Nevada
|
98-0531819
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
565
Silvertip Road, Canmore, Alberta
|
T1W
3K8
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
||
None
|
None
|
Common
stock, $.001 par value
|
(Title
of Class)
|
Item
in Form 10-K
|
Page
No.
|
|
PART
I
|
||
Item
1
|
Business
|
4
|
Item
1A
|
Risk
Factors
|
6
|
Item
1B
|
Unresolved
Staff Comments
|
8
|
Item
2
|
Properties
|
8
|
Item
3
|
Legal
Proceedings
|
8
|
Item
4
|
Submission
of Matters to a Vote of the Security Holders
|
8
|
PART
II
|
||
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
8
|
Item
6
|
Selected
Financial Data
|
9
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk
|
12
|
Item
8
|
Financial
Statements and Supplementary Data
|
12
|
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
13
|
Item
9A
|
Controls
and Procedures
|
13
|
Item
9B
|
Other
Information
|
13
|
PART
III
|
||
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
14
|
Item
11
|
Executive
Compensation
|
16
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
18
|
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence
|
20
|
Item
14
|
Principal
Accountant Fees and Services
|
21
|
PART
IV
|
||
Item
15
|
Exhibits,
Financial Statement Schedules
|
21
|
SIGNATURES
|
22
|
·
|
The
West Caroline area is in the foothills distrubed belt of the Alberta,
Canada Rocky Mountain’s eastern slopes. There is an existing
dry hole on the location that spudded into the older Devonian strata
indicating an over-the-thrust zone. Devonian D2 porosity was
found at 1100 meters (3698.92 feet), and is 7 meters (22.9659 feet)
thick. The well site geologist said the samples were oil
stained and the logs show 6.7 meters (22 feet) of
porosity.
|
·
|
There
are dry holes east, north-northwest and south of the subject
well. The oil pool appears, therefore, to be orientated in a
southwest and northeast trend.
|
·
|
Drilling
of the first well on this acreage was commenced on June 30,
2008. The well was spudded into the Devonian
formation. Drilling was completed on July 14, 2008 using normal
methods, either low water loss mud, mist or invert
mud.
|
Expense
|
Amount
of direct or indirect payments to directors, officers, general partners,
10% shareholders or affiliates of the Issuer
|
Amount
of direct or indirect payments to others
|
Transfer
agent
|
0
|
0
|
Legal
and Accounting
|
0
|
0
|
Costs
of the offering
|
0
|
0
|
Office
and Administration
|
0
|
0
|
Total
|
0
|
0
|
Expenses
|
Amount of direct or indirect payments to
directors, officers, general partners, 10% shareholders or affiliates of
the Issuer
|
Amount
of direct or indirect payments to others
|
Exploration
and development activities
|
0
|
0
|
Legal
and Accounting
|
0
|
0
|
Consulting
|
0
|
0
|
Office
Furniture, Equipment and Supplies
|
0
|
0
|
Miscellaneous
Administration Expenses
|
0
|
0
|
Working
capital
|
0
|
0
|
TOTAL
|
0
|
0
|
·
|
Focus
growth capital to higher quality
reservoirs;
|
·
|
Utilize
production enhancement techniques to increase productivity and add value
within the parameters of good oilfield production
practices;
|
·
|
Create
value from our asset base through exploitation, development and
exploration activities; and
|
·
|
Utilize
risk management opportunities through hedging or other means for cash flow
management.
|
·
|
Exhibit
the potential for delivering superior rates of return on capital
employed;
|
·
|
Accretive
to cash flow per share;
|
·
|
Accretive
to net asset value;
|
·
|
Accretive
to reserves per share;
|
·
|
Potential
for value enhancement through further exploitation, including improved
production practices, additional development drilling, infill drilling or
re-drilling/re-completion and improved marketing
arrangements;
|
·
|
Assets
that include associated undeveloped lands for development and exploration
opportunities;
|
·
|
Geological
opportunities with multi-zone potential;
and
|
·
|
Near-term
market access and sufficient infrastructure for increased
activity.
|
Page
|
|
Audited
Financial Statements
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
Balance
Sheets
|
F-4
|
Statements
of Operations
|
F-5
|
Statements
of Stockholders’ Equity
|
F-6
|
Statements
of Cash Flows
|
F-7
|
Notes
to Audited Financial Statements
|
F-8
to F-11
|
ASSETS
|
August
31,
2008
|
August
31,
2007
|
||||||
Current
|
||||||||
Cash
|
$ | 13,668 | $ | 36,402 | ||||
Deposits
|
- | 23,435 | ||||||
Amounts
Receivable
|
2,134 | - | ||||||
Deferred
offering costs
|
38,200 | 5,000 | ||||||
$ | 54,002 | $ | 64,837 | |||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts payable and accrued
liabilities
|
$ | 34,490 | $ | 1,250 | ||||
STOCKHOLDERS’ EQUITY
|
||||||||
Capital
stock – Notes 3 and 5
|
||||||||
Authorized:
|
||||||||
75,000,000
common shares, par value $0.001 per share
|
||||||||
Issued and
outstanding:
|
||||||||
1,300,000
common shares
|
1,300 | 1,300 | ||||||
Additional Paid-in
Capital
|
63,700 | 63,700 | ||||||
Deficit
accumulated during the development stage
|
(45,488 | ) | (1,413 | ) | ||||
19,512 | 63,587 | |||||||
$ | 54,002 | $ | 64,837 |
Year
ended August 31,
|
Period
ended
August
31,
|
From
Inception
(March
19, 2007)
|
||||||||||
2008
|
2007
|
to
August 31,2008
|
||||||||||
Expenses
|
||||||||||||
Organizational
costs
|
$ | - | $ | 1,250 | $ | 1,250 | ||||||
Dry
hole costs
|
24,078 | - | 24,078 | |||||||||
Professional
fees
|
18,695 | - | 18,695 | |||||||||
Office
and administration
|
1,302 | 163 | 1,465 | |||||||||
Net
loss for the period
|
$ | (44,075 | ) | $ | (1,413 | ) | $ | (45,488 | ) | |||
Basic
and diluted loss per share
|
$ | (0.03 | ) | $ | (0.01 | ) | ||||||
Weighted
average number of shares outstanding
|
1,300,000 | 264,545 | ||||||||||
Additional
|
Deficit
Accumulated
|
|||||||||||||||||||
Common
Stock
|
Paid-in
|
during
the
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Development
Stage
|
Total
|
||||||||||||||||
Capital
stock issued for cash – at $0.05
|
1,300,000 | $ | 1,300 | $ | 63,700 | $ | - | $ | 65,000 | |||||||||||
Net
loss for the period
|
- | - | - | (1,413 | ) | (1,413 | ) | |||||||||||||
Balance,
August 31, 2007
|
1,300,000 | 1,300 | 63,700 | (1,413 | ) | 63,587 | ||||||||||||||
Net
loss for the period
|
- | - | - | (44,075 | ) | (44,075 | ) | |||||||||||||
Balance,
August 31, 2008
|
1,300,000 | $ | 1,300 | $ | 63,700 | $ | (45,488 | ) | $ | 19,512 | ||||||||||
Year
ended August 31, 2008
|
Period
ended August 31, 2007
|
From
Inception (March 19, 2007) to August 31,2008
|
||||||||||
Cash
flows used in Operating Activities
|
||||||||||||
Net
loss for the period
|
$ | (44,075 | ) | $ | (1,413 | ) | $ | (45,488 | ) | |||
Adjustment
to reconcile net loss to net cash used by operating
activities
|
||||||||||||
Deposit
|
23,435 | (23,435 | ) | - | ||||||||
Amounts
receivable
|
(2,134 | ) | - | (2,134 | ) | |||||||
Deferred
offering costs
|
(33,200 | ) | (5,000 | ) | (38,200 | ) | ||||||
Accounts
payable and accrued liabilities
|
33,240 | 1,250 | 34,490 | |||||||||
Net
cash used in operating activities
|
(22,734 | ) | (28,598 | ) | (51,332 | ) | ||||||
Cash
flows from Financing Activities
|
||||||||||||
Issuance
of common shares
|
- | 65,000 | 65,000 | |||||||||
Net
cash provided by financing activities
|
- | 65,000 | 65,000 | |||||||||
Increase
(decrease) in cash during the period
|
(22,734 | ) | 36,402 | 13,668 | ||||||||
Cash,
beginning of period
|
36,402 | - | - | |||||||||
Cash,
end of period
|
$ | 13,668 | $ | 36,402 | $ | 13,668 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - | ||||||
|
b)
|
Development
Stage Activities
|
|
The
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). 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 management’s opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized
below:
|
|
a)
|
Organizational
and Start-up Costs
|
|
Costs
of start-up activities, including organizational costs, are expensed as
incurred.
|
|
b)
|
Development
Stage Company
|
|
The
Company is a development stage company as defined in Statement of
Financial Accounting Standards (“SFAS”) No. 7. The Company is
devoting substantially all of its present efforts to establishing a new
business and none of its planned principal operations have
commenced. All losses accumulated since inception has been
considered as part of the Company’s development stage
activities.
|
|
c)
|
Offering
Expenses
|
|
The
Company filed a Form S-1 Registration Statement to offer to the public up
to 1,500,000 common shares at ten cents ($0.10) per share. The
S-1 became effective on August 13, 2008. The $38,200 estimated costs
relating to such Registration Statement will be charged
to
|
|
The
Company has adopted SFAS No. 109 – “Accounting for Income
Taxes”. SFAS No. 109 requires the use of the asset and
liability method of accounting for income taxes. Under the
asset and liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of
existing assets and liabilities 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.
|
|
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 common share is computed similar
to basic loss per common share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. At August 31, 2008, the
Company had no stock equivalents that were anti-dilutive and excluded in
the loss per share computation.
|
|
The
carrying value of the Company’s financial instruments, consisting of cash
and accounts payable and accrued liabilities approximate their fair value
due to the short-term maturity of such instruments. Unless
otherwise noted, it is management’s opinion that the Company is not
exposed to significant interest, currency or credit risks arising from
these financial statements.
|
|
The
Company’s functional currency is Canadian dollars as all of the Company’s
operations are in Canada. The Company used the United States of
America dollar as its reporting currency for consistency with registrants
of the Securities and Exchange Commission and in accordance with SFAS No.
52.
|
|
Assets
and liabilities denominated in a foreign currency are translated at the
exchange rate in effect at the year-end and capital accounts are
translated at historical rates. Income statement accounts are
translated at the average rates of exchange prevailing during the year and
are included in the Comprehensive Income Account in Stockholders’ Equity,
if applicable.
|
|
Transactions
undertaken in currencies other than the functional currency of the Company
are translated using the exchange rate in effect as of the transaction
date. Any exchange gains or losses are included in the
Statement of Operations.
|
In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS, an amendment of ARB No. 51. The objective of this statement is to improve the relevance, comparability, and transparency of the financial statements by establishing accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The Company believes that this statement will not have any impact on its financial statements, unless it deconsolidates a subsidiary. | |
|
In
March 2008, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 161, DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES (an amendment to SFAS No. 133). This statement is effective for
financial statements issued for fiscal years and interim periods beginning
after November 15, 2008 and requires enhanced disclosures with respect to
derivative and hedging activities. The Company will comply with the
disclosure requirements of this statement if it utilizes derivative
instruments or engages in hedging activities upon its
effectiveness.
|
|
In
April 2008, the FASB issued FASB Staff Position No. 142-3,
DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS (“FSP
No. 142-3”) to improve the consistency between the useful life of a
recognized intangible asset (under SFAS No. 142) and the period of
expected cash flows used to measure the fair value of the intangible asset
(under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be
considered when developing renewal or extension assumptions that are used
to estimate an intangible asset’s useful life under SFAS No. 142. The
guidance in the new staff position is to be applied prospectively to
intangible assets acquired after December 31, 2008. In addition, FSP
No. 142-3 increases the disclosure requirements related to renewal or
extension assumptions. The Company does not believe implementation of FSP
No. 142-3 will have a material impact on its financial
statements.
|
|
In
May 2008, the FASB issued Statement No. 162, THE HIERARCHY OF GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES. This statement identifies the
sources of accounting principles and the framework for selecting the
principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP
hierarchy). This statement is effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, “the
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.”
|
In May 2008, the FASB issued Statement No. 163, ACCOUNTING FOR FINANCE GUARANTEE INSURANCE CONTRACTS – AN INTERPRETATION OF FASB STATEMENT NO. 60. The premium revenue recognition approach for a financial guarantee insurance contract links premium revenue recognition to the amount of insurance protection and the period in which it is provided. For purposes of this statement, the amount of insurance protection provided is assumed to be a function of the insured principal amount outstanding, since the premium received requires the insurance enterprise to stand ready to protect holders of an insured financial obligation from loss due to default over the period of the insured financial obligation. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. |
|
In
June 2008, the FASB issued FASB Staff Position Emerging Issues
Task Force (EITF) No. 03-6-1, DETERMINING WHETHER INSTRUMENTS
GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE PARTICIPATING SECURITIES
(“FSP EITF No. 03-6-1”). Under FSP EITF No. 03-6-1, unvested
share-based payment awards that contain rights to receive nonforfeitable
dividends (whether paid or unpaid) are participating securities, and
should be included in the two-class method of computing EPS. FSP EITF No.
03-6-1 is effective for fiscal years beginning after December 15,
2008, and interim periods within those years, and is not expected to have
a significant impact on the Company’s financial
statements.
|
|
None
of the above new pronouncements has current application to the Company,
but may be applicable to the Company's future financial
reporting.
|
|
The
Company’s authorized common stock consists of 75,000,000 shares with a par
value of $0.001 per share. The Company had 1,300,000 shares of
common stock issued and outstanding as of the fiscal year ended August 31,
2008.
|
Total
|
|||||
Deferred
Tax Assets
|
|||||
Non-capital
loss carry forward
|
$ | 15,900 | |||
Valuation
allowance for deferred tax asset
|
(15,900 | ) | |||
$ | - |
|
The
amount taken into income as deferred tax assets must reflect that portion
of the income tax loss carry-forwards that is likely to be realized from
future operations. The Company has
chosen
|
|
to
provide an allowance of one hundred percent (100%) against all available
income tax loss carry-forwards, regardless of their time of
expiry.
|
|
At
August 31, 2008, the Company has accumulated non-capital losses totaling $
45,488, which are available to reduce taxable income in future taxation
years. These losses expire beginning in
2027.
|
|
During
the period March 19, 2007, (Date of Incorporation) to August 31, 2008, the
Company issued 1,300,000 shares of common stock for $65,000 to directors,
close friends and business associates of the
Company.
|
|
Subsequent
to the period covered by this report, the Company has completed its
prospectus offering and has raised a total of $150,000 by the sale of
1,500,000 shares of common stock at $0.10 per common
share.
|
NAME
|
AGE
|
POSITION
|
David
Wehrhahn
|
70
|
Director,
Principal Executive Officer
|
Kelly
Warrack
|
39
|
Director,
Secretary, Treasurer and Principal Financial Officer
|
Donald
Byers
|
64
|
Director
|
Name
|
Reporting
Person
|
Form
3/# of transactions
|
Form
4/# of transactions
|
Form
5/# of transactions
|
Kelly
Warrack
|
Director
and Principal Financial Officer
|
Late/1
|
N/A
|
N/A
|
Donald
Byers
|
Director
|
Late/1
|
N/A
|
N/A
|
David
Wehrhahn
|
Principal
Executive Officer and Director
|
Late/1
|
N/A
|
N/A
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
$
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Total
($)
|
David
Wehrhahn
Principal
Executive Officer
|
2008
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
David
Wehrhahn
Principal
Executive Officer
|
2007
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
TITLE
OF CLASS
|
NAME
AND ADDRESS OF BENEFICIAL OWNER
|
AMOUNT
AND NATURE OF BENEFICIAL OWNER
|
PERCENT
OF CLASS
(1)
|
||
Common
|
Vicki
Barlow
#403,
3412 Parkdale Blvd NW
Calgary,
Alberta T2N 3T4
|
200,000
shares held directly
|
7.1%
|
||
Common
|
Buccaneer
Holdings Inc.
Cor
12 Baymen Avenue and Calle Al Mar
Belize
City, Belize CA
|
175,000
shares held directly
|
6.3%
|
||
Common
|
Wally
Yee
9716
Oakhill Drive SW
Calgary,
Alberta T2V 3W5
|
226,760
shares held directly
|
8.1%
|
||
(1)
|
Based
upon 2,800,000 issued and outstanding shares of
common stock as of November 28,
2008.
|
TITLE
OF CLASS
|
NAME
OF BENEFICIAL OWNER
|
AMOUNT
AND NATURE OF BENEFICIAL OWNER
|
PERCENT
OF CLASS
(1)
|
||
Common
|
David
Wehrhahn
Director,
CEO, President,
565
Silvertip Road
Canmore,
Alberta T1W 3K8
|
100,000 common
shares are held directly
|
3.6%
|
||
Common
|
Kelly
Warrack
Director,
CFO, Secretary-Treasurer
Box
25, Site 12, RR5
Calgary,
Alberta T2P 2G6
|
100,000
common shares held directly
|
3.6%
|
||
Common
|
Donald
Byers
Director
17732-92
Street NW
Edmonton,
Alberta T5J 2L5
|
100,000
common shares held directly
|
3.6%
|
||
Common
|
All
Officers and Directors as a group
|
Common
shares
|
10.8%
|
||
Notes
|
|||||
(1)
|
Based
upon 2,800,000 issued and outstanding shares of common stock as
of November 28, 2008.
|
Services
|
2008
|
2007
|
||||||
Audit
fees
|
$ | 10,500 | $ | 6,000 | ||||
Audit
related fees
|
0 | 0 | ||||||
Tax
fees
|
500 | 500 | ||||||
Total
fees
|
$ | 11,000 | $ | 6,500 |
Report
of Independent Registered Public Accounting Firm
|
F-3
|
Balance
Sheets
|
F-4
|
Statements
of Operations
|
F-5
|
Statements
of Stockholders’ Equity
|
F-6
|
Statements
of Cash Flows
|
F-7
|
Notes
to the Financial Statements
|
F-8
to F-11
|
Number
|
Description
|
|||
3.1 |
Articles
of Incorporation.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
||
3.2 |
Bylaws.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
||
5 |
Legal
Opinion
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
||
10.1 |
Farm-Out
Agreement dated July 9, 2007 between Dar Energy Inc. and SLAP,
Inc.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
||
31.1 |
Section
302 Certification - Principal Executive Officer
|
Filed
herewith
|
||
31.2 |
Section
302 Certification - Principal Financial Officer
|
Filed
herewith
|
||
32.1 |
Certification
Pursuant to 18 U.S.C.
Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Filed
herewith
|
||
32.2 |
Certification
Pursuant to 18 U.S.C.
Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Filed
herewith
|