Washington
|
91-0626366
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
601
W. Main Ave., Suite 1012, Spokane, WA
|
99201
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large accelerated filer ¨ | Accelerated filer ¨ | |||
Non-accelerated
filer ¨
(Do not check if a smaller
reporting company)
|
Smaller reporting company þ |
ITEM
1.
|
Financial
Statements
|
3
|
Balance Sheets at August 31, 2008 (Unaudited) and February 29, 2008 |
3
|
|
Statements of
Operations for the Three Months Ended August 31, 2008 and 2007
and from
March 1, 2005 (Date of Inception of Exploration Stage) to August 31,
2008 – (Unaudited)
|
4
|
|
Statement of Changes in Stockholders’ Equity – (Unaudited) |
5
|
|
Statements of Cash
Flows for the Three Months Ended August 31, 2008 and 2007
and from March 1, 2005 (Date
of Inception of Exploration Stage) to August 31, 2008 –
(Unaudited)
|
6
|
|
Notes to Unaudited Financial Statements |
8
|
|
ITEM 2. |
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
|
17
|
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk |
29
|
ITEM 4T. | Controls and Procedures |
31
|
ITEM 1.
|
Legal Proceedings |
32
|
ITEM 4. | Submission of Matters to a Vote of Security Holders |
33
|
ITEM 5. | Other Information |
33
|
ITEM 6. | Exhibits |
33
|
Signatures |
34
|
As
of August 31,
|
As
of February 29,
|
|||||||
2008
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 2,170,260 | $ | 59,133 | ||||
Investment
in marketable securities, at market
|
||||||||
cost
of $3,009,163 and $155,445
|
3,009,163 | 155,445 | ||||||
Accounts
receivable:
|
||||||||
Oil
and gas sales
|
79,609 | 311,277 | ||||||
Joint
interest participants
|
264,194 | 502,420 | ||||||
Prepaid
expenses and other current assets
|
- | 20,942 | ||||||
Total
current assets
|
5,523,226 | 1,049,217 | ||||||
OIL
AND GAS PROPERTIES, net of accumulated depletion,
depreciation,
|
||||||||
amortization,
and impairment, successful efforts method
|
141,844 | 169,521 | ||||||
VEHICLES
AND EQUIPMENT, net of accumulated depreciation of $18,532
|
||||||||
and
$13,310 respectively
|
12,797 | 18,019 | ||||||
ASSETS
HELD FOR SALE
|
- | 1,634,471 | ||||||
JOINT
INTEREST RECEIVABLE - LONG TERM
|
361,504 | 500,000 | ||||||
OTHER
ASSETS
|
388,486 | 289,809 | ||||||
Total
assets
|
$ | 6,427,857 | $ | 3,661,037 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable and other accrued liabilities
|
$ | 99,769 | $ | 316,253 | ||||
OTHER
LIABILITIES
|
||||||||
Asset
retirement obligation
|
30,783 | 119,207 | ||||||
Total
liabilities
|
130,552 | 435,460 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||
Preferred
stock - 10,000,000 shares authorized, $0.001 par value;
|
- | - | ||||||
Series
A Convertible Preferred stock - 2,400,000 shares
authorized,
|
||||||||
$0.001
par value, 6% cumulative dividends; 1,170,465 and
|
||||||||
1,297,465
shares issued and outstanding respectively
|
1,171 | 1,298 | ||||||
Common
stock- 200,000,000 shares authorized; $0.001 par value,
44,734,299
|
||||||||
and
44,293,299 shares issued and outstanding respectively
|
44,735 | 44,294 | ||||||
Additional
paid-in capital
|
21,060,650 | 21,046,264 | ||||||
Accumulated
deficit
|
(736,035 | ) | (736,035 | ) | ||||
Deficit
accumulated during the exploration stage
|
(14,073,216 | ) | (17,130,244 | ) | ||||
Total
stockholders’ equity
|
6,297,305 | 3,225,577 | ||||||
Total
liabilities and stockholders' equity
|
$ | 6,427,857 | $ | 3,661,037 |
From
|
||||||||||||||||||||
Six
Months Ended,
|
Inception
|
|||||||||||||||||||
Three
Months Ended,
|
Through
|
|||||||||||||||||||
August
31,
|
August
31,
|
August
31,
|
||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
2008
|
||||||||||||||||
REVENUE:
|
||||||||||||||||||||
Oil
and gas sales
|
$ | 105,914 | $ | 98,042 | $ | 204,864 | $ | 171,407 | $ | 726,502 | ||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||||||
Production
costs
|
45,588 | 57,118 | 134,943 | 134,977 | 569,723 | |||||||||||||||
Exploration
and drilling
|
158,921 | 378,186 | 244,344 | 533,396 | 2,485,718 | |||||||||||||||
Depreciation,
depletion, amortization,
|
||||||||||||||||||||
and
impairment expense
|
18,980 | 72,460 | 37,199 | 266,284 | 4,768,818 | |||||||||||||||
General
and administrative
|
414,426 | 501,632 | 851,275 | 891,735 | 10,477,242 | |||||||||||||||
Total
operating expenses
|
637,915 | 1,009,396 | 1,267,761 | 1,826,392 | 18,301,501 | |||||||||||||||
OPERATING
LOSS
|
(532,001 | ) | (911,354 | ) | (1,062,897 | ) | (1,654,985 | ) | (17,574,999 | ) | ||||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||||||
Interest
income
|
4,236 | 3,870 | 7,465 | 37,312 | 162,310 | |||||||||||||||
Interest
expense
|
(3 | ) | (52,039 | ) | (363 | ) | (112,780 | ) | (1,478,412 | ) | ||||||||||
Total
other income (expense)
|
4,233 | (48,169 | ) | 7,102 | (75,468 | ) | (1,316,102 | ) | ||||||||||||
LOSS
FROM CONTINUING OPERATIONS
|
(527,768 | ) | (959,523 | ) | (1,055,795 | ) | (1,730,453 | ) | (18,891,101 | ) | ||||||||||
DISCONTINUED
OPERATIONS:
|
||||||||||||||||||||
Income
(Loss) from discontinued operations (net
|
||||||||||||||||||||
of
tax)
|
(10,769 | ) | 16,200 | 119,382 | 169,471 | 824,444 | ||||||||||||||
Gain
from sale of oil and gas properties (net of
|
||||||||||||||||||||
taxes
of $-0-)
|
3,993,441 | - | 3,993,441 | - | 3,993,441 | |||||||||||||||
NET
INCOME (LOSS)
|
3,454,904 | (943,323 | ) | 3,057,028 | (1,560,982 | ) | (14,073,216 | ) | ||||||||||||
Cumulative
convertible preferred stock
|
||||||||||||||||||||
dividend
requirement
|
(53,274 | ) | (67,687 | ) | (107,900 | ) | (123,065 | ) | (499,618 | ) | ||||||||||
Deemed
dividend - Beneficial conversion
|
||||||||||||||||||||
feature
|
- | - | - | - | (4,199,295 | ) | ||||||||||||||
NET
INCOME (LOSS) AVAILABLE TO
|
||||||||||||||||||||
COMMON
SHAREHOLDERS
|
$ | 3,401,630 | $ | (1,011,010 | ) | $ | 2,949,128 | $ | (1,684,047 | ) | $ | (18,772,129 | ) | |||||||
NET
INCOME (LOSS) PER COMMON SHARE
|
||||||||||||||||||||
Loss
from continuing operations
|
$ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.04 | ) | ||||||||
Income
from discontinued operations
|
0.09 | 0.00 | 0.09 | 0.00 | ||||||||||||||||
NET
INCOME ( LOSS) PER COMMON
|
||||||||||||||||||||
SHARE
- Basic and diluted
|
$ | 0.08 | $ | (0.02 | ) | $ | 0.07 | $ | (0.04 | ) | ||||||||||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||||||||||||||
COMMON
SHARES OUTSTANDING -
|
||||||||||||||||||||
Basic
and diluted
|
44,683,419 | 41,073,017 | 44,567,319 | 41,035,001 |
Deficit
|
||||||||||||||||||||||||||||||||
Series
A Convertible
|
Accumulated
|
|||||||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
Additional
|
During
the
|
|||||||||||||||||||||||||||||
Paid-In
|
Accumulated
|
Exploration
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Stage
|
Total
|
|||||||||||||||||||||||||
BALANCE,
March 1, 2005 (Exploration
|
||||||||||||||||||||||||||||||||
stage
date of inception)
|
- | $ | - | 18,199,419 | $ | 18,199 | $ | 709,997 | $ | (736,035 | ) | $ | - | $ | (7,839 | ) | ||||||||||||||||
Issuance
of common stock for:
|
- | |||||||||||||||||||||||||||||||
Cash
|
- | - | 4,400,000 | 4,400 | 1,083,100 | - | - | 1,087,500 | ||||||||||||||||||||||||
Services
|
- | - | 5,352,667 | 5,353 | 3,622,176 | - | - | 3,627,529 | ||||||||||||||||||||||||
Oil
and gas properties
|
- | - | 700,000 | 700 | 411,300 | - | - | 412,000 | ||||||||||||||||||||||||
Conversion
of convertible debentures
|
- | |||||||||||||||||||||||||||||||
and
interest payable
|
- | - | 806,135 | 806 | 200,728 | - | - | 201,534 | ||||||||||||||||||||||||
Discount
on convertible notes payable
|
- | - | - | - | 1,240,213 | - | - | 1,240,213 | ||||||||||||||||||||||||
Net
(Loss)
|
- | - | - | - | - | - | (4,472,041 | ) | (4,472,041 | ) | ||||||||||||||||||||||
BALANCE,
FEBRUARY 28, 2006
|
- | $ | - | 29,458,221 | $ | 29,458 | $ | 7,267,514 | $ | (736,035 | ) | $ | (4,472,041 | ) | $ | 2,088,896 | ||||||||||||||||
Issuance
of common stock for:
|
- | |||||||||||||||||||||||||||||||
Cash
|
- | - | 8,027,206 | 8,027 | 5,180,230 | - | - | 5,188,257 | ||||||||||||||||||||||||
Services
|
- | - | 1,270,000 | 1,270 | 2,606,430 | - | - | 2,607,700 | ||||||||||||||||||||||||
Oil
and gas properties
|
- | - | 222,500 | 223 | 528,527 | - | - | 528,750 | ||||||||||||||||||||||||
Conversion
of convertible debentures
|
- | - | 2,049,303 | 2,049 | 1,022,473 | - | - | 1,024,522 | ||||||||||||||||||||||||
Purchase
and cancellation of common stock:
|
- | - | (150,000 | ) | (150 | ) | (149,850 | ) | (150,000 | ) | ||||||||||||||||||||||
Issuance
of preferred stock for:
|
||||||||||||||||||||||||||||||||
Cash
|
1,399,765 | 1,400 | - | - | 3,624,804 | - | - | 3,626,204 | ||||||||||||||||||||||||
Discount
on convertible notes payable
|
- | - | - | - | 25,000 | - | - | 25,000 | ||||||||||||||||||||||||
Extension
warrants on convertible notes
|
- | - | - | - | 119,284 | - | - | 119,284 | ||||||||||||||||||||||||
Discount
on preferred stock
|
- | - | - | - | 4,199,295 | - | - | 4,199,295 | ||||||||||||||||||||||||
Deemed
dividend on preferred stock
|
- | - | - | - | (4,199,295 | ) | - | - | (4,199,295 | ) | ||||||||||||||||||||||
Net
(Loss)
|
- | - | - | - | - | - | (8,392,030 | ) | (8,392,030 | ) | ||||||||||||||||||||||
BALANCE,
FEBRUARY 28, 2007
|
1,399,765 | $ | 1,400 | 40,877,230 | $ | 40,877 | $ | 20,224,411 | $ | (736,035 | ) | $ | (12,864,071 | ) | $ | 6,666,582 | ||||||||||||||||
Issuance
of common stock for:
|
- | |||||||||||||||||||||||||||||||
Cash
|
- | - | 3,062,000 | 3,062 | 728,754 | - | - | 731,816 | ||||||||||||||||||||||||
Services
|
- | - | 10,000 | 10 | 4,490 | - | - | 4,501 | ||||||||||||||||||||||||
Conversion
of convertible debentures
|
- | - | 37,169 | 38 | 27,840 | - | - | 27,878 | ||||||||||||||||||||||||
Extension
warrants on convertible notes
|
- | - | - | - | 60,973 | - | - | 60,973 | ||||||||||||||||||||||||
Conversion
of preferred stock
|
(102,300 | ) | (102 | ) | 306,900 | 307 | (204 | ) | - | - | - | |||||||||||||||||||||
Net
(Loss)
|
- | - | - | - | - | - | (4,266,173 | ) | (4,266,173 | ) | ||||||||||||||||||||||
BALANCE,
FEBRUARY 29, 2008
|
1,297,465 | $ | 1,298 | 44,293,299 | $ | 44,294 | $ | 21,046,264 | $ | (736,035 | ) | $ | (17,130,244 | ) | $ | 3,225,577 | ||||||||||||||||
Issuance
of common stock for:
|
- | |||||||||||||||||||||||||||||||
Cash
|
- | - | 60,000 | 60 | 14,940 | - | - | 15,000 | ||||||||||||||||||||||||
Conversion
of preferred stock
|
(91,000 | ) | (91 | ) | 273,000 | 273 | (182 | ) | - | - | - | |||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Net
(Loss)
|
- | - | - | - | - | - | (397,876 | ) | (397,876 | ) | ||||||||||||||||||||||
BALANCE,
MAY 31, 2008
|
1,206,465 | $ | 1,207 | 44,626,299 | $ | 44,627 | $ | 21,061,022 | $ | (736,035 | ) | $ | (17,528,120 | ) | $ | 2,842,701 | ||||||||||||||||
Issuance
of common stock for:
|
- | |||||||||||||||||||||||||||||||
Cash
|
- | - | - | - | (300 | ) | - | - | (300 | ) | ||||||||||||||||||||||
Conversion
of preferred stock
|
(36,000 | ) | (36 | ) | 108,000 | 108 | (72 | ) | - | - | - | |||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Net
Income
|
- | - | - | - | - | - | 3,454,904 | 3,454,904 | ||||||||||||||||||||||||
BALANCE,
AUGUST 31, 2008
|
1,170,465 | $ | 1,171 | 44,734,299 | $ | 44,735 | $ | 21,060,650 | $ | (736,035 | ) | $ | (14,073,216 | ) | $ | 6,297,305 |
From
Inception
|
||||||||||||
Six
Months Ended
|
Six
Months Ended
|
March
1, 2005
|
||||||||||
August
31,
|
August
31,
|
Through
August 31,
|
||||||||||
2008
|
2007
|
2008
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
Income (Loss)
|
$ | 3,057,028 | $ | (1,560,982 | ) | $ | (14,073,216 | ) | ||||
Adjustments
to reconcile net loss to net cash
|
||||||||||||
used
in operating activities:
|
||||||||||||
Gain
on sale of oil and gas properties
|
(3,993,441 | ) | - | (3,993,441 | ) | |||||||
Common
stock issued for services
|
- | 4,500 | 6,239,729 | |||||||||
Depreciation,
depletion, amortization, and
|
||||||||||||
impairment
expense
|
105,317 | 373,526 | 4,836,936 | |||||||||
Exploration
expense - Dry well
|
- | 33,233 | 849,753 | |||||||||
Non
cash interest expense and accretion
|
- | 102,770 | 1,470,051 | |||||||||
Non
cash interest income
|
(3,459 | ) | (19,052 | ) | (60,152 | ) | ||||||
Changes
in assets and liabilities:
|
||||||||||||
Accounts
receivable - Oil and gas sales
|
(162,045 | ) | (220,462 | ) | (473,322 | ) | ||||||
Accounts
receivable - Related party participants
|
- | 14,607 | - | |||||||||
Accounts
receivable -Joint interest participants
|
393,829 | 266,318 | (608,591 | ) | ||||||||
Prepaid
expenses and other current assets
|
20,942 | 60,484 | 441 | |||||||||
Accounts
payable and other accrued liabilities
|
(182,468 | ) | (894,021 | ) | 171,885 | |||||||
Joint
interest receivable - Long term
|
- | - | - | |||||||||
Other
assets
|
- | - | (77,177 | ) | ||||||||
Net
cash (used) in operating activities
|
(764,297 | ) | (1,839,079 | ) | (5,717,104 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of marketable securities, net
|
(2,853,718 | ) | - | (3,009,163 | ) | |||||||
Purchase
of reclamation bond
|
(100,000 | ) | (250,000 | ) | (375,000 | ) | ||||||
Purchase
of oil and gas properties
|
(2,840 | ) | (1,090,693 | ) | (8,470,395 | ) | ||||||
Purchase
of fixed assets
|
- | (8,930 | ) | - | ||||||||
Proceeds
from sale of oil and gas properties
|
5,812,500 | - | 7,812,500 | |||||||||
Proceeds
(repayments) from note receivable
|
- | 800,000 | (31,841 | ) | ||||||||
Additions
(deletions) to oil and gas prepayments
|
4,782 | (44,823 | ) | 77,175 | ||||||||
Net
cash provided by (used in) investing activities
|
2,860,724 | (594,446 | ) | (3,996,724 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from sales of preferred stock, net
|
- | - | 3,626,204 | |||||||||
Proceeds
from sales of common stock, net
|
14,700 | - | 7,022,273 | |||||||||
Proceeds
from related party notes payable
|
- | - | 200,000 | |||||||||
Proceeds
(repayments) from borrowings
|
- | (158,245 | ) | 1,035,520 | ||||||||
Net
cash provided by (used in) financing activities
|
14,700 | (158,245 | ) | 11,883,997 | ||||||||
NET
INCREASE (DECREASE) IN CASH AND
|
||||||||||||
EQUIVALENTS
|
2,111,127 | (2,591,770 | ) | 2,170,169 | ||||||||
CASH
AND EQUIVALENTS AT BEGINNING
|
||||||||||||
OF
PERIOD
|
59,133 | 2,734,170 | 91 | |||||||||
CASH
AND EQUIVALENTS AT END
|
||||||||||||
OF
PERIOD
|
$ | 2,170,260 | $ | 142,400 | $ | 2,170,260 |
From
Inception
|
||||||||||||
Six
Months Ended
|
Six
Months Ended
|
March
1, 2005
|
||||||||||
August
31,
|
August
31,
|
Through
August 31,
|
||||||||||
2008
|
2007
|
2008
|
||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | 363 | $ | 10,010 | $ | 55,459 | ||||||
Income
taxes
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Common
stock issued for services
|
$ | - | $ | 4,500 | $ | 6,239,729 | ||||||
Common
stock issued for oil and gas properties
|
$ | - | $ | - | $ | 940,750 | ||||||
Common
stock repurchased and cancelled
|
$ | - | $ | - | $ | (150,000 | ) | |||||
Common
stock issued on conversion of convertible
|
||||||||||||
debentures
and interest
|
$ | - | $ | 27,878 | $ | 1,253,934 | ||||||
Discount
on convertible notes payable
|
$ | - | $ | 35,386 | $ | 1,326,186 | ||||||
Extension
warrants on convertible notes payable
|
$ | - | $ | - | $ | 119,283 | ||||||
Conversion
of preferred stock to common stock
|
$ | - | $ | 165 | $ | 185 |
August
31, 2008
|
February
29, 2008
|
|||||||
Proved
leasehold costs
|
$ | 302,410 | $ | 299,571 | ||||
Unproved
leasehold costs
|
104,700 | 104,700 | ||||||
Costs
of wells and development
|
1,732,958 | 1,732,958 | ||||||
Capitalized
asset retirement costs
|
22,741 | 22,740 | ||||||
2,162,809 | 2,159,969 | |||||||
Less
- Accumulated depletion, depreciation,
amortization and
impairment
|
(2,020,965 | ) | (1,990,448 | ) | ||||
$ | 141,844 | $ | 169,521 |
Three
Months Ended
|
||||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Oil
and gas sales revenues – Tuscaloosa project
|
$ | - | $ | 196,652 | ||||
Cost
and expenses
|
(10,769 | ) | (180,452 | ) | ||||
Loss
from discontinued operations
|
$ | (10,769 | ) | $ | 16,200 |
Six
Months Ended
|
||||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Oil
and gas sales revenues – Tuscaloosa project
|
$ | 234,473 | $ | 348,331 | ||||
Cost
and expenses
|
(115,091 | ) | (178,860 | ) | ||||
Income
from discontinued operations
|
$ | 119,382 | $ | 169,471 |
From
Inception through
|
||||
August
31, 2008
|
||||
Oil
and gas sales revenues – Tuscaloosa project
|
$ | 1,317,424 | ||
Cost
and expenses
|
(492,980 | ) | ||
Income
from discontinued operations
|
$ | 824,444 |
Six
months ended August 31, 2008
|
As
Reported
|
Pro
Forma
|
||||||
Revenues
|
$ | 204,864 | $ | 204,864 | ||||
Net
loss for the period
|
(1,055,795 | ) | (1,055,795 | ) | ||||
Loss
per share
|
(0.02 | ) | (0.02 | ) |
Six
months ended August 31, 2007
|
As
Reported
|
Pro
Forma
|
||||||
Revenues
|
$ | 171,407 | $ | 171,407 | ||||
Net
loss for the period
|
(1,730,453 | ) | (1,730,453 | ) | ||||
Loss
per share
|
(0.04 | ) | (0.04 | ) |
Exercise
|
Remaining
|
Exercisable
Warrants
|
||||||||||||||
Description
|
Warrants
|
Price
|
Life
(Years)
|
Remaining
|
||||||||||||
Spring
2006 Common Stock Private Placement
|
4,013,602 | $ | 2.00 |
2.75
|
4,013,602 | |||||||||||
Placement
Agent Warrants Spring 2006 PP
|
802,721 | $ | 0.75 |
4.75
|
802,721 | |||||||||||
Placement
Agent Warrants Spring 2006 PP
|
401,361 | $ | 2.00 |
4.75
|
401,361 | |||||||||||
July
2006 Preferred Stock Private Placement
|
2,799,530 | $ | 2.00 |
3.00
|
2,799,530 | |||||||||||
Placement
Agent Warrants July 2006 PP
|
419,930 | $ | 1.00 |
3.00
|
419,930 | |||||||||||
Convertible
Debenture Term Extension
|
150,001 | $ | 2.00 |
3.25
|
150,001 | |||||||||||
Convertible
Debenture 2nd
Term Extension
|
112,000 | $ | 0.53 |
1.00
|
112,000 | |||||||||||
Convertible
Debenture 3rd
Term Extension
|
90,000 | $ | 0.25 |
1.25
|
90,000 | |||||||||||
Spring
2006 PP Goodwill Warrants
|
4,013,602 | $ | 0.65 |
1.50
|
4,013,602 | |||||||||||
July
2006 PP Goodwill Warrants
|
1,399,765 | $ | 0.65 |
1.50
|
1,399,765 | |||||||||||
Placement
Agent Warrants January 2008 PP
|
39,550 | $ | 0.25 |
2.50
|
39,550 | |||||||||||
14,242,062 | 14,242,062 |
August
31, 2008
|
August
31, 2007
|
|||||||
Computed
at U.S. and State statutory rates (40%)
|
$ | 1,222,808 | $ | (624,400 | ) | |||
Permanent
differences
|
2,750 | 40,100 | ||||||
Changes
in valuation allowance
|
(1,225,558 | ) | 584,300 | |||||
Total
|
$ | - | $ | - |
August
31, 2008
|
February
29, 2008
|
|||||||
Deferred
tax assets:
|
||||||||
Net operating loss
carryforwards
|
$ | 2,732,312 | $ | 2,574,000 | ||||
Oil
and gas properties
|
361,950 | 1,745,820 | ||||||
Less
valuation allowance
|
(3,094,262 | ) | (4,319,820 | ) | ||||
Total
|
$ | - | $ | - |
Fiscal
Period
|
Shareholders
at Period End
|
Accumulated
Dividends
|
||||||
Year
Ended February 28, 2007
|
100
|
$ | 153,966 | |||||
Year
Ended February 29, 2008
|
90
|
|
237,752 | |||||
Six
Months Ended August 31, 2008
|
82
|
107,900 | ||||||
Total
Accumulated Dividends
|
$ | 499,618 |
August
31,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Current
Assets
|
$ | 5,523,226 | $ | 1,049,217 | ||||
Current
Liabilities
|
99,769 | 316,253 | ||||||
Working
Capital
|
$ | 5,423,457 | $ | 732,964 | ||||
Current
Ratio
|
55.36 | 3.32 |
Quarter
Ended
|
Quarter
Ended
|
|||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Alabama
– Gilbertown
|
$ | 52,652 | $ | 30,023 | ||||
Louisiana
– Krotz Springs
|
29,024 | 25,323 | ||||||
Texas
– Saxet Field
|
24,238 | 42,696 | ||||||
Total
Revenues
|
$ | 105,914 | $ | 98,042 |
Quarter
Ended
|
Quarter
Ended
|
|||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Production
Costs
|
$ | 45,588 | $ | 57,118 | ||||
Exploration
Costs
|
158,921 | 378,186 | ||||||
Depreciation,
Depletion, Amortization & Impairment
|
18,980 | 72,460 | ||||||
General
& Administrative
|
414,426 | 501,632 | ||||||
Total
Operating Expenses
|
$ | 637,915 | $ | 1,009,396 |
Six
Months Ended
|
Six
Months Ended
|
|||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Alabama
– Gilbertown Field
|
$ | 102,160 | $ | 43,759 | ||||
Louisiana
– Krotz Springs
|
39,736 | 29,428 | ||||||
Texas
– Saxet Field
|
62,968 | 98,220 | ||||||
Total
Revenues
|
$ | 204,864 | $ | 171,407 |
Six
Months Ended
|
Six
Months Ended
|
|||||||
August
31, 2008
|
August
31, 2007
|
|||||||
Production
Costs
|
$ | 134,943 | $ | 134,977 | ||||
Exploration
Costs
|
244,344 | 533,396 | ||||||
Depreciation,
Depletion, Amortization & Impairment
|
37,199 | 266,284 | ||||||
General
& Administrative
|
851,275 | 891,735 | ||||||
Total
Operating Expenses
|
$ | 1,267,761 | $ | 1,826,392 |
Project
|
Location
|
Product
|
Revenue
|
Percentage
|
||||||
Gilbertown
|
Alabama
|
Oil
|
$ | 102,160 |
49.9%
|
|||||
Krotz
Springs
|
Louisiana
|
Gas/Liquids
|
37,593 |
18.4%
|
||||||
Saxet
|
Texas
|
Gas
|
59,433 |
29.0%
|
Voting Results
|
||||||||
Director
|
For
|
Withheld
|
||||||
Dale
B. Lavigne
|
34,052,908 | 293,433 | ||||||
Ronald
D. Lavigne
|
34,052,908 | 293,433 | ||||||
Timothy
R. Lindsey
|
34,118,908 | 227,433 | ||||||
James
F. Meara
|
34,203,708 | 142,633 |
Voting Results
|
||
For
|
Against
|
Abstentions
|
34,209,408
|
41,967
|
94,966
|
Exhibit
Number
|
Description |
31.1
|
Certification
of Timothy R. Lindsey pursuant to Exchange Rule 13a-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of James F. Westmoreland pursuant to Exchange Rule 13a-14(a) as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
Certification
of Timothy R. Lindsey pursuant to 18.U.S.C Section 1350 pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
of James F. Westmoreland pursuant to 18.U.S.C Section 1350 pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
DAYBREAK OIL AND GAS, INC. | |||
|
By:
|
/s/ Timothy R. Lindsey | |
Timothy R. Lindsey, its | |||
Chief Executive Officer | |||
Date: October 14, 2008 |
|
By:
|
/s/ James F. Westmoreland | |
James F. Westmoreland, its | |||
Chief Financial Officer | |||
Date: October 14, 2008 |