a result, shares of Preferred Stock may be issued by our Board
of Directors which cause the holders to have super majority voting power over
our shares, provide the holders of the Preferred Stock the right to convert the
shares of Preferred Stock they hold into shares of our common stock, which may
cause substantial dilution to our then common stock shareholders and/or have
other rights and preferences greater than those of our common stock
shareholders. Investors should keep in mind that the Board of Directors has the
authority to issue additional shares of common stock and Preferred Stock, which
could cause substantial dilution to our existing shareholders. Additionally, the
dilutive effect of any Preferred Stock, which we may issue may be exacerbated
given the fact that such Preferred Stock may have super majority voting rights
and/or other rights or preferences which could provide the preferred
shareholders with voting control over us subsequent to this offering and/or
provide those holders the power to prevent or cause a change in control. As a
result, the issuance of shares of common stock and/or Preferred Stock, may cause
the value of our securities to decrease and/or become worthless.
The public market for our securities is illiquid and our
stock price may be volatile.
Our securities are authorized to trade on the OTC Bulletin
Board; however, we can make no assurances that there will be a public market for
our common stock in the future. If there is a market for our common stock in the
future, we anticipate that such market would be illiquid and would be subject to
wide fluctuations in response to several factors, including, but not limited to:
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(1)
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actual or anticipated variations in our results of
operations;
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(2)
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our ability or inability to generate new
revenues;
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(3)
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increased competition;
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(4)
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conditions and trends in the oil and gas industries;
and
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(5)
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the market for oil and gas which we may choose to drill
or explore for.
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Furthermore, our stock price may be impacted by factors that
are unrelated or disproportionate to our operating performance. These market
fluctuations, as well as general economic, political and market conditions, such
as recessions, interest rates or international currency fluctuations may
adversely affect the market price and liquidity of our common stock.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not applicable
ITEM
2.
PROPERTIES
Effective December 2007 we moved our offices to 225 Marine
Drive, Suite 210, Blaine, Washington, pursuant to a consulting agreement with
our President. We do not pay rent for the use of the office but may be
responsible for certain telephone charges and miscellaneous office expenses. We
share this office space with other companies, and occupy approximately 750
square feet.
ITEM
3. LEGAL
PROCEEDINGS
We are not a party to any legal proceedings, nor are we aware
of any contemplated or pending legal proceedings against us
.
9
ITEM
4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
Part II
ITEM
5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on the Over the Counter Bulletin
Board under the symbol PTNL.
The following is the range of high and low bid prices for our
common stock for the periods indicated. The quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commissions and may not represent
actual transactions.
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High
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Low
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Fiscal Year ended July 31, 2008
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First Quarter (August 1
October 31, 2007)
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$1.76
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$0.644
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Second Quarter (November 1, 2007 January
31, 2008)
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$0.92
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$0.40
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Third Quarter (February 1,
2008 April 30, 2008)
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$0.44
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$0.244
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Fourth Quarter (May 1, 2008 July 31, 2008)
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$0.50
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$0.10
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High
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Low
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Fiscal Year ended July 31, 2007
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|
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First Quarter (August 1
October 31, 2006)
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$0.06
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$0.003
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Second Quarter (November 1, 2007 January
31, 2007)
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$0.71
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$0.060
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Third Quarter (February 1,
2008 April 30, 2007)
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$0.68
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$0.45
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Fourth Quarter (May 1, 2008 July 31, 2007)
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$0.49
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$0.40
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The closing price for our common stock on July 31, 2008 was
$0.20.
Stockholders
As of July 31, 2008, there were 112,817,254 shares of common
stock issued and outstanding held by 21 stockholders of record (not including
street name holders).
Dividends
We have neither declared nor paid any cash dividends on our
capital stock and do not anticipate paying cash dividends in the foreseeable
future. Our current policy is to retain any earnings in order to finance the
expansion of our operations. Our board of directors will determine future
declaration and payment of dividends, if any, in light of the then-current
conditions they deem relevant and in accordance with applicable corporate law.
Equity Compensation Plan Information
None.
Recent Sales of Unregistered Securities
On May 13, 2008, the Company issued 250,000 units (1,000,000
pre reverse-splits units) at $0.20 pursuant to a private placement, each unit
consisting of one share of common stock and one share purchase warrants, each
warrant entitling the holder to purchase one share of common stock at $0.40
($0.10 pre reverse-splits) for two years.
On July 15, 2008, the Company issued 300,000 units at $0.10
pursuant to a private placement, each unit consisting of one share of common
stock and one share purchase warrants, each warrant entitling the holder to
purchase one
10
share of common stock at $0.15 for two years.
On July 24, 2008, the Company offered certain debt holders the
opportunity to convert all of their outstanding debt into units of the Companys
securities at $0.10 per unit, each unit consisting of one share of common stock
and one share purchase warrants, each warrant entitling the holder to purchase
one share of common stock at $0.15 for two years. Three debt holders opted to
convert the aggregate sum of $350,654 into 3,506,522 units. Subsequent to year
end, on August 28, 2008, the units were issued.
ITEM
6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM
7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto included elsewhere in this
Report. Forward looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward-looking statements are based upon estimates,
forecasts, and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by us, or on our behalf. We disclaim any
obligation to update forward-looking statements.
The discussion and financial statements contained herein are
for our fiscal year ended July 31, 2008 and July 31, 2007. The following
discussion regarding our financial statements should be read in conjunction with
our financial statements included herewith.
Background
We were incorporated in the State of Nevada, United States of
America, on July 7, 2005 under the name Claron Ventures, Inc. and were engaged
in the exploration of mineral interest located in British Columbia. We have
relinquished our rights to this mineral interest and changed our focus to the
oil and gas industry towards the later half of 2006.
In furtherance of its business goal of acquiring an oil and gas
property, on December 6, 2006, the Company entered into an Agreement with
PetroHunter Energy Corporation (PetroHunter) and its subsidiary, PetroHunter
Energy NT Ltd. (NT), for the Companys acquisition of NT in exchange solely
for the issuance of 5,000,000 preferred shares (the Super Voting Preferred
Stock) of the Company, each preferred share to have the equivalent of 100
common share voting rights and 200,000,000 shares of common stock (in exchange
for all of the issued and outstanding shares of NT) (Agreement). It is
proposed that the Company would effect a recapitalization such that the number
of common shares held by its existing shareholders would not exceed 60,000,000.
Pursuant to the terms of this Agreement, the Company appointed
Matthew R. Silverman and Stephen Schultz as directors concurrently with entering
into the Agreement. Completion of the transaction was subject to several
conditions, including the completion of satisfactory due diligence by the
parties and NT having raised at least $15,000,000 in a private placement by
January 10, 2007 in order to complete its acquisition of the exploration
permits. Under the terms of the Agreement, investors in the $15,000,000 private
placement would exchange their interests in NT for common shares of the Company.
The Agreement expired as none of the preconditions to closing had been met by
the closing date of January 10, 2007. In May 2007, Mr. Silverman and Mr. Schultz
resigned as directors of the Company.
On December 15, 2006, the Company incorporated a Colorado
subsidiary with the name Outback Energy Corporation and merged with it on
January 16, 2007 for the purpose of effecting a name change. During 2007 and the
beginning of 2008, the Company underwent a complete change in management and its
board of directors. In
11
furtherance of new management, and a new direction for the
Company to pursue overseas oil and gas opportunities, specifically in the Middle
East and East Asia, the Company effected a 2 for 1 forward stock split on May
22, 2008 and a subsequent 2 for 1 forward stock split on July 8, 2008.
Additionally, the Company incorporated a Nevada subsidiary with the name
PetroNational Corp. and merged with it on July 8, 2008 for the purpose of
effecting a name change.
Cash and Cash Equivalents
As of July 31, 2008, we had cash of $4. As such, we anticipate
that we will have to raise additional capital through debt or equity financings
to fund our operations and execute our business plan during the next 6 to 12
months.
Development
Our future operations are dependent upon the identification and
successful completion of additional long-term or permanent equity financings,
the support of creditors and shareholders, and, ultimately, the achievement of
profitable operations. There can be no assurances that we will be successful,
which would in turn significantly affect our ability to roll out our business
plan. If not, we will likely be required to reduce operations or liquidate
assets. We will continue to evaluate our projected expenditures relative to our
available cash and seek additional means of financing in order to satisfy our
working capital and other cash requirements.
We continue to operate with very limited administrative
support, and our current officers and directors continue to be responsible for
many duties to preserve our working capital.
Our focus is currently in locating and assessing potential
overseas acquisition targets, including oil and gas rights and oil and gas
companies. We will focus primarily on oil and gas properties for exploration,
secondary recovery and development projects in the Middle East and East Asia,.
Each project will be evaluated by our management based on sound geology,
acceptable risk levels and total capital requirements to develop. Our officers
and directors expect to travel overseas to evaluate potential acquisitions.
Further, our management will participate in a variety of conferences throughout
2009 to increase our exposure to potential opportunities. We believe that, with
our current efforts to raise capital, we will have sufficient cash resources to
satisfy our needs over the next twelve months. Our ability to satisfy cash
requirements thereafter will determine whether we achieve our business
objectives. Should we require additional cash in the future, there can be no
assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to our company, if at all.
Critical Accounting Policies
The preparation of financial statements in conformity with
United States generally accepted accounting principles requires management of
our company to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods.
Our management routinely makes judgments and estimates about
the effects of matters that are inherently uncertain. As the number of variables
and assumptions affecting the probable future resolution of the uncertainties
increase, these judgments become even more subjective and complex. Our
significant accounting policies are discussed in Note 2 to our financial
statements for the fiscal year ended July 31, 2008 included in the Form 10-K. We
have identified the following accounting policies, described below, as the most
important to an understanding of our current financial condition and results of
operations.
12
Exploration Stage
The Company complies with Financial Accounting Standard Boards
Statement of Financial Accounting Standards (SFAS) No. 7 for its
characterization of the Company as an Exploration Stage Company. The Company is
devoting substantially all of its present efforts to establish a new business
and none of its planned principal operations have commenced.
Loss per share
In accordance with SFAS No. 128,
Earnings Per Share
, the
basic loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding.
Diluted loss per share is computed by dividing net loss by the weighted average
number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding during each period. Diluted loss per common
share is not presented because it is anti-dilutive. The weighted average number
of shares outstanding during the periods has been retroactively restated to
reflect:
i.
|
a forward stock split of 26 new shares for one old share,
effective on November 10, 2006;
|
ii.
|
a reverse stock split of 1 new share for two old shares,
effective May 22, 2008.
|
iii.
|
a reverse stock split of 1 new share for two old shares,
effective July 8, 2008.
|
Income taxes
The Company accounts for income taxes under SFAS No. 109,
Accounting for Income Taxes.
Under SFAS No.109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between their financial statement carrying amounts and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled
Impairment of Long-lived Assets
Property and equipment are stated on the basis of historical
cost less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. Major
renewals and improvements are capitalized, while minor replacements, maintenance
and repairs are charged to current operations.
Impairment losses are recorded on fixed assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. There were no impairment losses in 2008 and 2007.
Foreign Currency Translation
Monetary items denominated in a foreign currency are translated
into US dollars, the reporting currency, at exchange rates prevailing at the
balance sheet date and non-monetary items are translated at exchange rates
prevailing when the assets were acquired or obligations incurred. Foreign
currency denominated revenue and expense items are translated at exchange rates
prevailing at the transaction date. Gains or losses arising from the
translations are included in operations.
Equity Financing
The Company issues common stock and other equity instruments in order to raise capital. In each case, the Company evaluates the characteristics of these instruments in the context of the provisions of SFAS 150 in order to determine the appropriate equity or liability classification.
Results of Operations
The following is Managements discussion and analysis of
certain significant factors which have affected the Companys financial
condition and results of operations during the periods included in the
accompanying financial statements.
Results of Operations for the Year Ended July 31, 2008 as
Compared to the Year Ended July 31, 2007
Results of Operations, Years ended
|
|
July 31, 2008
|
|
|
July 31, 2007
|
|
|
|
|
|
|
|
|
Interest expense
|
$
|
28,905
|
|
$
|
7,954
|
|
Investor relations and marketing
|
|
150,649
|
|
|
118,065
|
|
Management fees
|
|
49,200
|
|
|
16,360
|
|
Office and administrative
|
|
24,947
|
|
|
9,296
|
|
Professional fees
|
|
56,639
|
|
|
75,925
|
|
|
|
|
|
|
|
|
|
$
|
310,340
|
|
$
|
227,600
|
|
13
General and administrative expenses
During the fiscal year ended July 31, 2008, we incurred total
expenses of $310,340, as compared to $227,600 for the year ended July 31, 2007.
These expenses were related mainly to investor relations, marketing and
professional fees. Other expenses were incurred in relation to activities
associated with maintaining a public listing, such as legal and accounting fees.
Expenses or other cash flows in this period may not be indicative
of future periods as we are in the early development stage.
Results of Operations for the Year Ended July 31, 2007 as
Compared to the Year Ended July 31, 2006
Results of Operations, Years ended
|
|
July 31, 2007
|
|
|
July 31, 2006
|
|
|
|
|
|
|
|
|
Exploration expenses
|
$
|
-
|
|
|
9,198
|
|
Interest expense
|
|
7,954
|
|
|
-
|
|
Investor relations and marketing
|
|
118,065
|
|
|
-
|
|
Management fees
|
|
16,360
|
|
|
-
|
|
Office and administrative
|
|
9,296
|
|
|
1,597
|
|
Professional fees
|
|
75,925
|
|
|
52,503
|
|
|
|
|
|
|
|
|
|
$
|
227,600
|
|
$
|
63,298
|
|
General and administrative expenses
During the fiscal year ended July 31, 2007, we incurred total
expenses of $227,600, as compared to $63,298 for the year ended July 31, 2006.
These expenses in fiscal 2007 were related mainly to investor relations,
marketing and professional fees, while in 2006 they consisted mainly of
professional fees. Other expenses were incurred in relation to activities
associated with maintaining a public listing, such registration fees.
Liquidity and Capital Resources
As of July 31, 2008, we had cash of $4, and working capital
deficiency of $101,736. During the period ended July 31, 2008, we funded our
operations from the proceeds of private sales of equity and convertible notes.
We plan to continue further financings and we believe that this will provide
sufficient working capital to fund our operations for at least the next 12
months. Changes in our operating plans, increased expenses, additional
acquisitions, or other events, may cause us to seek additional equity or debt
financing in the future.
For the period ended July 31, 2008, we used $261,011 in cash
flows to fund operating activities. Net cash used in operating activities
resulted from the net loss of $310,340, an increase of $99 in prepaid expenses,
non-cash accrued interest of $28,905 and an increase in accounts payable of
$20,523.
We raised $180,000 during the fiscal year ended July 31, 2008
from the proceeds of convertible notes, and $78,500 from subscriptions received.
Subsequent to July 31, 2008, the units of common stock subscribed were issued.
We do not have significant cash requirements at this time due
to our limited operations. Accordingly, we expect to continue to use the cash
raised subsequent to year end to fund operations for our fiscal year ended July
31, 2009, as we look to expand our asset base and fund exploration of our future
properties.
14
Recent Financings
Promissory Note Payable
On November 21, 2006, the Company received $6,000 pursuant to a
promissory note. The note is unsecured, bears interest at 12% per annum
calculated monthly and is due on demand. Any payments of principal or interest
in arrears bear interest at 12% per annum calculated annually. Default in
payment shall, at the option of the holder, render the entire balance payable.
At July 31, 2008, interest of $1,205 is accrued on the balance sheet. Subsequent
to year end, the note was repaid in full.
Issuance of Common Stock Pursuant to Debt Conversion
Effective July 24, 2008, the Company entered into option
agreements to convert outstanding debt with various creditors. The debtors
agreed to convert outstanding principal and accrued interest in the amount of
$350,654 into units at a price of $0.10 per unit. Each unit consist of one share
of common stock and one share purchase warrant, each warrant entitling the
holder to purchase one share of common stock at $0.15 for two years. Subsequent
to year end, on August 28, 2008, the units were issued. Accordingly, the
following loans were converted:
|
(1)
|
On December 4, 2006, the Company received $5,000 pursuant
to a promissory note. The note is unsecured, bears interest at 12% per
annum calculated monthly and is due on demand. Any payments of principal
or interest in arrears bear interest at 12% per annum calculated annually.
Default in payment shall, at the option of the holder, render the entire
balance payable. At July 24, 2008, the principal and accrued interest of
$981 was converted into 59,814 units as described above.
|
|
|
|
|
(2)
|
On January 15, 2007, the Company received $100,000
pursuant to a promissory note. The note is unsecured, bears interest at
12% per annum calculated monthly and is due on demand. Any payments of
principal or interest in arrears bear interest at 12% per annum calculated
annually. Default in payment shall, at the option of the holder, render
the entire balance payable. At July 24, 2008, the principal and accrued
interest of $18,279 was converted into 1,182,795 units as described
above.
|
|
|
|
|
(3)
|
On June 5, 2007, the Company received $30,000 pursuant to
a promissory note. The note is unsecured, bears interest at 12% per annum
calculated annually and is due on demand. Any payments of principal or
interest in arrears bear interest at 12% per annum calculated annually.
Default in payment shall, at the option of the holder, render the entire
balance payable. At July 24, 2008, the principal and accrued interest of
$4,083 was converted into 340,833 units as described above.
|
|
|
|
|
(4)
|
On September 18, 2007, the Company received $50,000
pursuant to a promissory note. The note is unsecured, bears interest at
12% per annum calculated annually and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder, render
the entire balance payable. At July 24, 2008, the principal and accrued
interest of $5,079 was converted into 550,795 units as described
above.
|
|
|
|
|
(5)
|
On November 6, 2007, the Company received $50,000
pursuant to a promissory note. The note is unsecured, bears interest at
12% per annum calculated annually and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder, render
the entire balance payable. At July 24, 2008, the principal and accrued
interest of $4,274 was converted into 542,740 units as described
above.
|
|
|
|
|
(6)
|
On December 17, 2007, the Company received $25,000
pursuant to a promissory note. The note is unsecured, bears interest at
12% per annum calculated annually and is due on demand. Any payments of
principal or interest in arrears bear interest at 30% per annum calculated
annually. Default in payment shall, at the option of the holder, render
the entire balance payable. At July 24, 2008, the principal and accrued
interest of $1,800 was converted into 268,000 units as described
above.
|
|
|
|
|
(7)
|
On May 29, 2008, the Company received $30,000 pursuant to
a promissory note. The note is unsecured, bears interest at 18% per annum
calculated annually and is due on demand. Any payments of principal or
interest in arrears bear interest at 30% per annum calculated annually.
Default in payment shall, at the option of the holder, render the entire
balance payable. At any time that the principal and interest shall remain
outstanding, the lender has the right to convert such principal and
interest to shares of common stock of the Company at a price equal to the
price of any future financing offered by the Company over the next twelve
month period. At July 24, 2008, the principal and accrued interest of $828
was converted into 308,266 units as described above.
|
|
|
|
|
(8)
|
On June 17, 2008, the Company received $5,000 pursuant to
a promissory note. The note is unsecured,
|
15
|
|
bears interest at 18% per annum calculated annually and
is due on demand. Any payments of principal or interest in arrears bear
interest at 30% per annum calculated annually. Default in payment shall,
at the option of the holder, render the entire balance payable. At any
time that the principal and interest shall remain outstanding, the lender
has the right to convert such principal and interest to shares of common
stock of the Company at a price equal to the price of any future financing
offered by the Company over the next twelve month period. At July 24,
2008, the principal and accrued interest of $91 was converted into 50,912
units as described above.
|
|
|
|
|
(9)
|
On June 30, 2008, the Company received $20,000 pursuant
to a promissory note. The note is unsecured, bears interest at 18% per
annum calculated annually and is due on demand. Any payments of principal
or interest in arrears bear interest at 30% per annum calculated annually.
Default in payment shall, at the option of the holder, render the entire
balance payable. At any time that the principal and interest shall remain
outstanding, the lender has the right to convert such principal and
interest to shares of common stock of the Company at a price equal to the
price of any future financing offered by the Company over the next twelve
month period. At July 24, 2008, the principal and accrued interest of $237
was converted into 202,367 units as described
above.
|
Issuance of Common Stock
On May 13, 2008, the Company issued 250,000 units (1,000,000
pre reverse-splits units) at $0.20 pursuant to a private placement, each unit
consisting of one share of common stock and one share purchase warrants, each
warrant entitling the holder to purchase one share of common stock at $0.40
($0.10 pre reverse-splits) for two years.
On July 15, 2008, the Company issued 300,000 units at $0.10
pursuant to a private placement, each unit consisting of one share of common
stock and one share purchase warrants, each warrant entitling the holder to
purchase one share of common stock at $0.15 for two years.
On July 24, 2008, the Company offered certain debt holders the
opportunity to convert all of their outstanding debt into units of the Companys
securities at $0.10 per unit, each unit consisting of one share of common stock
and one share purchase warrants, each warrant entitling the holder to purchase
one share of common stock at $0.15 for two years. Three debt holders opted to
convert the aggregate sum of $350,654 into 3,506,522 units.
Subscriptions Received
Subsequent to our fiscal year ended July 31, 2008, on August 6,
2008, August 22, 2008 and October 2, 2008, the Company received subscriptions
for 600,000 units at $0.10 pursuant to a private placement, each unit consisting
of one share of common stock and one share purchase warrants, each warrant
entitling the holder to purchase one share of common stock at $0.15 for two
years.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined
in Item 303(a)(4) of Regulation S-K.
Capital Expenditures
We did not make any capital expenditures in the fiscal year
ended July 31, 2008.
The following table outlines payments due under our significant
contractual obligations over the periods shown, exclusive of interest:
|
|
|
Payments Due by
|
|
|
|
|
Period
|
|
Contract Obligations
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
|
|
At July 31,
2008
|
|
|
Total
|
|
|
1
Year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
5
years
|
|
Total Debt
|
|
$
|
7,205
|
|
$
|
7,205
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
16
The above table outlines our obligations as of July 31, 2008
and does not reflect any changes in our obligations that have occurred after
that date. Subsequent to fiscal year ended July 31, 2008, the note was repaid in
full.
ITEM
7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM
8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our financial statements are included following the signature
page to this Form 10-K.
ITEM
9.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A(T). CONTROLS AND
PROCEDURES
We carried out an evaluation, under the supervision and with
the participation of our management, including our Chief Executive Officer along
with our Chief Financial Officer, of the effectiveness of the design of the our
disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e)
and 15a-15(e)) as of the end of our fiscal year pursuant to Exchange Act Rule
13a-15. Based upon that evaluation, our Chief Executive Officer along with our
Chief Financial Officer concluded that our disclosure controls and procedures
are effective in ensuring that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms.
Changes in Internal Control over Financial Reporting
We have had very limited operations and there were no changes
in our internal controls over financial reporting that occurred during the three
months ended July 31, 2008 that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting. We
believe that a control system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the control system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within any company have been detected.
Managements Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on criteria established in the
framework in
Internal Control - Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, our management concluded that our internal control over financial
reporting was effective as of July 31, 2008.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate. All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.
This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Our managements report was not subject to attestation by our
registered public
17
accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only our managements report
in this annual report.
ITEM
9B. OTHER
INFORMATION
Sale of Securities
On May 13, 2008, the Company issued 250,000 units (1,000,000
pre reverse splits units) of our securities to accredited investors at a price
of $0.20 per unit, for net proceeds of $50,000. Each unit consisting of one
share of our common stock and one share purchase warrant, each warrant
exercisable at $0.40 ($0.10 pre reverse-splits) for a two year period. We
offered and sold our securities in reliance on Section 506 of Regulation D
and/or Regulation S of the Securities Act, and comparable exemptions for sales
to accredited investors under state securities laws.
On June 17, 2008, the Company issued convertible notes to
accredited investors for proceeds of $5,000. The amount is unsecured and is due
on demand. The principal amount bears interest at 18% per annum calculated and
payable annually. At any time that the principal and interest shall remain
outstanding, the lender has the right to convert such principal and interest to
shares of our common stock at a price equal to the price of any future financing
offered by the Company over the next twelve month period. We offered and sold
the convertible notes in reliance on Section 506 of Regulation D and/or
Regulation S of the Securities Act, and comparable exemptions for sales to
accredited investors under state securities laws.
On June 30, 2008, the Company issued convertible notes to
accredited investors for proceeds of $20,000. The amount is unsecured and is due
on demand. The principal amount bears interest at 18% per annum calculated and
payable annually. At any time that the principal and interest shall remain
outstanding, the lender has the right to convert such principal and interest to
shares of our common stock at a price equal to the price of any future financing
offered by the Company over the next twelve month period. We offered and sold
the convertible notes in reliance on Section 506 of Regulation D and/or
Regulation S of the Securities Act, and comparable exemptions for sales to
accredited investors under state securities laws.
On July 15, 2008, we issued 300,000 units of our securities to
accredited investors at a price of $0.10 per unit, for net proceeds of $30,000.
Each unit consisting of one share of our common stock and one share purchase
warrant, each warrant exercisable at $0.15 for a two year period. We offered and
sold our securities in reliance on Section 506 of Regulation D and/or Regulation
S of the Securities Act, and comparable exemptions for sales to accredited
investors under state securities laws.
On July 23, 2008, the Company offered certain debt holders the
opportunity to convert all of their outstanding debt into units of the Companys
securities at $0.10 per unit, each unit consisting of one share of common stock
and one share purchase warrants, each warrant entitling the holder to purchase
one share of common stock at $0.15 for two years. Three debt holders opted to
convert the aggregate sum of $350,654 into 3,506,522 units. We offered and sold
our securities in reliance on Section 506 of Regulation D and/or Regulation S of
the Securities Act, and comparable exemptions for sales to accredited
investors under state securities laws.
Subsequent to our fiscal year ended July 31, 2008, on August 6,
2008, August 22, 2008 and October 2, 2008, we received subscriptions for 600,000
units of our securities to accredited investors at a price of $0.10 per unit,
for net proceeds of $60,000. Each unit consisting of one share of our common
stock and one share purchase warrant, each warrant exercisable at $0.15 for a
two year period. We offered and sold our securities in reliance on Section 506
of Regulation D and/or Regulation S of the Securities Act, and comparable
exemptions for sales to accredited investors under state securities laws.
Finders Fee Agreement
On June 13, 2008, the Company entered into a finders fee
agreement with Coast Advisors LLC whereby Coast Advisors would introduce
potential accredited investors to the Company for a fee of 5% of any cash
invested in the Company.
18
PART III
ITEM
10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth
the names and ages of our current directors and executive officers, the
principal offices and positions held by each person:
Person
|
|
Age
|
|
Position
|
|
|
|
|
|
G. Leigh Lyons
|
|
50
|
|
President, Chief
Executive Officer, Chief Financial Officer, Secretary, Director
|
Gregory Leigh Lyons
On December 12, 2007, Mr. Lyons was appointed as a director on
the Companys Board of Directors. On December 19, 2007, the Board of Directors
of the Company appointed G. Leigh Lyons as the Companys new President, Chief
Executive Officer and Chief Financial Officer. Mr. Lyons has over 24 years
experience in the domestic and international oil and gas sector, specializing in
general management, corporate governance, strategic planning, acquisitions and
project management. In 2005 he founded Sound Energy Advisors LLC, a consulting
company dedicated to providing corporate management and governance services to
start-up and emerging energy companies. Mr. Lyons has been the acting President
and Director of Radial Energy, Inc. (RENG.PK) since April 2006, as well as the
acting President and Director of American Petro-Hunter, Inc. (AAPH.OB) since
December 2007. From December 2007 to February 2008, he served as the interim
President and Director of Ameriwest Energy Corp. Mr. Lyons served as President
and Director of Digital Ecosystems Inc. from September 2005 to March 2006. He
was the acting President and Director of Benem Ventures Inc. from September 2005
to December 2007. From September 2000 until July 2005, he served as Chief
Operating Officer and Project Manager for Gas Trans Boliviano, S.A. in Santa
Cruz, Bolivia. Prior to 2000 Mr. Lyons held many management and governance
positions, primarily with companies involved in the international oil and gas
sector, in particular in Latin America. Mr. Lyons earned a bachelors degree in
Earth Science from the University of California, Santa Cruz in 1984. Mr. Lyons
is an alumnus of Harvard Business School having completed the Advanced
Management Program in 2004.
Audit Committee
Our Board of Directors has not established a separate audit
committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Instead, the entire Board of
Directors acts as the audit committee within the meaning of Section 3(a)(58)(B)
of the Exchange Act. We do not have any independent directors. We are seeking
candidates for outside directors to serve on a separate audit committee when we
establish one. Due to our small size and limited operations and resources, it
has been difficult to recruit outside directors.
Audit Committee Financial Expert
We currently do not have an audit committee financial expert,
or an independent audit committee expert on our Board of Directors.
Code of Ethics
We have adopted a code of ethics that applies to all of our
employees, including our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Based solely upon a review of Forms 3, 4 and 5 delivered to us
as filed with the Securities Exchange Commission, each of our former President
and Director, Trevor Sali, our former Chief Financial Officer, Dennis Mee,
current
19
President and Director, Gregory Leigh Lyons and 10% beneficial
owner, Dartmore International, Inc. failed to file on a timely basis Form 3 and
Form 4s as required pursuant to Section 16(a) of the Securities Exchange Act.
Mr. Sali and Dartmore International, Inc. failed to file any reports during the
fiscal year ended July 31, 2008. Mr. Mee had two late reports and Mr. Lyons had
one late report during the fiscal year ended July 31, 2008.
Except as set forth above, and based solely upon a review of
Forms 3, 4 and 5 delivered to us as filed with the Securities Exchange
Commission, our executive officers and directors, and persons who own more than
10% of our Common Stock timely filed all required reports pursuant to Section
16(a) of the Securities Exchange Act.
ITEM
11. EXECUTIVE
COMPENSATION
The summary compensation table below shows certain compensation
information for services rendered in all capacities to us by our principal
executive officer and by each other executive officer whose total annual salary
and bonus exceeded $100,000 during the fiscal periods ended July 31, 2008 and
July 31, 2007. Other than as set forth below, no executive officers total
annual compensation exceeded $100,000 during our last fiscal period.
Summary Compensation Table
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Non
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Equity
|
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Incentive
|
|
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Non-qualified
|
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Plan
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Deferred
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All Other
|
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|
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|
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Stock
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Option
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Compensa
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Compensation
|
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Compensa
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Salary
|
|
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Bonus
|
|
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Awards
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Awards
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tion
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Earnings
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tion
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Total
|
|
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Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Name and Principal
Position (a)
|
(b)
|
|
|
(c)
|
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(d)
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|
(e)(2)
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|
|
(f)
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(g)
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(h)
|
|
|
(i)
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|
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(j)
|
|
Trevor Sali,
|
2008
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
8,000
|
|
$
|
8,000
|
|
Former President and Chief Financial
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
Officer
and Director(1)
|
2007
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
10,000
|
|
$
|
10,000
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
Dennis Mee
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
Former Chief Financial Officer and
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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Director(2)
|
2008
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
21,200
|
|
$
|
21,200
|
|
|
2007
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
6,360
|
|
$
|
6,360
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory Leigh Lyons
|
2008
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
20,000
|
|
$
|
20,000
|
|
President, Chief Financial Officer and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director(3)
|
2007
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
20
(1)
|
Mr. Sali resigned as Chief Financial Officer on June 22,
2007, as President on December 19, 2007 and as Director on March 19, 2008.
The Company had entered into a verbal month to month management agreement
with Mr. Trevor Sali for $1,000 per month, commencing October 2006. This
agreement has terminated.
|
|
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(2)
|
Mr. Mee resigned as Chief Financial Officer and Director
on December 19, 2007. In June 2007, the Company entered into a contract
for management services with a company controlled by Mr. Dennis Mee,
requiring the payment of $4,000 per month plus applicable taxes for a
period of one year expiring on June 30, 2008. This agreement has
terminated.
|
|
|
(3)
|
The Company entered into a Management and Governance
Consultant Agreement with Sound Energy Advisors LLC on December 21, 2007.
Pursuant to the agreement, Sound Energy Advisors provides services to us
relating to corporate management and governance and consults with our
officers and employees concerning matters relating to corporate
management, governance, including day-to-day operations, accounting,
regulatory compliance, marketing and investor relation services. We agreed
to pay Sound Energy Advisors $2,500 per month for services rendered
pursuant to the agreement. The agreement will expire pursuant to its own
terms on November 30, 2009, and either party may terminate the agreement
at any time by providing 30 days written notice to the other party. Mr.
Lyons is the founder and president of Sound Energy Advisors.
|
|
|
|
Mr. Lyons billed a total of $20,000 for the fiscal year
ended July 31, 2008.
|
Director Compensation
Our board of directors are reimbursed for actual expenses
incurred in attending Board meetings. Except for other compensation received as
set forth above, there are no other compensation arrangement with directors, and
the directors did not receive any compensation in the fiscal years ending July
31, 2008 and 2007.
Pension and Retirement Plans
Currently, we do not offer any annuity, pension or retirement
benefits to be paid to any of our officers, directors or employees, in the event
of retirement. There are also no compensatory plans or arrangements with respect
to any individual named above which results or will result from the resignation,
retirement or any other termination of employment with our company, or from a
change in the control of our Company.
ITEM
12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The following table sets forth certain information, as of July
31, 2008 with respect to any person (including any group, as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
Exchange Act)) who is known to the Company to be the beneficial owner of more
than five percent of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each its
director, the executive officers of the company and all of its directors and
executive officers of the Company and all of its directors and executive
officers as a group. Unless otherwise specified in the table below, such
information, other than information with respect to the directors and officers
of the Company, is based on a review of statements filed, with the Securities
and Exchange commission (the Commission) pursuant to Sections 13 (d), 13 (f),
and 13 (g) of the Exchange Act with respect to the Company's Common Stock. As of
July 31, 2008, there were 112,817,254 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each
person is determined under the rules of the Commission and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which such person has
sole or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the date hereof,
through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
The table also shows the number of shares beneficially owned as
of July 31, 2008 by each of the individual directors and executive officers and
by all directors and executive officers as a group.
21
Unless provided for otherwise, the address for each of the
beneficial owners named below is the Company's business address.
Name and Address of
|
Number of Shares
|
Percent of Class
|
Beneficial Owner
|
Beneficially Owned
(1)
|
Of Common Stock
|
Dartmore
International Inc.
|
73,125,000
|
64.82%
|
Suite 13, Oliaji
Trade Centre
|
|
|
Francis Rachel St.
|
|
|
Victoria Mahe
|
|
|
Seychelles
|
|
|
Gregory Leigh Lyons
|
-
|
-
|
|
|
|
Dennis Mee
|
-
|
-
|
1480 Foster Street,
Suite 28
|
|
|
White Rock, BC, V4B 3X7
|
|
|
|
|
|
Trevor Sali
|
-
|
-
|
#2-630 2nd Avenue
|
|
|
Saskatoon, SK, S7K 2C8
|
|
|
|
|
|
All officers and
directors as a group (3
|
-
|
-
|
persons)
|
|
|
|
(1)
|
Percent of Ownership is calculated in accordance with the
Securities and Exchange Commission's Rule 13(d) - 13(d)(1). Shares of
common stock subject to warrants currently exercisable or exercisable
within 60 days of July 31, 2008 are deemed outstanding for computing the
percentage ownership of the stockholder holding the warrants, but are not
deemed outstanding for computing the percentage ownership of any other
stockholder. Unless otherwise indicated in the footnotes to this table, we
believe that stockholders named in the table have sole voting and sole
investment power with respect to the shares set forth opposite such
stockholder's name. Unless otherwise indicated, the officers, directors
and stockholders can be reached at our principal offices. Percentage of
ownership is based on 112,817,254 shares of our common stock outstanding
as of July 31, 2008.
|
ITEM
13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
On December 21, 2007, we entered into a Management and
Governance Consultant Agreement with Sound Energy Advisors, LLC, an affiliated
entity of our President (the Consultant), whereby it was agreed that the
Consultant would provide us with management and consulting services for a
monthly fee of $2,500. The agreement was effective on December 1, 2007 and
expires on November 30, 2009 and is subject to termination upon 30-day prior
written notice by either party. Mr. Lyons is the founder and president of Sound
Energy Advisors.
The Company entered into a verbal month to month management
agreement with Mr. Trevor Sali, our former President, Chief Financial Officer
and Director for $1,000 per month, commencing October 2006. This agreement has
terminated.
In June 2007, the Company entered into a contract for
management services with a company controlled by Mr. Dennis Mee, our Chief
Financial Officer and Director, requiring the payment of $4,000 per month plus
applicable taxes for a period of one year expiring on June 30, 2008. This
agreement has terminated.
Director Independence
The Company does not have any independent directors on its
Board of Directors.
22
ITEM
14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The Registrant's Board of Directors has appointed LBB &
Associates Ltd. LLP as independent public accountant for the fiscal year ending
July 31, 2008.
Audit Fees.
The aggregate fees billed by our auditors for professional
services rendered for the audit of our annual financial statements for the years
ended July 31, 2008 and 2007 were $7,000 and $5,500, respectively.
Audit fees consist of fees billed for professional services
rendered for the audit of our financial statements and review of the interim
financial statements included in quarterly reports and services that are
normally provided by the above auditors in connection with statutory and
regulatory fillings or engagements
Audit Related Fees.
We incurred $6,660 and $6,050 to auditors for audit related
fees during the fiscal year ended July 31, 2008 and 2007.
Tax Fees.
We incurred $nil and $nil fees to auditors for tax compliance,
tax advice or tax compliance services during the fiscal year ended July 31, 2008
and 2007, respectively.
All Other Fees.
We did not incur any other fees billed by auditors for services
rendered to our Company, other than the services covered in "
Audit Fees
"
for the fiscal year ended July 31, 2008 and 2007.
The Board of Directors has considered whether the provision of
non-audit services is compatible with maintaining the principal accountant's
independence.
In the absence of a formal audit committee, the full Board of
Directors pre-approves all audit and non-audit services to be performed by the
independent registered public accounting firm in accordance with the rules and
regulations promulgated under the Securities Exchange Act of 1934, as amended.
The Board of Directors pre-approved 100% of the audit, audit-related and tax
services performed by the independent registered public accounting firm in
fiscal 2007. The percentage of hours expended on the principal accountants
engagement to audit the Companys financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountants full-time, permanent employees was 0%.
23
PART IV
ITEM
15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
`
Exhibits
The following exhibits are included as part
of this report by reference:
3.1
|
Articles of Incorporation, incorporated
by reference from Exhibit 3.1 filed with our Registration Statement on
Form SB-2 filed on November 14, 2005, SEC File Number 333-129664
|
|
|
3.2
|
By-laws, incorporated by reference from
Exhibit 3.2 filed with our Registration Statement on Form SB-2 filed on
November 14, 2005, SEC File Number 333-129664.
|
|
|
3.3
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed November 13, 2006.
|
|
|
3.4
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed January 29, 2007.
|
|
|
3.5
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed July 8, 2008.
|
|
|
10.1
|
Agreement amongst Claron Ventures Inc.,
PetroHunter Energy Corporation and PetroHunter Energy NT Ltd., dated December
6, 2006, incorporated by reference from Exhibit 10.1 to our Form 8-K filed
December 8, 2006.
|
|
|
10.2
|
Management and governance consultant
agreement with Sound Energy Advisors LLC, dated December 21, 2007, incorporated
by reference from Exhibit 10.1 to the Form 10-QSB filed on March 17, 2008.
|
|
|
10.3
|
Finders Fee
Agreement with Coast Advisors LLC dated June 13, 2008.
|
|
|
10.4
|
Form of Securities
Purchase Agreement
|
|
|
10.5
|
Form of Convertible
Promissory Note
|
|
|
10.6
|
Form of Warrant
|
|
|
14.1
|
Code of Ethics
|
|
|
31.1
|
Rule 13(a)
14(a)/15(d) 14(a) Certification (Principal Executive Officer)
|
|
|
31.2
|
Rule 13(a)
14(a)/15(d) 14(a) Certification (Principal Financial Officer)
|
|
|
32
|
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
24
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the Exchange Act) the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PETRONATIONAL CORP.
Dated: October 28, 2008
|
/s/
Gregory Leigh Lyons
|
|
By: Gregory Leigh Lyons
|
|
Its: President, Chief Financial Officer and
Director
|
|
(Principal Executive Officer)
|
|
|
Dated: October 28, 2008
|
/s/
Gregory Leigh Lyons
|
|
By: Gregory Leigh Lyons
|
|
Its: President, Chief Financial Officer and
Director
|
|
(Principal Financial Officer and Principal
Accounting
|
|
Officer)
|
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:
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/ Gregory Leigh
Lyons
|
|
Director
|
|
October 28, 2008
|
Gregory Leigh Lyons
|
|
|
|
|
25
PetroNational Corp.
Index to Financial Statements
July 31, 2008
INDEX
F-1
Report of Independent Registered Public Accounting
Firm
To the Board of Directors of
PetroNational Corp.
(formerly Outback Energy Corporation)
(An Exploration Stage
Company)
Blaine, Washington, USA
We have audited the accompanying balance sheets of
PetroNational Corp (the Company) as of July 31, 2008 and 2007, and the related
statements of operations, stockholders' deficit, and cash flows for the years
ended July 31, 2008 and 2007 and for the period from July 7, 2005 (inception)
through July 31, 2008. These financial statements are the responsibility of the
Company's management. 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 purpose of
expressing an opinion on the effectiveness of the Companys 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 financial position of
PetroNational Corp as of July 31, 2008 and 2007, and the results of its
operations and its cash flows for the years in the period ended July 31, 2008
and 2007 and for the period from July 7, 2005 (inception) through July 31, 2008
in conformity with accounting principles generally accepted in the United States
of America.
As discussed in Note 1 to the financial statements, the
Company's absence of significant revenues, recurring losses from operations, and
its need for additional financing in order to fund its projected loss in 2009
raise substantial doubt about its ability to continue as a going concern. The
2008 financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
LBB & Associates Ltd., LLP
Houston, Texas
October 15, 2008
F-2
PetroNational Corp.
(Formerly
Outback Energy Corporation)
(An Exploration Stage Company)
Balance
Sheets
|
|
July 31, 2008
|
|
|
July 31, 2007
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
$
|
4
|
|
$
|
2,515
|
|
Prepaid expenses
|
|
99
|
|
|
-
|
|
Total current assets
|
|
103
|
|
|
2,515
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
103
|
|
$
|
2,515
|
|
|
|
|
|
|
|
|
LIABILITIES and STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
94,634
|
|
$
|
74,111
|
|
Accrued interest
|
|
1,205
|
|
|
7,954
|
|
Notes payable
|
|
6,000
|
|
|
141,000
|
|
Total current liabilities
|
|
101,839
|
|
|
223,065
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
101,839
|
|
|
223,065
|
|
|
|
|
|
|
|
|
COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
Preferred - 10,000,000 shares
authorized at $0.001 par value, none issued
|
|
-
|
|
|
-
|
|
Common - 187,500,000 shares authorized at
$0.001 par value,
|
|
|
|
|
|
|
112,817,254 and 112,567,254
shares issued and outstanding at July 31,
|
|
|
|
|
|
|
2008 and 2007, respectively
|
|
112,817
|
|
|
112,567
|
|
Additional paid in capital
|
|
400,878
|
|
|
(28,026
|
)
|
Deficit accumulated during exploration stage
|
|
(615,431
|
)
|
|
(305,091
|
)
|
|
|
|
|
|
|
|
Total stockholders' deficit
|
|
(101,736
|
)
|
|
(220,550
|
)
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
$
|
103
|
|
$
|
2,515
|
|
The accompanying notes are an integral part of these audited
financial statements.
F-3
PetroNational Corp.
(Formerly
Outback Energy Corporation)
(An Exploration Stage Company)
Statements of
Operations
For the Years Ended July 31, 2008 and 2007
And for the
period from July 7, 2005 [Inception] to July 31, 2008
|
|
|
|
|
|
|
|
|
Period from July 7,
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2005 [Inception]
|
|
|
|
2008
|
|
|
2007
|
|
|
|
to July 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
Exploration expenses
|
$
|
-
|
|
$
|
-
|
|
|
$
|
18,218
|
|
General and administrative
|
|
281,435
|
|
|
219,646
|
|
|
|
560,354
|
|
Loss from operations
|
|
281,435
|
|
|
219,646
|
|
|
|
578,572
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
28,905
|
|
|
7,954
|
|
|
|
36,859
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(310,340
|
)
|
$
|
(227,600
|
)
|
|
$
|
(615,431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
112,615,199
|
|
|
112,567,254
|
|
|
|
|
|
The accompanying notes are an integral part of these audited
financial statements.
F-4
PetroNational Corp.
(Formerly
Outback Energy Corporation)
(An Exploration Stage Company)
Statements of
Shareholders' Equity (Deficit)
For the period from July 7, 2005
[Inception] to July 31, 2008
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Deficit during
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
Paid-
In
|
|
|
Exploration
|
|
|
Equity
|
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at inception
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Stock issued for cash *
|
|
97,500,000
|
|
|
97,500
|
|
|
(82,500
|
)
|
|
-
|
|
|
15,000
|
|
Net loss from inception (July 7, 2005) to July 31,
2005
|
|
|
|
|
|
|
|
|
|
|
(14,193
|
)
|
|
(14,193
|
)
|
Balance, July 31, 2005
|
|
97,500,000
|
|
|
97,500
|
|
|
(82,500
|
)
|
|
(14,193
|
)
|
|
807
|
|
Stock issued for cash *
|
|
15,067,254
|
|
|
15,067
|
|
|
54,474
|
|
|
-
|
|
|
69,541
|
|
Net loss for
year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(63,298
|
)
|
|
(63,298
|
)
|
Balance, July 31, 2006
|
|
112,567,254
|
|
|
112,567
|
|
|
(28,026
|
)
|
|
(77,491
|
)
|
|
7,050
|
|
Net loss for
year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(227,600
|
)
|
|
(227,600
|
)
|
Balance, July 31, 2007
|
|
112,567,254
|
|
|
112,567
|
|
|
(28,026
|
)
|
|
(305,091
|
)
|
|
(220,550
|
)
|
Units issued or to be issued for cash *
|
|
250,000
|
|
|
250
|
|
|
78,250
|
|
|
|
|
|
78,500
|
|
Shares and warrants to be issued for conversion
of debt
|
|
|
|
|
|
|
|
350,654
|
|
|
|
|
|
350,654
|
|
Net loss for
year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(310,340
|
)
|
|
(310,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July
31, 2008
|
|
112,817,254
|
|
$
|
112,817
|
|
$
|
400,878
|
|
$
|
(615,431
|
) $
|
|
(101,736
|
)
|
* The common stock issued has been retroactively restated to
reflect three stock splits: (1) a forward stock split of 26 new shares for 1 old
share, effective November 10, 2006; (2) a reverse stock split of 1 new share for
2 old shares, effective May 22, 2008 and; (3) a reverse stock split of 1 new
share for 2 old shares, effective July 8, 2008.
The accompanying notes are an integral part of these audited
financial statements.
F-5
PetroNational Corp.
(Formerly
Outback Energy Corporation)
(An Exploration Stage Company)
Statements of
Cash Flows
For the Years Ended July 31, 2008 and 2007
And for the
period from July 7, 2005 [Inception] to July 31, 2008
|
|
|
|
|
|
|
|
Period from
July 7, 2005
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
[Inception] to
|
|
|
|
2008
|
|
|
2007
|
|
|
July 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(310,340
|
)
|
$
|
(227,600
|
)
|
$
|
(615,431
|
)
|
Adjustments to reconcile net loss to
|
|
|
|
|
|
|
|
|
|
net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
28,905
|
|
|
7,954
|
|
|
36,859
|
|
Prepaid expenses
|
|
(99
|
)
|
|
-
|
|
|
(99
|
)
|
Accounts payable and accrued liabilities
|
|
20,523
|
|
|
72,681
|
|
|
94,634
|
|
Cash used in operating activities
|
|
(261,011
|
)
|
|
(146,965
|
)
|
|
(484,037
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
180,000
|
|
|
141,000
|
|
|
321,000
|
|
Proceeds from issue of common stock and warrants
|
|
78,500
|
|
|
-
|
|
|
163,041
|
|
Cash flows
provided by financing activities
|
|
258,500
|
|
|
141,000
|
|
|
484,041
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
(2,511
|
)
|
|
(5,965
|
)
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning
of period
|
|
2,515
|
|
|
8,480
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of
period
|
$
|
4
|
|
$
|
2,515
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH DISCLOSURES
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Income taxes
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-CASH DISCLOSURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants issued for
conversion of notes
|
|
|
|
|
|
|
|
|
|
payable and accrued interest
|
$
|
350,654
|
|
$
|
-
|
|
$
|
350,654
|
|
The accompanying notes are an integral part of these audited
financial statements.
F-6
PetroNational Corp.
(formerly
Outback Energy Corporation)
(An Exploration Stage Company)
Notes
to Financial Statements
July 31, 2008 and 2007
1.
Nature of operations and going concern
Outback Energy Corporation (the Company) was incorporated in
the State of Nevada, United States of America, on July 7, 2005 under the name
Claron Ventures, Inc. On December 15, 2006, the Company incorporated a Colorado
subsidiary with the name Outback Energy Corporation and merged with it on
January 16, 2007 for the purpose of effecting a name change. On June 25, 2008,
the Company incorporated a Nevada subsidiary with the name PetroNational Corp.
and merged with it effective on July 8, 2008 for the purpose of effecting a name
change. The Company is listed on the Over-the-Counter Bulletin Board under the
symbol OUBE. The Company had limited operations acquiring and exploring mineral
interest in British Columbia.
These financial statements have been prepared in accordance
with generally accepted accounting principles applicable to a going concern,
which assumes that the Company will be able to meet its obligations and continue
its operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be unable to
continue as a going concern. At July 31, 2008, the Company had not yet achieved
profitable operations, has accumulated losses of $615,431 since its inception,
has a working capital deficiency of $101,736 and expects to incur further losses
in the development of its business, all of which raises substantial doubt about
the Companys ability to continue as a going concern. The Companys ability to
continue as a going concern is dependent upon its ability to generate future
profitable operations and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations
when they come due.
The Company expects to continue to incur substantial losses as
it executes its business plan and does not expect to attain profitability in the
near future. Since its inception, the Company has funded operations through
short-term borrowings and equity investments in order to meet its strategic
objectives. The Company's future operations are dependent upon external funding
and its ability to execute its business plan, realize sales and control
expenses. Management believes that sufficient funding will be available from
additional borrowings and private placements to meet its business objectives
including anticipated cash needs for working capital, for a reasonable period of
time. However, there can be no assurance that the Company will be able to obtain
sufficient funds to continue the development of its business operation, or if
obtained, upon terms favorable to the Company.
2.
Summary of significant accounting policies
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the United States of
America. Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a
period necessarily involves the use of estimates, which have been made using
careful judgment. Actual results may vary from these estimates.
The financial statements have, in managements opinion, been
properly prepared within the framework of the significant accounting policies
summarized below:
a.
|
Cash and cash equivalents
|
|
|
|
Cash and cash equivalents are defined as cash on hand,
demand deposits and short-term, highly liquid investments with an original
maturity of ninety days or less.
|
F-7
b.
|
Exploration stage company
|
|
|
|
The Company complies with Financial Accounting Standard
Board Statement (SFAS) No. 7 for its characterization of the Company as
an Exploration Stage Company. The Company is devoting substantially all of
its present efforts to establish a new business and none of its planned
principal operations have commenced.
|
|
|
c.
|
Mineral properties
|
|
|
|
Costs of license acquisitions, exploration, carrying and
retaining unproven mineral; lease properties are expensed as
incurred.
|
|
|
d.
|
Loss per share
|
|
|
|
In accordance with SFAS No. 128,
Earnings Per
Share
, the basic loss per common share is computed by dividing net
loss available to common stockholders by the weighted average number of
common shares outstanding. Diluted loss per share is computed by dividing
net loss by the weighted average number of shares of common stock, common
stock equivalents and potentially dilutive securities outstanding during
each period. Diluted loss per common share is not presented because it is
anti-dilutive. The weighted average number of shares outstanding during
the periods has been retroactively restated to
reflect:
|
|
i.
|
a forward stock split of 26 new shares for one old share,
effective on November 10, 2006;
|
|
|
|
|
ii.
|
a reverse stock split of 1 new share for two old shares,
effective May 22, 2008.
|
|
|
|
|
iii.
|
a reverse stock split of 1 new share for two old shares,
effective July 8, 2008.
|
e.
|
Income taxes
|
|
|
|
The Company accounts for income taxes under SFAS No. 109,
Accounting for Income Taxes.
Under SFAS No.109, deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between their financial statement carrying
amounts and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled.
|
|
|
f.
|
Foreign Currency Translation
|
|
|
|
Monetary items denominated in a foreign currency are
translated into US dollars, the reporting currency, at exchange rates
prevailing at the balance sheet date and non-monetary items are translated
at exchange rates prevailing when the assets were acquired or obligations
incurred. Foreign currency denominated revenue and expense items are
translated at exchange rates prevailing at the transaction date. Gains or
losses arising from the translations are included in operations.
|
|
|
g.
|
Long-lived Assets
|
|
|
|
Property and equipment are stated on the basis of
historical cost less accumulated depreciation. Depreciation is provided
using the straight-line method over the estimated useful lives of the
assets. Major renewals and improvements are capitalized, while minor
replacements, maintenance and repairs are charged to current
operations.
Impairment losses are recorded on fixed assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. There were no impairment losses in 2007 and
2006.
|
|
|
h.
|
Equity Financing
The Company issues common stock and other equity instruments in order to raise capital. In each case, the Company evaluates the characteristics of these instruments in the context of the provisions of SFAS 150 in order to determine the appropriate equity or liability classification.
|
3.
|
Recently issued accounting
pronouncements
|
|
|
|
The Company does not expect the adoption of recently
issued accounting pronouncements to have a significant impact on the
Companys results of operations, financial position or cash
flow.
|
F-8
a.
|
Credit risk
|
|
|
|
The Company maintains cash deposits with financial
institutions, which from time to time may exceed federally insured limits.
The Company has not experienced any losses in connection with these
deposits and believes it is not exposed to any significant credit risk
from cash.
|
|
|
b.
|
Fair values
|
|
|
|
Financial instruments that are subject to fair disclosure
requirements are carried in the financial statements at amounts that
approximate fair value and include cash, accounts payable and accrued
expenses and notes payable. Fair values are based on assumptions
concerning the amount and timing of estimated future cash flows and
assumed discount rates reflecting varying degrees of risk.
|
|
|
c.
|
Liquidity risk
|
|
|
|
The Company is exposed to liquidity risk as its continued
operations are dependent upon obtaining additional capital or achieving
profitable operations to satisfy its liabilities as they come
due.
|
5.
Mineral rights
In 2005, the Company acquired 100% of the mineral rights of
twelve cells claims situated in southwestern British Columbia, spanning over
approximately 550 acres and referred to as the Lucky Todd Claims. The claims do
not contain any known reserves or minerals. During the fiscal year ended July
31, 2006, the Company completed preliminary studies on the claims, and extended
the rights to 4 of the claims to March 22, 2007, and of the remaining eights
cells to July 8, 2007. The Company did not further explore these claims, and did
not further extend the rights of the claims. At July 31, 2007, the Company no
longer had the rights to the Lucky Todd Claims.
6.
Notes payable
On November 21, 2006, the Company received $6,000 pursuant to a
promissory note. The note is unsecured, bears interest at 12% per annum
calculated monthly and is due on demand. Any payments of principal or interest
in arrears bear interest at 12% per annum calculated annually. Default in
payment shall, at the option of the holder, render the entire balance payable.
At July 31, 2008, interest of $1,205 is accrued on the balance sheet. Subsequent
to year end, the note was repaid in full.
Effective July 24, 2008, the Company entered into agreements to
settle outstanding debt with various creditors. The debtors agreed to convert
outstanding principal and accrued interest in the amount of $350,654 into units
at a price of $0.10 per unit. Each unit consist of one share of common stock and
one share purchase warrant, each warrant entitling the holder to purchase one
share of common stock at $0.15 for two years. The debt settled was as
follows:
|
|
|
|
|
|
|
|
Conversion
|
|
|
|
|
|
Accrued
|
|
Date
|
|
Interest rate
|
|
|
Maturity
|
|
|
date
|
|
|
Principal
|
|
|
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-Dec-06
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
$
|
5,000
|
|
$
|
981
|
|
15-Jan-07
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
100,000
|
|
|
18,281
|
|
5-Jun-07
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
30,000
|
|
|
4,083
|
|
18-Sep-07
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
50,000
|
|
|
5,079
|
|
6-Nov-07
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
50,000
|
|
|
4,274
|
|
17-Dec-07
|
|
12%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
25,000
|
|
|
1,800
|
|
29-May-08
|
|
18%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
30,000
|
|
|
828
|
|
17-Jun-08
|
|
18%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
5,000
|
|
|
91
|
|
30-Jun-08
|
|
18%
|
|
|
On demand
|
|
|
24-Jul-08
|
|
|
20,000
|
|
|
237
|
|
|
|
|
|
|
|
|
|
|
|
$
|
315,000
|
|
$
|
35,654
|
|
F-9
a.
|
Common shares
|
|
On May 13, 2008, the Company issued 250,000 (1,000,000
units pre reverse splits) for net proceeds of $50,000. Each unit consist
of one share of common stock and one share purchase warrant, each warrant
entitling the holder to purchase one additional share of common stock at
$0.40 ($0.10 pre reverse-split) per share until May 13, 2010. The
allocation of proceeds from the sale of the units and corresponding
issuance of 250,000 (1,000,000 pre reverse-splits) warrants was estimated
at $16,450 using the Black Scholes stock price valuation model with the
following assumptions: i) expected volatility of 121%; ii) risk free
interest rate of 2.47%; iii) expected weighted average life of 2 years;
and iv) no dividend yield.
|
|
|
|
On May 22, 2008, the Company reverse split its issued
common shares on the basis of one new share for two old shares. The number
of shares referred to in these financial statements has been restated to
give retroactive effect on the reverse stock split. On May 22, 2008, the
Company decreased its authorized capital stock to 375,000,000 shares of
common stock.
|
|
|
|
On July 8, 2008, the Company reverse split its issued
common shares on the basis of one new share for two old shares. The number
of shares referred to in these financial statements has been restated to
give retroactive effect on the reverse stock split. On July 8, 2008, the
Company decreased its authorized capital stock to 187,500,000 shares of
common stock.
|
|
|
|
On July 15, 2008, the Company received subscriptions for
300,000 units at $0.10 per unit, for gross proceeds to $30,000. Each unit
consist of one share of common stock and one share purchase warrant, each
warrant entitling the holder to purchase one share of common stock at
$0.15 for two years. At July 31, 2008, the units to be issued are included
as additional paid-in capital on the balance sheet, net of finders fees
of $1,500. The allocation of proceeds from the sale of the units and
corresponding issuance of 300,000 warrants was estimated at $13,881 using
the Black Scholes stock price valuation model with the following
assumptions: i) expected volatility of 187%; ii) risk free interest rate
of 2.39%; iii) expected weighted average life of 2 years; and iv) no
dividend yield. Subsequent to year end, on August 28, 2008, the securities underlying the units were
issued.
|
|
|
|
Effective July 24, 2008, the Company entered into option
agreements to convert outstanding debt with various creditors. The debtors
agreed to convert outstanding principal and accrued interest in the amount
of $350,654 into units at a price of $0.10 per unit. Each unit consist of
one share of common stock and one share purchase warrant, each warrant
entitling the holder to purchase one share of common stock at $0.15 for
two years. The allocation of proceeds from debt conversion and
corresponding issuance of 3,506,522 warrants was estimated at $162,209
using the Black Scholes stock price valuation model with the following
assumptions: i) expected volatility of 196%; ii) risk free interest rate
of 2.61%; iii) expected weighted average life of 2 years; and iv) no
dividend yield. Subsequent to year end, on August 28, 2008, the units were
issued.
|
|
|
b.
|
Warrants
|
|
At July 31, 2008, 4,056,522
warrants were outstanding, as follows.
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Average
|
|
Weighted
|
|
|
|
# of
|
|
|
|
|
|
Outstanding
|
|
Remaining
|
|
Average
|
|
|
|
Warrants
|
|
|
|
Exercise
|
|
as at
|
|
Contractual
|
|
Exercise
|
|
|
|
Issued
|
|
Expiry
|
|
Price
|
|
July 31, 2008
|
|
Life
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2007
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 13, 2008
|
250,000
|
|
13-May-10
|
|
$ 0.40
|
|
250,000
|
|
0.11
|
|
$ 0.40
|
|
|
July 15, 2008
|
300,000
|
|
15-Jul-10
|
|
$ 0.15
|
|
300,000
|
|
0.14
|
|
$ 0.15
|
|
|
July 24, 2008
|
3,506,522
|
|
23-Jul-10
|
|
$ 0.15
|
|
3,506,522
|
|
1.71
|
|
$ 0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2008
|
4,056,522
|
|
|
|
|
|
4,056,522
|
|
|
|
|
|
F-10
8.
Income taxes
Deferred income taxes reflect the net effect of:
|
(a)
|
temporary difference between carrying amounts of assets
and liabilities for financial purposes and the amounts used for income
taxes reporting purposes, and
|
|
|
|
|
(b)
|
net operating loss carryforwards.
|
No net provision for refundable U.S. Federal income tax has
been made in the accompanying statement of loss because no recoverable taxes
were paid previously. Similarly, no deferred tax asset attributable to the net
operating loss carryforward has been recognized, as it is not deemed likely to
be realized.
The effective tax rate of the Company is reconciled to
statutory tax rates as follows:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
U.S. federal statutory tax
rate
|
|
34%
|
|
|
34%
|
|
U.S. valuation difference
|
|
-34%
|
|
|
-34%
|
|
Effective tax rate
|
|
-
|
|
|
-
|
|
Deferred tax assets consist of the following:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Net operating loss
carryforward
|
$
|
209,000
|
|
$
|
104,000
|
|
Valuation allowance
|
|
(209,000
|
)
|
|
(104,000
|
)
|
Net deferred income tax
assets
|
$
|
-
|
|
$
|
-
|
|
The valuation allowance increased by approximately $105,000
during the year ended July 31, 2008 (2007 - $78,000). The Company has
non-capital losses carried forward of approximately $615,000 which expire
beginning in 2024. They may be utilized to offset future taxable income. Future
tax benefits, which may arise as a result of these losses and resource
expenditures, have not been recognized in these financial statements.
9.
Related party transactions
a.
|
During the fiscal year ended July 31, 2008, the Company
paid or accrued $8,000 to its former President and director pursuant to a
verbal month to month management agreement. This commitment was terminated
in March 2008;
|
|
|
b.
|
During the fiscal year ended July 31, 2008, the Company
paid $21,200 to a former director pursuant to a contract for management
services with a company controlled by this former director and officer of
the Company. This commitment was terminated in December 2007;
|
|
|
c.
|
In December 2007, the Company entered into a contract for
management services with a company controlled by the President and a
director of the Company, requiring the payment of $2,500 per month plus
applicable expenses for a period of two years, expiring on November 30,
2009. This commitment can be terminated by either party with 30 days
notice. During the fiscal year ended July 31, 2008, $20,000 was paid or
accrued pursuant to this agreement.
|
F-11
10.
Commitments
a.
|
In December 2006, the Company entered into a contract for
investor relations services requiring the payment of $10,000 per month
expiring on November 30, 2008. This commitment can be terminated by either
party with 30 days written notice;
|
|
|
b.
|
In December 2007, the Company entered into a contract for
management services with a company controlled by the President and a
director of the Company requiring the payment of $2,500 per month for a
period of two years, expiring on November 30, 2009. This commitment can be
terminated by either party with 30 days notice.
|
11.
Subsequent events
a.
|
Subsequent to year end, on August 6, 2008, August 22,
2008 and October 2, 2008, the Company received subscriptions for 600,000
units at $0.10 per unit, for gross proceeds to $60,000. Each unit consist
of one share of common stock and one share purchase warrant, each warrant
entitling the holder to purchase one share of common stock at $0.15 for
two years. The Company incurred finders fees in the amount of $3,000 in
relation to these subscriptions.
|
F-12
INDEX TO EXHIBITS
3.1
|
Articles of Incorporation, incorporated
by reference from Exhibit 3.1 filed with our Registration Statement on
Form SB-2 filed on November 14, 2005, SEC File Number 333-129664
|
|
|
3.2
|
By-laws, incorporated by reference from
Exhibit 3.2 filed with our Registration Statement on Form SB-2 filed on
November 14, 2005, SEC File Number 333-129664.
|
|
|
3.3
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed November 13, 2006.
|
|
|
3.4
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed January 29, 2007.
|
|
|
3.5
|
Amendment to Articles filed with the
Secretary of State of Nevada, incorporated by reference from Exhibit 3.1
to the Form 8-K filed July 8, 2008.
|
|
|
10.1
|
Agreement amongst Claron Ventures Inc.,
PetroHunter Energy Corporation and PetroHunter Energy NT Ltd., dated December
6, 2006, incorporated by reference from Exhibit 10.1 to our Form 8-K filed
December 8, 2006.
|
|
|
10.2
|
Management and governance consultant
agreement with Sound Energy Advisors LLC, dated December 21, 2007, incorporated
by reference from Exhibit 10.1 to the Form 10-QSB filed on March 17, 2008.
|
|
|
10.3
|
Finders Fee
Agreement with Coast Advisors LLC dated June 13, 2008.
|
|
|
10.4
|
Form of Securities
Purchase Agreement
|
|
|
10.5
|
Form of Convertible
Promissory Note
|
|
|
10.6
|
Form of Warrant
|
|
|
14.1
|
Code of Ethics
|
|
|
31.1
|
Rule 13(a)
14(a)/15(d) 14(a) Certification (Principal Executive Officer)
|
|
|
31.2
|
Rule 13(a)
14(a)/15(d) 14(a) Certification (Principal Financial Officer)
|
|
|
32
|
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
26