HOLLOMAN ENERGY CORPORATION |
(Exact name of registrant as specified in its charter) |
Nevada
|
77-0643398
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated
filer
(Do not
check if a smaller reporting company)
|
o | Smaller reporting company | þ |
|
●
|
The
impact of the current economic recession and changes in consumer and
business consumption habits;
|
|
●
|
our
ability to finance our business
plan;
|
|
●
|
our
ability to deal effectively with competition and manage our
growth;
|
|
●
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the
success or commercial viability of our exploration and drilling
plans;
|
|
●
|
our
ability to effectively judge acquisition opportunities and integrate
acquired assets.
|
License
|
Description of Minimum Work
Obligation
|
Date of Required
Completion
|
||
PEL
112
|
Reprocessing
of seismic data on hand – 2D
|
June
11, 2010
|
||
PEL
112
|
Acquisition
of new seismic data – 2D (100 sq km)
|
June
11, 2011
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||
PEL
112
|
Geological
and geophysical testing
|
June
11, 2012
|
||
PEL
112
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Drill
one well
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June
11, 2013
|
||
PEL
444
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Reprocessing
of seismic data on hand – 2D
|
June
11, 2010
|
||
PEL
444
|
Acquisition
of new seismic data – 2D (200 sq km)
|
June
11, 2011
|
||
PEL
444
|
Geological
and geophysical testing
|
June
11, 2012
|
||
PEL
444
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Drill
one well
|
June
11, 2013
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|
1.
|
Fund
the costs required to drill, and if warranted, complete three wells on the
PEL 112 within the timeframes required by the permit work program;
and
|
|
2.
|
Pay
us a 1.33% overriding royalty on gross revenues generated from the sale of
any oil or gas produced from wells drilled on the PEL
112.
|
Quarter
|
High
|
Low
|
||||||
4th
Quarter 2009
|
$ | 0.60 | $ | 0.28 | ||||
3rd
Quarter 2009
|
$ | 0.64 | $ | 0.35 | ||||
2nd
Quarter 2009
|
$ | 0.38 | $ | 0.02 | ||||
1st
Quarter 2009
|
$ | 0.07 | $ | 0.02 | ||||
4th
Quarter 2008
|
$ | 0.25 | $ | 0.04 | ||||
3rd
Quarter 2008
|
$ | 0.43 | $ | 0.17 | ||||
2nd
Quarter 2008
|
$ | 0.49 | $ | 0.04 | ||||
1st
Quarter 2008
|
$ | 0.40 | $ | 0.05 |
Name
|
Age
|
Position
|
||
Mark
Stevenson
|
55
|
Chairman
of the Board of Directors, President, Chief Executive Officer, and
Secretary
|
||
Eric
Prim
|
51
|
Chief
Operating Officer, and Director
|
||
Robert
Wesolek
|
53
|
Chief
Financial Officer, and Treasurer
|
||
J.
Douglas Brown
|
57
|
Director
|
||
Keith
Macdonald
|
53
|
Director
|
Appointed
(A)
|
||||||
to
or
|
||||||
Resigned
(R)
|
Positions
Appointed to
|
|||||
Date
|
Name
|
from
Positions
|
Positions
Resigned From
|
|||
1/4/08
|
Grant
Petersen
|
A
|
President,
Chief Executive Officer and Treasurer
|
|||
1/29/09
|
David
Lewis
|
R
|
Director
|
|||
7/1/09
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Grant
Petersen
|
R
|
President,
Chief Executive Officer
|
|||
7/1/09
|
Mark
Stevenson
|
A
|
President,
Chief Executive Officer
|
|||
7/22/09
|
Eric
Prim
|
A
|
Chief
Operating Officer
|
|||
8/4/09
|
Grant
Petersen
|
R
|
Chief
Financial Officer and Treasurer
|
|||
8/4/09
|
Robert
Wesolek
|
A
|
Chief
Financial Officer and Treasurer
|
|||
8/4/09
|
Keith
Macdonald
|
A
|
Director
|
|||
Stock
|
Option
|
All
Other
|
||||||||||||||||||||||||
Principal
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Total
|
||||||||||||||||||||
Position
|
Year
|
($)
|
($)
|
($) (4)
|
($) (4)
|
($) (2)
|
($)
|
|||||||||||||||||||
Mark
Stevenson,
|
||||||||||||||||||||||||||
Chief
Executive
|
2008
|
–– | –– | –– | –– | –– | $ | –– | ||||||||||||||||||
Officer
|
2009
|
–– | –– | –– | –– | –– | –– | |||||||||||||||||||
Grant
Petersen (1),
|
||||||||||||||||||||||||||
Chief
Executive
|
2008
|
175,000 | –– | –– | –– | –– | 175,000 | |||||||||||||||||||
and
Financial
|
2009
|
60,000 | –– | 14,000 | 300,000 | –– | 374,000 | |||||||||||||||||||
Officer
|
||||||||||||||||||||||||||
Robert
Wesolek(2),
|
||||||||||||||||||||||||||
Chief
Financial
|
2008
|
–– | –– | –– | –– | 273,000 | 273,000 | |||||||||||||||||||
Officer
|
2009
|
123,075 | –– | 14,000 | 300,000 | 138,375 | 575,450 | |||||||||||||||||||
Eric
Prim(3),
|
||||||||||||||||||||||||||
Chief
Operating
|
2008
|
–– | –– | –– | –– | –– | –– | |||||||||||||||||||
Officer
|
2009
|
–– | –– | 28,000 | 600,000 | –– | 628,000 |
———————
|
(1)
|
Mr. Petersen
became our Chief Executive and Financial Officer on January 4, 2008
and resigned from those positions on July 1, 2009 and August 4, 2009,
respectively. Mr. Petersen’s was compensated in the form of
management fees for services rendered in the normal course of operations.
The amount of the fees was established and approved by our Board of
Directors.
|
(2)
|
Mr. Wesolek
became our Chief Financial Officer on August 4, 2008. During 2008 and
a portion of 2009, we paid Mr. Wesolek consulting fees totaling $273,000
and $138,375, respectively. As of December 31, 2009, Mr. Wesolek had
voluntarily deferred $24,024 of the amounts payable to him. During January
2010, he converted $10,000 of those deferred fees into shares of our
common stock at a market price of $0.48 per share. Mr. Wesolek is
compensated in the form of fees for services rendered in the normal course
of operations. The amount of the fees was established and approved by our
Board of Directors.
|
(3)
|
Compensation
for Eric Prim includes stock awards in the amount $14,000 and option
awards in the amount of $300,000 earned in his capacity as one of our
Directors.
|
(4)
|
Stock
and option awards are valued at fair market value. The assumptions applied
in our calculation of the value of those awards are set forth in Note 7 to
our financial statements.
|
Number
of securities underlying
unexercised
options
|
|||||||||||||
(#) | (#) |
Option
Exercise
|
Option
Expiration
|
||||||||||
Name
|
Exercisable
|
Unexercisable(1)
|
Price
|
Date
|
|||||||||
Eric
Prim
|
|||||||||||||
Stock
Option A
|
300,000 | –– | $ | 0.70 |
August
15, 2012
|
||||||||
Stock
Option B
|
–– | 300,000 | $ | 0.80 |
August
15, 2012
|
||||||||
Stock
Option C
|
–– | 300,000 | $ | 1.00 |
August
15, 2014
|
||||||||
Stock Option D
|
–– | 300,000 | $ | 1.20 |
August
15, 2014
|
||||||||
Robert Wesolek
|
|||||||||||||
Stock
Option A
|
150,000 | –– | $ | 0.70 |
August
15, 2012
|
||||||||
Stock
Option B
|
–– | 150,000 | $ | 0.80 |
August
15, 2012
|
||||||||
Stock
Option C
|
–– | 150,000 | $ | 1.00 |
August
15, 2014
|
||||||||
Stock Option D
|
–– | 150,000 | $ | 1.20 |
August
15, 2014
|
||||||||
J.Douglas
Brown
|
|||||||||||||
Stock
Option A
|
300,000 | –– | $ | 0.70 |
August
15, 2012
|
||||||||
Stock
Option B
|
–– | 300,000 | $ | 0.80 |
August
15, 2012
|
||||||||
Stock Option C
|
–– | 300,000 | $ | 1.00 |
August
15, 2014
|
||||||||
Stock Option D
|
–– | 300,000 | $ | 1.20 |
August
15, 2014
|
||||||||
Keith
Macdonald
|
|||||||||||||
Stock
Option A
|
300,000 | –– | $ | 0.70 |
August
15, 2012
|
||||||||
Stock
Option B
|
–– | 300,000 | $ | 0.80 |
August
15, 2012
|
||||||||
Stock
Option C
|
–– | 300,000 | $ | 1.00 |
August
15, 2014
|
||||||||
Stock Option D
|
–– | 300,000 | $ | 1.20 |
August
15, 2014
|
(1)
|
The
vesting date for each Stock Option B and Stock Option C is August 15,
2010. The vesting date for each Stock Option D is August 15,
2011.
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
(a)
|
(b)
|
(c)(1)
|
|
Equity
compensation plans approved by security holders
|
––
|
––
|
––
|
Equity
compensation plans not approved by security holders
|
4,800,000
|
$ 0.93
|
2,500,000
|
Total
|
4,800,000
|
$ 0.93
|
2,500,000
|
|
———————
|
Name | Shares | |||
Eric Prim | 50,000 | |||
Robert Wesolek | 25,000 | |||
J. Douglas Brown | 50,000 | |||
Keith McDonald | 50,000 | |||
Grant Petersen | 25,000 |
Fees
earned
or
paid in cash
|
Stock
Awards
|
Option Awards(1)
|
All
Other
Compensation
|
Total | ||||||||||||||||
Name |
($)
|
($)
|
($)
|
($) (2)
|
($) | |||||||||||||||
J.Douglas
Brown
|
–– | 28,000 | 600,000 | –– | 628,000 | |||||||||||||||
Keith
Macdonald
|
–– | 28,000 | 600,000 | –– | 628,000 |
(1)
|
Mr.
Brown and Mr. Macdonald each had 1,200,000 option awards outstanding at
December 31, 2009.
|
(2)
|
On
August 15, 2009, we issued our officers and directors fractional
participation in a 2% net revenue interest in wells drilled by us on lands
in the Cooper Basin. These participation units represent a 0.454% interest
in our Cooper Basin revenues, after all royalties, exploration expenses,
operating costs and capital investments associated with the Cooper Basin
have been recovered. In our opinion no value can be assigned to these
revenue interests, as any valuation is
non-estimable.
|
Name
and address of beneficial owner
|
Number
of
Shares
(1)
|
Percentage
of
Common
Stock
|
||||||
Mark
Stevenson
|
58,929,310 | (2&3) | 49.68 | % | ||||
Chairman
of the Board, Chief Executive Officer,
|
||||||||
President
and Secretary
|
||||||||
333
North Sam Houston Parkway East
|
||||||||
Suite
600
|
||||||||
Houston,
TX 77060
|
||||||||
Eric
Prim
|
18,261,701 | (4) | 16.98 | % | ||||
Chief
Operating Officer and Director
|
||||||||
4901
Polo Parkway
|
||||||||
Midland,
Texas 79705
|
||||||||
Robert
Wesolek
|
3,006,250 | 2.80 | % | |||||
Chief
Financial Officer and Treasurer
|
||||||||
3
Farther Point
|
||||||||
Houston,
TX 77024
|
||||||||
J.
Douglas Brown
|
6,055,293 | 5.52 | % | |||||
Director
|
||||||||
16E
Les Roseyres, Gron1882
|
||||||||
Vaud,
Switzerland
|
||||||||
Keith
Macdonald
|
687,500 | (5) | 0.64 | % | ||||
Director
|
||||||||
203
Heritage Place
|
||||||||
Calgary,
AB, Canada T3Z 3P3
|
||||||||
Grant
Petersen
|
4,548,827 | (6) | 4.2 | % | ||||
482
– 1027 Davie Street
|
||||||||
Vancouver,
BC, Canada
|
||||||||
Holloman
Oil & Gas Limited
|
17,237,500 | (7) | 16.07 | % | ||||
9,
88 Forrest Street
|
||||||||
Cottesloe,
WA 6011
|
||||||||
Australia
|
||||||||
Holloman
Corporation
|
57,926,421 | (7) | 49.00 | % | ||||
333
North Sam Houston Parkway East
|
||||||||
Suite
600
|
||||||||
Houston,
Texas 77060
|
||||||||
All
Officers and Directors as a group (four persons)
|
74,251,380 | (4) | 60.41 | % |
(1)
|
Includes
shares which may be acquired on the exercise of options or warrants listed
below, all of which were exercisable as of December 31,
2009.
|
Shares
Issuable Upon
|
||||||
Name
|
Exercise of
Warrants
|
Exercise
Price
|
Expiration
Date
|
|||
Mark
Stevenson
|
196,078
|
$0.70
|
9/30/2011
|
|||
Mark
Stevenson
|
196,078
|
$2.00
|
9/30/2011
|
|||
Mark
Stevenson
|
20,834
|
$0.80
|
12/17/2012
|
|||
Eric
Prim
|
300,000
|
$0.70
|
8/15/2012
|
|||
Eric
Prim
|
26,042
|
$0.80
|
12/17/2012
|
|||
Robert
Wesolek
|
150,000
|
$0.70
|
8/15/2012
|
|||
Robert
Wesolek
|
10,442
|
$0.80
|
12/17/2012
|
|||
J.
Douglas Brown
|
1,078,431
|
$0.70
|
9/30/2011
|
|||
J.
Douglas Brown
|
1,078,431
|
$2.00
|
9/30/2011
|
|||
J.
Douglas Brown
|
300,000
|
$0.70
|
8/15/2012
|
|||
Keith
Macdonald
|
300,000
|
$0.70
|
8/15/2012
|
|||
Keith
Macdonald*
|
50,000
|
$0.80
|
12/17/2012
|
|||
Grant
Petersen**
|
392,157
|
$0.70
|
9/30/2011
|
|||
Grant
Petersen**
|
392,157
|
$2.00
|
9/30/2011
|
|||
Grant
Petersen
|
150,000
|
$0.70
|
8/15/2012
|
|||
Grant
Petersen***
|
55,785
|
$0.80
|
12/17/2012
|
|||
Holloman
Corporation
|
5,098,040
|
$0.70
|
9/30/2011
|
|||
Holloman
Corporation
|
5,098,040
|
$0.70
|
9/30/2011
|
|||
Holloman
Corporation
|
781,250
|
$0.80
|
12/17/2012
|
*
|
Warrants
are held of record by an entity controlled by Mr.
Macdonald.
|
**
|
Warrants
are held of record by Mr. Petersen’s
wife.
|
***
|
Warrants
are held of record by an entity controlled by
Mr. Petersen.
|
(2)
|
Includes
429,745 shares held directly, 160,154 shares held indirectly by entities
controlled by Mr. Stevenson, and shares issuable upon the exercise of
warrants.
|
(3)
|
Mark
Stevenson is the President and Chief Executive Officer of Holloman
Corporation. Holloman Corporation owns all of the outstanding shares of
Holloman Oil & Gas. Mr. Stevenson is the president of Holloman
Oil & Gas. Accordingly, Mr.
Stevenson’s numbers includes shares owned of record by Holloman Oil &
Gas and Holloman Corporation as well as shares issuable upon the exercise
of warrants held by Holloman
Corporation.
|
(4)
|
Eric
Prim is a Director of Holloman Oil & Gas. Accordingly, Mr. Prim’s
numbers includes shares owned of record by Holloman Oil &
Gas.
|
(5)
|
All
shares held indirectly by an entity controlled by Mr. Macdonald, and
shares issuable upon the exercise of
warrants.
|
(6)
|
Includes
shares held by an entity controlled by Mr. Petersen, shares held by
Mr. Peterson’s wife, and shares issuable upon the exercise of
warrants.
|
(6)
|
Shares
held by Holloman Corporation include shares owned of record by Holloman
Oil & Gas, its wholly-owned
subsidiary.
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
09-24-07
|
55,000
|
Open
market purchase
|
||
10-01-07
|
27,000
|
Open
market purchase
|
||
11-21-07
|
210,126
|
Acquisition
of Holloman Petroleum Pty. Ltd. Mr. Stevenson, as well as a limited
liability company and two trusts controlled by Mr. Stevenson, were
shareholders of Holloman Petroleum Pty. Ltd.
|
||
09-17-08
|
60,000
|
Open
market purchase
|
||
10-06-08
|
196,078
|
(2)
|
||
12-23-09
|
41,667
|
(3)
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
9-24-07
|
59,000
|
Open
market purchases
|
||
11-21-07
|
377,076
|
Acquisition
of Holloman Petroleum Pty. Ltd. Mr. Prim was a shareholder of
Holloman Petroleum Pty. Ltd.
|
||
07-14-09
|
100,000
|
Open
market purchase
|
||
08-04-09
|
50,000
|
Open
market purchase
|
||
08-17-09
|
50,000
|
Stock
Bonus Grant (see Item 11 of this report)
|
||
08-19-09
|
10,000
|
Open
market purchase
|
||
12-24-09
|
52,083
|
(3)
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
3-07-08
|
3,000,000
|
(1)
|
||
08-17-09
|
25,000
|
Stock
Bonus Grant (see Item 11 of this report)
|
||
12-24-09
|
20,833
|
(3)
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
03-07-08
|
2,460,000
|
(1)
|
||
10-06-08
|
1,078,431
|
(2)
|
||
08-04-09
|
10,000
|
Open
market purchase
|
||
08-17-09
|
50,000
|
Stock
Bonus Grant (see Item 11 of this
report)
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
07-04-09
|
137,500
|
Open
market purchase
|
||
08-17-09
|
50,000
|
Stock
Bonus Grant (see Item 11 of this report)
|
||
09-03-09
|
50,000
|
Open
market purchase
|
||
12-23-09
|
100,000
|
(3)
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
03-07-08
|
4,000,000
|
*
|
(1)
|
|
09-17-08
|
30,000
|
Open
market purchase
|
||
10-06-08
|
392,157
|
*
|
(2)
|
|
08-17-09
|
25,000
|
Stock
Bonus Grant (see Item 11 of this report)
|
||
12-23-09
|
111,571
|
(3)
|
*
|
Held
of record by Mr. Petersen’s wife and an entity affiliated with
Mr. Petersen
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
11-21-07
|
17,237,500
|
Acquisition
of Holloman Petroleum Pty. Ltd. Holloman Oil & Gas Ltd. was the
principal shareholder of Holloman Petroleum Pty.
Ltd.
|
Number
of
|
||||
Date
|
Shares
Acquired
|
Description of
Transaction
|
||
03-07-08
|
15,000,000
|
(1)
|
||
09-30-08
|
193,050
|
Conversion
of $50,000 in administrative service fees at $0.26 per
share
|
||
10-06-08
|
5,098,040
|
(2)
|
||
12-31-08
|
1,812,783
|
Conversion
of $150,000 in administrative service fees at $0.083 per
share
|
||
06/02/09
|
6,045,218
|
Conversion
of $604,522 of indebtedness at FMV ($0.10 per
share)
|
||
12-23-09
|
1,562,500
|
(3)
|
(1)
|
Shares
were purchased in a private transaction from Adrian Crimeni, our former
President and largest shareholder.
|
(2)
|
Shares
were purchased from us in a private offering. The shares were sold as part
of a unit and at a price of $0.255 per unit. Each unit consisted of one
share of our restricted common stock, one Series A warrant and one
Series B warrant. Each Series A warrant entitles the holder to
purchase one share of our restricted common stock at a price of $0.70 per
share. Each Series B warrant entitled the holder to purchase one
share of our restricted common stock at a price of $2.00 per share. The
Series A and B warrants expire on September 30,
2011.
|
(3)
|
Shares
were purchased from us in a private offering of investment units. The
investment units were priced at $0.48 each and consisted of one share of
our common stock, and one stock purchase warrant. Each stock purchase
warrant entitles the holder to purchase one half share of our common stock
at a price of $0.80 per share until December 17,
2012.
|
2009
|
2008
|
|||||||
Audit-related
fees
|
$ | 66,000 | $ | 77,000 | ||||
Tax
fees
|
9,500 | 5,000 | ||||||
Total
|
$ | 75,500 | $ | 82,000 |
Exhibit
Number
|
Description
of Exhibit
|
|
3.1
|
Articles
of Incorporation(1)
|
|
3.2
|
Corporate
Bylaws(1)
|
|
10.1
|
Share
Exchange Agreement between Endeavor Energy Corporation, First Endeavor
Holdings Inc .and Endeavor Canada Corporation(2)
|
|
10.2
|
Agreement
between Endeavor Energy Corporation and Holloman Petroleum Pty. Ltd. for
the purchase of assets and exchange of shares(3)
|
|
10.3
|
Option
Agreement dated February 1, 2008 between Holloman Energy Corporation
and Cameron King for an exchange of shares of Endeavor Canada
Corporation(4)
|
|
10.4
|
Notice
of Option Exercise dated February 15, 2008 relating to the Option
Agreement between Holloman Energy Corporation and Cameron King for an
exchange of shares of Endeavor Canada Corporation(4)
|
|
10.5
|
Farm
Out Commitment Agreement between Holloman Energy Corporation and Holloman
Oil & Gas, Ltd.
(4)
|
|
14.1
|
Code
of Ethics for Principal Executive and Senior Financial Officers(5)
|
|
21.1
|
As
of March 15, 2009 our subsidiaries were:
|
|
First
Endeavor Holdings Inc. (100% Owned)
|
||
Holloman
Petroleum Pty. Ltd. (100% Owned)
|
||
Endeavor
Exploration Pty. Ltd. (100% Owned)
|
||
31.1
|
Rule 13a-14(a)
Certifications
|
|
31.2
|
Rule 13a-14(a)
Certifications
|
|
32
|
Section 1350
Certifications
|
|
———————
|
(1)
|
Previously
filed with our Form SB-2 on January 23, 2006 and incorporated by
reference.
|
(2)
|
Previously
filed with our Form 8-K on August 9, 2007 and incorporated by
reference.
|
(3)
|
Previously
filed with our Form 8-K on November 29, 2007 and incorporated by
reference.
|
(4)
|
Previously
filed with our Form 10-KSB on April 15, 2008 and incorporated by
reference.
|
(5)
|
Previously
filed with our Form 10-KSB/A on April 26, 2007 and incorporated
by reference.
|
HOLLOMAN
ENERGY CORPORATION
|
||
Date:March
31, 2010
|
||
By:
|
/s/ Mark
Stevenson
|
|
Mark
Stevenson,
President
and Principal Executive Officer
|
||
By:
|
/s/ Robert
Wesolek
|
|
Robert
Wesolek,
Principal
Financial and Accounting Officer
|
Signature
|
Date
|
|
/s/ Mark
Stevenson
|
March
31, 2010
|
|
Mark
Stevenson, Director
|
||
/s/ J.
Douglas Brown
|
March
31, 2010
|
|
J.
Douglas Brown, Director
|
||
/s/ Eric
Prim
|
March
31, 2010
|
|
Eric
Prim, Director
|
||
/s/ Keith
Macdonald,
|
March
31, 2010
|
|
Keith
Macdonald, Director
|
Vancouver, Canada |
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED
ACCOUNTANTS
|
HOLLOMAN
ENERGY CORPORATION
|
(An
Exploration Stage Company)
|
CONSOLIDATED
BALANCE SHEETS
(Audited)
|
December
31, 2009
|
December
31, 2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 1,089,456 | $ | 1,763,998 | ||||
Other
receivable
|
3,425 | 2,838 | ||||||
Prepaid
expenses and deposits
|
12,037 | 5,375 | ||||||
1,104,918 | 1,772,211 | |||||||
Oil
and gas properties, full cost method, unproven
|
16,456,220 | 23,081,129 | ||||||
Deposit
on acquisition
|
- | 639,487 | ||||||
Total
Assets
|
$ | 17,561,138 | $ | 25,492,827 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 270,674 | $ | 175,351 | ||||
Loans
payable
|
- | 259,343 | ||||||
Due
to related parties
|
- | 1,572,803 | ||||||
270,674 | 2,007,497 | |||||||
Deferred
tax liability
|
4,191,070 | 5,086,156 | ||||||
Total
Liabilities
|
4,461,744 | 7,093,653 | ||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Authorized:
|
||||||||
10,000,000
preferred shares, par value $0.001 per share
|
||||||||
150,000,000
common shares, par value $0.001 per share
|
||||||||
Issued
and outstanding :
|
||||||||
107,237,820
common shares (95,159,065 at December 31, 2008)
|
107,238 | 95,159 | ||||||
Additional
paid in capital
|
23,806,998 | 20,464,301 | ||||||
Accumulated
other comprehensive income (loss)
|
(2,926 | ) | 1,614 | |||||
Deficit
accumulated during the exploration stage
|
(10,811,916 | ) | (2,161,900 | ) | ||||
Total
Stockholders' Equity
|
13,099,394 | 18,399,174 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 17,561,138 | $ | 25,492,827 |
Cumulative
results
|
||||||||||||
from
May 5, 2006 to
|
Year
Ended December 31,
|
|||||||||||
December
31, 2009
|
2009
|
2008
|
||||||||||
CONTINUING
OPERATIONS
|
||||||||||||
Consulting | $ | 928,353 | $ | 492,576 | $ | 304,907 | ||||||
Foreign
exchange (gain)/loss
|
271,347 | 1,355,095 | (1,091,047 | ) | ||||||||
(Gain)
loss on settlement of debt
|
(40,026 | ) | (1,963 | ) | (38,063 | ) | ||||||
Management
and directors fees
|
670,075 | 295,075 | 375,000 | |||||||||
Stock-based
compensation expense
|
1,143,377 | 1,143,377 | - | |||||||||
Office,
travel and general
|
457,012 | 68,244 | 201,820 | |||||||||
Professional fees | 472,243 | 145,512 | 167,026 | |||||||||
Salaries,
wages, and benefits
|
86,666 | - | - | |||||||||
General and
Administrative Expenses
|
(3,989,047 | ) | (3,497,916 | ) | 80,357 | |||||||
Oil
& gas property impairment
|
(7,396,207 | ) | (7,396,207 | ) | - | |||||||
Deferred
income tax recovery
|
2,244,107 | 2,244,107 | - | |||||||||
Income
(loss) from Continuing Operations
|
(9,141,147 | ) | (8,650,016 | ) | 80,357 | |||||||
DISCONTINUED
OPERATIONS
|
||||||||||||
Net
Loss from Discontinued Operations
|
(2,454,637 | ) | - | (55,903 | ) | |||||||
Gain
on Disposal of Endeavor
|
783,868 | - | 783,868 | |||||||||
Income
(loss) from Discontinued Operations
|
(1,670,769 | ) | - | 727,965 | ||||||||
NET
INCOME (LOSS)
|
$ | (10,811,916 | ) | $ | (8,650,016 | ) | $ | 808,322 | ||||
BASIC
AND DILUTED NET (LOSS) INCOME FROM
|
||||||||||||
CONTINUING
OPERATIONS PER COMMON SHARE
|
$ | (0.09 | ) | $ | (0.00 | ) | ||||||
BASIC
AND DILUTED NET LOSS FROM
|
||||||||||||
DISCONTINUED
OPERATIONS PER COMMON SHARE
|
$ | (0.00 | ) | $ | 0.01 | |||||||
BASIC
AND DILUTED NET (LOSS) INCOME
|
||||||||||||
PER
COMMON SHARE
|
$ | (0.09 | ) | $ | 0.01 | |||||||
WEIGHTED
AVERAGE NUMBER OF BASIC AND
|
||||||||||||
DILUTED
COMMON SHARES OUTSTANDING
|
100,842,265 | 85,860,458 |
Cumulative
results
|
||||||||||||
from
May 5, 2006 to
|
Year
Ended
|
|||||||||||
December.
31, 2009
|
December
31, 2009
|
December
31, 2008
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
(loss) income
|
$ | (10,811,916 | ) | $ | (8,650,016 | ) | $ | 808,322 | ||||
Adjustments
to reconcile net (loss) income to net cash
|
||||||||||||
used
in operating activities:
|
||||||||||||
Cash
used by discontinued operations
|
1,729,701 | - | 29,135 | |||||||||
Gain on disposal of Endeavor | (783,868 | ) | - | (783,868 | ) | |||||||
Gain
from settlement of indebtedness
|
(65,026 | ) | (1,963 | ) | (63,062 | ) | ||||||
Stock-based
compensation and fee payments
|
1,659,627 | 1,459,627 | 200,000 | |||||||||
Unrealized
foreign exchange (gain) loss
|
227,835 | 1,356,441 | (1,091,048 | ) | ||||||||
Impairment
of oil and gas properties (net of tax recovery)
|
5,152,100 | 5,152,100 | - | |||||||||
Changes
in non-cash working capital items
|
||||||||||||
Other receivable | (3,425 | ) | (588 | ) | (2,838 | ) | ||||||
Prepaid
expenses and deposits
|
(12,037 | ) | (6,661 | ) | (5,375 | ) | ||||||
Accounts payable and accrued liabilities | 445,825 | 95,324 | 5,650 | |||||||||
Cash
used in operations
|
(2,461,184 | ) | (595,736 | ) | (903,084 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||||||
Financing
activities from discontinued operations
|
2,000,261 | - | - | |||||||||
Common
stock issued for cash
|
3,325,001 | 893,000 | 2,372,000 | |||||||||
Loans payable | 50,567 | - | (35,100 | ) | ||||||||
Due to related parties
|
1,343,831 | (840,000 | ) | 1,025,415 | ||||||||
Cash
provided by financing activities
|
6,719,660 | 53,000 | 3,362,315 | |||||||||
INVESTING
ACTIVITIES
|
||||||||||||
Investing
Activities from discontinued operations
|
(1,447,739 | ) | - | - | ||||||||
Petroleum and natural gas expenditures
|
(1,094,490 | ) | (131,806 | ) | (695,233 | ) | ||||||
Cash acquired on acquisition
|
12,696 | - | - | |||||||||
Deposit on acquisition
|
(639,487 | ) | - | - | ||||||||
Deposits | - | - | - | |||||||||
Cash
used in investing activities
|
(3,169,020 | ) | (131,806 | ) | (695,233 | ) | ||||||
CHANGE
IN CASH
|
1,089,456 | (674,542 | ) | 1,763,998 | ||||||||
CASH,
BEGINNING
|
- | 1,763,998 | - | |||||||||
CASH,
ENDING
|
$ | 1,089,456 | $ | 1,089,456 | $ | 1,763,998 | ||||||
SUPPLEMENTAL
DISCLOSURE:
|
||||||||||||
Interest
paid
|
$ | 9,908 | $ | - | $ | - | ||||||
Income
taxes paid
|
$ | - | $ | - | $ | - | ||||||
NON-CASH
ACTIVITIES:
|
||||||||||||
Shares
issued on conversion of management fees
|
$ | 200,000 | $ | - | $ | 200,000 | ||||||
Shares
issued on conversion of liabilities
|
$ | 2,641,879 | $ | 1,002,146 | $ | - | ||||||
Shares
issued for property acquired
|
$ | 15,903,000 | $ | - | $ | - |
Deficit
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Common
Shares
|
Preferred
Shares
|
Additional
|
During
|
Total
|
||||||||||||||||||||||||||||
Number
|
Number
|
Paid
In
|
Comprehensive
|
Exploration
|
Stockholders'
|
|||||||||||||||||||||||||||
of
Shares
|
Amount
|
of
Shares
|
Amount
|
Capital
|
Income/(Loss)
|
Stage
|
Equity
|
|||||||||||||||||||||||||
Issuance
of common shares to
|
||||||||||||||||||||||||||||||||
to
founder, May 2006
|
100 | $ | 1 | - | $ | - | $ | - | $ | - | $ | - | $ | 1 | ||||||||||||||||||
Foreign
currency translation
|
13,987 | 13,987 | ||||||||||||||||||||||||||||||
Net
loss for the 8 month period ended
|
||||||||||||||||||||||||||||||||
December
31, 2006
|
- | - | - | - | - | (1,462,407 | ) | (1,462,407 | ) | |||||||||||||||||||||||
Balance,
December 31, 2006
|
100 | 1 | - | - | - | 13,987 | (1,462,407 | ) | (1,448,419 | ) | ||||||||||||||||||||||
Issued
by the Company on acquisition of
|
||||||||||||||||||||||||||||||||
ECC
in August 2007
|
- | 9,000 | 9 | - | - | - | 9 | |||||||||||||||||||||||||
Issued
by FEH on acquisition of ECC in
|
||||||||||||||||||||||||||||||||
August,
2007
|
- | - | 9,000,000 | 9,000 | (9,000 | ) | - | - | - | |||||||||||||||||||||||
Adjustment
to give effect to acquisition of ECC
|
||||||||||||||||||||||||||||||||
in
August, 2007
|
61,466,203 | 61,466 | - | - | 329,766 | - | - | 391,232 | ||||||||||||||||||||||||
Shares
of ECC acquired by legal parent
|
(100 | ) | (1 | ) | - | - | - | - | - | (1 | ) | |||||||||||||||||||||
Issued
at $1.50 per share in August 2007
|
||||||||||||||||||||||||||||||||
on
conversion of ECC debentures
|
1,093,155 | 1,093 | - | - | 1,638,640 | - | - | 1,639,733 | ||||||||||||||||||||||||
Issued
for cash at $1.00 per share
|
60,000 | 60 | - | - | 59,940 | - | - | 60,000 | ||||||||||||||||||||||||
Issued
for property at $0.86 per share
|
18,600,000 | 18,600 | - | - | 15,884,400 | - | - | 15,903,000 | ||||||||||||||||||||||||
Foreign
currency translation
|
(44,857 | ) | (44,857 | ) | ||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||
December
31, 2007
|
- | - | - | - | - | - | (1,507,745 | ) | (1,507,745 | ) | ||||||||||||||||||||||
Balance,
December 31, 2007
|
81,219,358 | $ | 81,219 | 9,009,000 | $ | 9,009 | $ | 17,903,746 | $ | (30,870 | ) | $ | (2,970,152 | ) | $ | 14,992,952 | ||||||||||||||||
Write
Off Accumulated Comprehensive Income from ECC operations to
Extraordinary Gain
|
31,265 | (70 | ) | 31,195 | ||||||||||||||||||||||||||||
Preferred
shares cancelled by the Company on
divestiture of ECC February 2008 |
(6,500 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Prefrerred
shares cancelled by FEH on
|
||||||||||||||||||||||||||||||||
divestiture
of ECC February 2008
|
(6,500,000 | ) | (6,500 | ) | (6,500 | ) | ||||||||||||||||||||||||||
Conversion
of preferred shares to common stock
|
2,502,500 | 2,503 | (2,502,500 | ) | (2,503 | ) | - | |||||||||||||||||||||||||
Investment
Units issued for cash at $0.30 per unit
|
2,766,668 | 2,767 | 744,233 | 747,000 | ||||||||||||||||||||||||||||
Investment
Units issued for cash at $0.255 per unit
|
6,664,706 | 6,664 | 1,618,335 | 1,624,999 | ||||||||||||||||||||||||||||
Management
fees converted to common stock
|
2,005,833 | 2,006 | 197,987 | 199,993 | ||||||||||||||||||||||||||||
Foreign
currency translation
|
1,219 | 1,219 | ||||||||||||||||||||||||||||||
Net
income for the year ended
|
||||||||||||||||||||||||||||||||
December
31, 2008
|
- | - | - | - | - | - | 808,322 | 808,322 | ||||||||||||||||||||||||
Balance,
December 31, 2008
|
95,159,065 | 95,159 | - | - | 20,464,301 | 1,614 | (2,161,900 | ) | 18,399,174 | |||||||||||||||||||||||
Conversion
of indebtedness to commmon stock
|
9,385,935 | 9,386 | - | - | 929,207 | 938,593 | ||||||||||||||||||||||||||
Issued
for services
|
700,000 | 700 | - | - | 315,550 | 316,250 | ||||||||||||||||||||||||||
Stock-based
compensation granted
|
- | - | - | - | 1,143,379 | 1,143,379 | ||||||||||||||||||||||||||
Investment
units issued for cash at $0.48 per unit
|
1,860,416 | 1,860 | - | - | 891,140 | 893,000 | ||||||||||||||||||||||||||
Conversion
of indebtedness to investment units
|
132,404 | 133 | - | - | 63,421 | 63,554 | ||||||||||||||||||||||||||
Foreign
currency translation
|
(4,540 | ) | (4,540 | ) | ||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||
December
31, 2009
|
- | - | - | - | - | (8,650,016 | ) | (8,650,016 | ) | |||||||||||||||||||||||
Balance,
December 31, 2009
|
107,237,820 | $ | 107,238 | - | $ | - | $ | 23,806,998 | $ | (2,926 | ) | $ | (10,811,916 | ) | $ | 13,099,394 | ||||||||||||||||
1.
|
NATURE
AND CONTINUANCE OF OPERATIONS
|
Equipment
is recorded at historical cost. The declining-balance method of
depreciation is used for the assets at the following annual
rates:
|
Computer
equipment
|
45 | % |
Furniture
and Equipment
|
20 | % |
Net
liabilities of Endeavor:
|
||||
Assets
|
$
|
(780,467
|
)
|
|
Liabilities,
including $351,504 in amounts payable to related parties
|
3,401,781
|
|||
Accumulated
comprehensive income
|
(31,265
|
)
|
||
Carrying
value
|
2,590,049
|
|||
Share
consideration received
|
6,507
|
|||
Intercompany
receivables written off
|
(1,812,688
|
)
|
||
Gain
on disposal of discontinued operations
|
$
|
783,868
|
Australian Exploration Properties -
Unproven
|
||||
Balance,
December 31, 2006
|
$ | –– | ||
Acquisition
costs
|
15,903,000 | |||
Impact
of deferred tax liability
|
6,177,000 | |||
Exploration
costs
|
290,925 | |||
Balance,
December 31, 2007
|
22,370,925 | |||
Exploration
Costs
|
710,204 | |||
Balance,
December 31, 2008
|
23,081,129 | |||
Write
down – Barrow
|
(2,908,010 | ) | ||
Write
down – Vic P60
|
(2,212,197 | ) | ||
Write
down – Deferred tax gross-ups
|
(1,636,508 | ) | ||
Exploration
Costs
|
131,806 | |||
Balance,
December 31, 2009
|
$ | 16,456,220 |
|
●
|
Fund
the costs required to drill, and if warranted, complete three wells on the
PEL 112 within the timeframes required by the permit work
programs; and
|
|
●
|
Pay
the Company a 1.33% overriding royalty on gross revenues generated from
the sale of any oil or gas produced from wells drilled on the PEL
112.
|
December
31,
2009
|
December
31,
2008
|
|||||||
Non-interest
bearing loan, unsecured, payable upon demand
|
–– | 259,343 | ||||||
$ | –– | $ | 259,343 |
December
31,
2009
|
December
31,
2008
|
|||||||
Advances
from a company affiliated with the president and chief executive
officer
|
$ | –– | $ | 74,729 | ||||
Advances
from shareholders / directors
|
–– | 243,553 | ||||||
Advances
from Shareholder
|
–– | 1,254,521 | ||||||
$ | –– | $ | 1,572,803 |
Number of
Shares
Issuable
Upon
Exercise
of Option
|
Exercise
Price
|
Vesting
Period
|
First
Date
Exercisable
|
Expiration
Date
|
||||
1,200,000
|
$0.70
|
None
|
8/15/2009
|
8/15/2012
|
||||
1,200,000
|
$0.80
|
1
Year
|
8/15/2010
|
8/15/2012
|
||||
1,200,000
|
$1.00
|
1
Year
|
8/15/2010
|
8/15/2014
|
||||
1,200,000
|
$1.20
|
2
Years
|
8/15/2011
|
8/15/2014
|
||||
4,800,000
|
Options
|
Shares
(000)
|
Weighted-Average
Exercise
Price
|
Weighted-Average
Remaining
Contract Term (yrs)
|
Aggregate
Intrinsic value
|
||||||||||||
Outstanding
– January 1, 2009
|
–– | –– | ||||||||||||||
Granted
|
4,800 | $ | 0.93 | |||||||||||||
Exercised
|
–– | –– | ||||||||||||||
Forfeited
or expired
|
–– | –– | ||||||||||||||
Outstanding
– December 31, 2009
|
4,800 | $ | 0.93 | 3.71 | $ | 0.00 | ||||||||||
Exercisable
– December 31, 2009
|
1,200 | $ | 0.70 | 2.71 | $ | 0.00 |
Year
Ended
December
31,
2009
|
Year
Ended
December
31
2008
|
|||||||
Statutory
tax rates
|
35 | % | 35 | % | ||||
Expected
recovery of income taxes at statutory rates
|
$ | (3,812,944 | ) | $ | 274,251 | |||
Increase
(reduction) in income taxes resulting from:
|
||||||||
Non-deductible
expenditures and other
|
865,889 | (317,498 | ) | |||||
Foreign
exchange rate and tax rate differences
|
374,017 | (78,676 | ) | |||||
Valuation
allowance change
|
328,931 | 121,923 | ||||||
Provision
for income taxes
|
$ | (2,244,107 | ) | $ | –– |
Year
Ended
December
31,
2009
|
Year
Ended
December
31,
2008
|
|||||||
Deferred
income tax assets:
|
||||||||
US
net operating loss carryforwards
|
$ | 863,061 | $ | 534,130 | ||||
Australian
operating loss carryforwards
|
59,898 | 28,885 | ||||||
Australian
deposits on property
|
191,846 | –– | ||||||
US
loan receivable
|
543,806 | 543,806 | ||||||
Total
deferred income tax assets
|
1,658,611 | 1,106,821 | ||||||
Less:
valuation allowance
|
(1,406,867 | ) | (1,077,936 | ) | ||||
Deferred
income tax assets, net
|
$ | 251,744 | $ | 28,885 | ||||
Petroleum
and natural gas properties, Australia
|
$ | (4,442,814 | ) | $ | (5,115,041 | ) | ||
Deferred
income tax liabilities, net
|
$ | (4,191,070 | ) | $ | (5,086,156 | ) |