form10k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
[X]
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR
THE FISCAL YEAR ENDED OCTOBER 31, 2008
|
|
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[_]
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TRANSITION
REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR
THE TRANSITION PERIOD FROM __________ TO
__________
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BLACKBIRD
PETROLEUM CORPORATION
(exact
name of registrant as specified in charter)
NEVADA
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000-53335
|
20-5965988
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State or other
jurisdiction Incorporation or organization
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Commission File
No.
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IRS Employer
Identification No.
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1630 York
Avenue
Main
Floor
New York,
New York 10028
(Address
of principal executive offices)
Registrant’s
telephone number (212)315-9705
Blackbird
Petroleum Coropration
4225 New
Forrest Drive
Plano,
Texas 75093
(Former
name or former address, if changed since last report)
With
Copies To:
Marc
Ross, Esq.
Jonathan
R. Shechter, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway
New York,
New York 10006
Tel:(212)
930-9700 Fax:(212) 930-9725
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act: None
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [_]
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s 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. [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [ X ]
State
issuer’s revenues for its most recent fiscal year: $0.00
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates, computed by reference to the average bid and asked price of such
common equity, as of October 31, 2008 is $13,800,000.
As of
January 30, 2009, the issuer had 29,550,000 outstanding shares of Common
Stock.
DOCUMENTS
INCORPORATED BY REFERENCE: NONE
Transitional
Small Business Disclosure Format (check one): Yes [X] No [ ]
BLACKBIRD
PETROLEUM CORPORATION
FORM
10-K
For
the Fiscal Year Ended October 31, 2008
TALE
OF CONTENTS
Part
I
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Pg
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Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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10
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Item
2
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Properties
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14
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Item
3
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Legal
Proceedings
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14
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Item
4
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Submission
of Matters to a Vote of Security Holders
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14
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Part
II
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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15
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Item
6
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Selected
Financial Data
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16
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Item
7
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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16
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Item
7A
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Quantitative
and Qualitative Disclosure About Market Risk
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19
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Item
8
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Financial
Statements and Supplementary Data
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19
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Item
9
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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19
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Item
9A
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Controls
& Procedures
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19
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Item
9B
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Other
Information
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20
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Part
III
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Item
10
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Directors,
Executive Officers and Corporate Governance
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20
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Item
11
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Executive
Compensation
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21
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Item
12
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Security
Ownership of Certain Beneficial Owners and Management
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21
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Item
13
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Certain
Relationships and Related Transactions and Director
Independence
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22
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Item
14
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Principal
Accounting Fees and Services
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22
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Part
IV
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Item
15
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Exhibits,
Financial Statement Schedules
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23
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Part
I
FORWARD-LOOKING
INFORMATION
This
Annual Report of Blackbird Petroleum Corporation on Form 10-K contains
forward-looking statements, particularly those identified with the words,
"anticipates," "believes," "expects," "plans," “intends”, “objectives” and
similar expressions. These statements reflect management's best judgment based
on factors known at the time of such statements. The reader may find discussions
containing such forward-looking statements in the material set forth under
"Legal Proceedings" and "Management's Discussion and Analysis and Plan of
Operations," generally, and specifically therein under the captions "Liquidity
and Capital Resources" as well as elsewhere in this Annual Report on Form 10-K.
Actual events or results may differ materially from those discussed
herein.
ITEM
1: DESCRIPTION OF BUSINESS
OVERVIEW
We were
incorporated in the State of Nevada on October 19, 2006 under the name Ark
Development, Inc. We created a wholly owned corporate subsidiary in Nevada on
October 29, 2008. On November 26, 2008 we merged with the subsidiary,
Blackbird Petroleum Corporation. The surviving corporation is
governed by the by-laws of Ark Development, Inc. We amended the articles of
incorporation of the surviving corporation to change our name to Blackbird
Petroleum Corporation.
Our
Company focuses on exploration, acquisition, development and production of oil
and natural gas reserves in Western Canada. Our business strategy is
to economically increase reserves, production, and the sale of natural gas and
oil from existing and acquired properties in Western Canada in order to maximize
shareholders’ return over the long term.
In
October 2008, we obtained participation rights to two exploration and
acquisition agreements with Black Goose Holdings, Inc., an oil and gas
exploration company (“Black Goose”). The Kahtah Participation
Agreement granted us the right to participate in acquisitions of drilling rights
to 13,000 acres in the Kahntah area of Northeast British Columbia, specifically
lands in “Redeye”, “Lapp” and “Pedigree”. The South Adsett
Agreement granted us the right to participate in drilling in 28,000 acres in the
South Adsett area of British Columbia.
We expect
to generate long-term reserve and production growth through drilling activities
and further acquisitions. We believe that our management’s experience and
expertise will enable us identify, evaluate, and develop oil and natural gas
projects. We intend to acquire additional producing oil and gas property
rights where we believe significant additional value can be
created.
Employees
We
currently employ two full-time employees including our CEO and Vice President of
strategic development. We consider our relations with our employees to be
good.
Research
& Development
For year
ended October 31, 2008, we spent 0 for research and development, as compared to
$5,000 during the year ended October 31, 2007.
Natural
Gas Demand
According to the United
States Department of Energy InfoCard for 2007, the United States currently
dependent on natural gas for approximately 23% of its total primary energy
requirements.1 With its large commitment to the
use of natural gas, particularly in the electricity sector, the U.S. now finds
itself with a supply shortage at a time of increased
demand. According to the US Annual Energy Outlook 2008, total natural
gas consumption is expected to grow to a peak of 23.8 trillion cubic feet in
2016 from 21.7 trillion cubic feet in 2006.2
Consumption of natural gas
in the residential, commercial, and industrial sectors is influenced by general
economic trends, not just fuel prices. Increased consumption is projected
across all natural gas sectors between the years 2006 and 2030.3 The industrial sector is projected
to experience growth in consumption, from 7.6 trillion cubic feet in 2006 to 8.1
trillion cubic feet in 2030.4 Growth is also predicted in the
residential and commercial sectors, from 7.2 trillion cubic feet in 2006 to 8.8
trillion cubic feet in 2030.5
The demand for natural gas
is influenced in part by economic conditions. According to AEO2008
projections, the largest variation of demands for natural gas depends on the
prices in the electric power sector.6 Under projections that assume
electric sector prices remain high, natural gas generated capacity will increase
by 65.4 gigawatts between 2007 and 2030.7 If prices remain low, the capacity
is expected to increase by 131.1 gigawatts within that same period.8
Natural
gas demand is also sensitive to prices of other fuels. The electric
power sector can substitute consumption of gas for other fuels like coal when
prices of natural gas are high. In contrast, the commercial,
residential, industrial and transportation sectors do not have the same ability
to easily switch fuel sources and are less sensitive to price
variation.
Natural
Gas Supply
According
to US Government statistics provided to the Energy Information Administration,
the US natural gas production is increasing at a rapid pace. After 9
years without net growth in this sector, there was a 3 percent increase in
production between the first quarter of 2006 and the first quarter of 2007, and
a 9 percent increase between the first quarter of 2007 and the first quarter of
2008. Contributing to this increase is a growth in supplies
across the lower 48 states. Improved technology now allows for the
horizontal drilling of wells, a method of “unconventional” drilling, instead of
the traditional vertical wells, and this allows companies to tap supplies in
geographic formations like shale. AEO2008 data anticipates an
increase in “unconventional” production from 8.5 trillion cubic feet in 2006 to
9.5 trillion cubic feet in 2030.9 The same report also
predicts a decrease in conventional natural gas production from 6.6 trillion
cubic feet in 2006 to 4.4 trillion cubic feet in 2030.10
1 The
United States Department of Energy InfoCard for 2007 is available on the
internet at http://www.eia.doe.gov/neic/brochure/infocard01.htm
2 The US
Annual Energy Outlook 2008 is available at
http://www.eia.doe.gov/oiaf/aeo
3 This
information is from the US Energy Outlook 2008 with Projections to 2030 at
http://www.eia.doe.gov/oiaf/aeo/gas.html
Natural
gas prices are expected to rise through 2030. According to the
E.I.A., in 2006, natural gas prices were an average of $6.40 per thousand
cubic feet and in 2007, the average was $6.30. Adjusting for inflation, prices
are projected to rise to $5.32 per thousand cubic feet in 2016 and rise to $6.63
per thousand cubic feet in 2030.11 The reason for the decline in
prices before 2016 is the increased development without a projected matching
increase in consumption.
The US
relies primarily on the natural gas it produces domestically, but also imports a
smaller percentage from other countries. In 2007, the U.S.
consumed 23,057,589 million cubic feet of natural gas. In that year, the U.S.
imported 4,602,035 million cubic feet of natural gas, and 3,777,161 million
cubic feet was from Canada.
Labor
and Other Supplies
We
contract all labor for the development of leasehold acreage in preparation for
drilling, as well as the drilling and completion crews. We purchase all
supplies, including but not limited to the steel casing for each well, valves,
regulators, 1”, 2”, 3” gathering lines, and all other supplies from local
distributors. In times of heavy demand, such as when many other local natural
gas producers are drilling, we may have difficulty obtaining supplies in a
timely fashion. Also during times of heavy demand, prices for our drilling
supplies are escalated, therefore affecting our profit margins.
Commodity
Price Volatility
Oil and
natural gas prices are volatile and subject to a number of external factors.
Prices are cyclical and fluctuate as a result of shifts in the balance between
supply and demand for oil and natural gas, world and North American market
forces, conflicts in Middle Eastern countries, inventory and storage levels,
OPEC policy, weather patterns and other factors. OPEC supply curtailment,
tensions in the Middle East, increased demand in China and low North American
crude stocks have kept crude oil prices high. Natural gas prices are greatly
influenced by market forces in North America since the primary source of supply
is contained within the continent.
Market
forces include the industry’s ability to find new production and reserves to
offset declining production, economic factors influencing industrial demand,
weather patterns affecting heating demand and the price of oil for fuel
switching.
Seasonality
The
exploration for oil and natural gas reserves depends on access to areas where
operations are to be conducted. Seasonal weather variations, including freeze-up
and break-up affect access in certain circumstances. According to the
American Petroleum Institute, more than 60 million U.S. households use
natural gas for water heating, space heating, or cooking. In total, natural gas
accounts for more than 50 percent of the fuel used to heat U.S.
homes. Residential and commercial heating demand for natural gas is highly
weather-sensitive, making weather the biggest driver of natural gas demand in
the short term. As a result, natural gas demand is highly “seasonal” in nature,
with significant “peaks” in the winter heating season.
Seasonality
and the natural gas in storage also play a prominent role in natural gas prices.
Because natural gas consumption is seasonal but production is not, natural gas
inventories are built during the summer for use in the winter. This seasonality
leads to higher winter prices and lower summer prices. In addition, inventories
above the seasonal average depress prices, and inventories below the seasonal
average boost prices.
Governmental
Regulation
Canada
The oil
and natural gas industry in Canada is subject to extensive controls and
regulations imposed by various levels of government. We do not expect that any
of these controls or regulations will affect our operations in a manner
materially different than they would affect other oil and gas industry
participants of similar size.
In
addition to federal regulation, each province has legislation and regulations
which govern land tenure, royalties, production rates, environmental protection
and other matters. The royalty regime is a significant factor in the
profitability of oil and natural gas production. Royalties payable on production
from lands other than government lands are determined by negotiations between
the mineral owner and the lessee. Royalties on government land are determined by
government regulation and are generally calculated as a percentage of the value
of gross production, and the rate of royalties payable generally depends upon
prescribed reference prices, well productivity, geographical location, field
discovery date and the type or quality of the petroleum product
produced.
In
Alberta, the royalty reserved to the Crown in respect of natural gas production,
subject to various incentives, is between 15% and 30%, in the case of new
natural gas, and between 15% and 35%, in the case of old natural gas, depending
upon a prescribed or corporate average reference price. Natural gas produced
from qualifying exploratory natural gas wells spudded or deepened after
July 31, 1985 and before June 1, 1988 is eligible for a royalty
exemption for a period of 12 months, up to a prescribed maximum amount.
Natural gas produced from qualifying intervals in eligible gas wells spudded or
deepened to a depth below 2,500 meters is also subject to a royalty exemption,
the amount of which depends on the depth of the wells.
The North
American Free Trade Agreement among the governments of Canada, the
United States and Mexico became effective on January 1, 1994. NAFTA
carries forward most of the material energy terms that are contained in the
Canada-U.S. Free Trade Agreement. Subject to the General Agreement on
Tariffs and Trade, Canada continues to remain free to determine whether exports
of energy resources to the United States or Mexico will be allowed, so long
as any export restrictions do not:
• reduce
the proportion of energy resources exported relative to total supply (based upon
the proportion prevailing in the most recent 36 month period or another
representative period agreed upon by the parties);
• impose
an export price higher than the domestic price (subject to an exception that
applies to some measures that only restrict the value of exports);
or
• disrupt
normal channels of supply.
All three
countries are prohibited from imposing minimum or maximum export or import price
requirements, with some limited exceptions.
United
States
Our
operations are or will be subject to various types of regulation at the federal,
state and local levels. Such regulation includes requiring permits for the
drilling of wells; maintaining bonding requirements in order to drill or operate
wells; implementing spill prevention plans; submitting notification and
receiving permits relating to the presence, use and release of certain materials
incidental to oil and gas operations; and regulating the location of wells, the
method of drilling and casing wells, the use, transportation, storage and
disposal of fluids and materials used in connection with drilling and production
activities, surface usage and the restoration of properties upon which wells
have been drilled, the plugging and abandoning of wells and the transporting of
production. Our operations are or will be also subject to various conservation
matters, including the regulation of the size of drilling and spacing units or
proration units, the number of wells which may be drilled in a unit, and the
unitization or pooling of oil and gas properties. In this regard, some states
allow the forced pooling or integration of tracts to facilitate exploration
while other states rely on voluntary pooling of lands and leases, which may make
it more difficult to develop oil and gas properties. In addition, state
conservation laws establish maximum rates of production from oil and gas wells,
generally limit the venting or flaring of gas, and impose certain requirements
regarding the ratable purchase of production. The effect of these regulations is
to limit the amounts of oil and gas we may be able to produce from our wells and
to limit the number of wells or the locations at which we may be able to
drill.
Our
business is affected by numerous laws and regulations, including energy,
environmental, conservation, tax and other laws and regulations relating to the
oil and gas industry. We plan to develop internal procedures and policies to
ensure that our operations are conducted in full and substantial environmental
regulatory compliance.
Failure
to comply with any laws and regulations may result in the assessment of
administrative, civil and criminal penalties, the imposition of injunctive
relief or both. Moreover, changes in any of these laws and regulations could
have a material adverse effect on business. In view of the many uncertainties
with respect to current and future laws and regulations, including their
applicability to us, we cannot predict the overall effect of such laws and
regulations on our future operations.
We
believe that our operations comply in all material respects with applicable laws
and regulations and that the existence and enforcement of such laws and
regulations have no more restrictive an effect on our operations than on other
similar companies in the energy industry. We do not anticipate any material
capital expenditures to comply with federal and state environmental
requirements.
Environmental
Regulation
Canada
The oil
and natural gas industry is governed by environmental regulation under Canadian
federal and provincial laws, rules and regulations, which restrict and prohibit
the release or emission and regulate the storage and transportation of various
substances produced or utilized in association with oil and natural gas industry
operations. In addition, applicable environmental laws require that well and
facility sites be abandoned and reclaimed, to the satisfaction of provincial
authorities, in order to remediate these sites to near natural conditions. Also,
environmental laws may impose upon “responsible persons” remediation obligations
on property designated as a contaminated site. Responsible persons include
persons responsible for the substance causing the contamination, persons who
caused the release of the substance and any present or past owner, tenant or
other person in possession of the site. Compliance with such legislation can
require significant expenditures. A breach of environmental laws may result in
the imposition of fines and penalties and suspension of production, in addition
to the costs of abandonment and reclamation.
In 1994,
the United Nations' Framework Convention on Climate Change came into force and
three years later led to the Kyoto Protocol which requires, upon ratification,
nations to reduce their emissions of carbon dioxide and other greenhouse gases.
In December 2002, the Canadian federal government ratified the Kyoto
Protocol. If certain conditions are met and the Kyoto Protocol enters into force
internationally, Canada will be required to reduce its greenhouse gas (GHG)
emissions. Currently the upstream crude oil and natural gas sector is in
discussions with various provincial and federal levels of government regarding
the development of greenhouse gas regulations for the industry. It is premature
to predict what impact these potential regulations could have on us but it is
possible that we would face increases in operating costs in order to comply with
a GHG emissions target.
United
States
Operations
on properties in which we have an interest are subject to extensive federal,
state and local environmental laws that regulate the discharge or disposal of
materials or substances into the environment and otherwise are intended to
protect the environment. Numerous governmental agencies issue rules and
regulations to implement and enforce such laws, which are often difficult and
costly to comply with and which carry substantial administrative, civil and
criminal penalties and in some cases injunctive relief for failure to
comply.
Some
laws, rules and regulations relating to the protection of the environment may,
in certain circumstances, impose “strict liability” for environmental
contamination. These laws render a person or company liable for environmental
and natural resource damages, cleanup costs and, in the case of oil spills in
certain states, consequential damages without regard to negligence or fault.
Other laws, rules and regulations may require the rate of oil and gas production
to be below the economically optimal rate or may even prohibit exploration or
production activities in environmentally sensitive areas. In addition, state
laws often require some form of remedial action, such as closure of inactive
pits and plugging of abandoned wells, to prevent pollution from former or
suspended operations.
Legislation
has been proposed in the past and continues to be evaluated in Congress from
time to time that would reclassify certain oil and gas exploration and
production wastes as “hazardous wastes.” This reclassification would make these
wastes subject to much more stringent storage, treatment, disposal and clean-up
requirements, which could have a significant adverse impact on operating costs.
Initiatives to further regulate the disposal of oil and gas wastes are also
proposed in certain states from time to time and may include initiatives at the
county, municipal and local government levels. These various initiatives could
have a similar adverse impact on operating costs.
The
regulatory burden of environmental laws and regulations increases our cost and
risk of doing business and consequently affects our profitability. The federal
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
also known as the “Superfund” law, imposes liability, without regard to fault,
on certain classes of persons with respect to the release of a “hazardous
substance” into the environment. These persons include the current or prior
owner or operator of the disposal site or sites where the release occurred and
companies that transported disposed or arranged for the transport or disposal of
the hazardous substances found at the site. Persons who are or were responsible
for releases of hazardous substances under CERCLA may be subject to joint and
several liability for the costs of cleaning up the hazardous substances that
have been released into the environment and for damages to natural resources,
and it is not uncommon for the federal or state government to pursue such
claims.
It is
also not uncommon for neighboring landowners and other third parties to file
claims for personal injury or property or natural resource damages allegedly
caused by the hazardous substances released into the environment. Under CERCLA,
certain oil and gas materials and products are, by definition, excluded from the
term “hazardous substances.” At least two federal courts have held that certain
wastes associated with the production of crude oil may be classified as
hazardous substances under CERCLA. Similarly, under the federal Resource,
Conservation and Recovery Act, or RCRA, which governs the generation, treatment,
storage and disposal of “solid wastes” and “hazardous wastes,” certain oil and
gas materials and wastes are exempt from the definition of “hazardous wastes.”
This exemption continues to be subject to judicial interpretation and
increasingly stringent state interpretation. During the normal course of
operations on properties in which we have an interest, exempt and non-exempt
wastes, including hazardous wastes, that are subject to RCRA and comparable
state statutes and implementing regulations are generated or have been generated
in the past. The federal Environmental Protection Agency and various state
agencies continue to promulgate regulations that limit the disposal and
permitting options for certain hazardous and non-hazardous wastes.
We have
established guidelines and management systems to ensure compliance with
environmental laws, rules and regulations. The existence of these controls
cannot, however, guarantee total compliance with environmental laws, rules and
regulations. We believe that the operator of the properties in which we have an
interest is in substantial compliance with applicable laws, rules and
regulations relating to the control of air emissions at all facilities on those
properties. Although we maintain insurance against some, but not all, of the
risks described above, including insuring the costs of clean-up operations,
public liability and physical damage, there is no assurance that our insurance
will be adequate to cover all such costs, that the insurance will continue to be
available in the future or that the insurance will be available at premium
levels that justify our purchase. The occurrence of a significant event not
fully insured or indemnified against could have a material adverse effect on our
financial condition and operations. Compliance with environmental requirements,
including financial assurance requirements and the costs associated with the
cleanup of any spill, could have a material adverse effect on our capital
expenditures, earnings or competitive position. We do believe, however, that our
operators are in substantial compliance with current applicable environmental
laws and regulations. Nevertheless, changes in environmental laws have the
potential to adversely affect operations. At this time, we have no plans to make
any material capital expenditures for environmental control
facilities.
Competition
We are in
direct competition with numerous oil and natural gas companies, drilling and
income programs and partnerships exploring various areas of Western Canada and
elsewhere competing for customers. Several of our competitors are large,
well-known oil and gas and/or energy companies, but no single entity dominates
the industry. Many of our competitors possess greater financial and personnel
resources, sometimes enabling them to identify and acquire more economically
desirable energy producing properties and drilling prospects than us.
Additionally, there is increasing competition from other fuel choices to supply
the energy needs of consumers and industry.
ITEM
1A: RISK FACTORS
RISKS
RELATED TO BUSINESS
You
should carefully consider the following risk factors and all other information
contained herein as well as the information included in this Annual Report in
evaluating our business and prospects. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties, other
than those we describe below, that are not presently known to us or that we
currently believe are immaterial, may also impair our business operations. If
any of the following risks occur, our business and financial results could be
harmed. You should refer to the other information contained in this Annual
Report, including our consolidated financial statements and the related
notes.
We
Have a History Of Losses Which May Continue, Which May Negatively Impact Our
Ability to Achieve Our Business Objectives.
We had no
net income for the year ended October 31, 2008, mainly as a result of our
efforts to acquire a portion of the large oil and gas leases in northern British
Columbia and Alberta. We cannot assure you that we can achieve or
sustain profitability on a quarterly or annual basis in the future. Our
operations are subject to the risks and competition inherent in the
establishment of a business enterprise. There can be no assurance that future
operations will be profitable. Revenues and profits, if any, will depend upon
various factors, including whether we will be able to continue expansion of our
revenue. We may not achieve our business objectives and the failure to achieve
such goals would have an adverse impact on us.
Our
Independent Auditors Have Expressed Substantial Doubt About Our Ability to
Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future
Financing.
In their
report dated January 21, 2009, our independent auditors stated that our
financial statements for the year ended October 31, 2008 were prepared assuming
that we would continue as a going concern. Our ability to continue as a going
concern is an issue raised as a result of recurring losses from operations. We
continue to experience net operating losses. Our ability to continue as a going
concern is subject to our ability to generate a profit and/or obtain necessary
funding from outside sources, including obtaining additional funding from the
sale of our securities, increasing sales or obtaining loans and grants from
various financial institutions where possible. Our continued net operating
losses increase the difficulty in meeting such goals and there can be no
assurances that such methods will prove successful.
We
Have a Limited Operating History and if We are not Successful in Continuing to
Grow Our Business, Then We may have to Scale Back or Even Cease Our Ongoing
Business Operations.
We have
received a limited amount of revenues from operations and have limited assets.
We have yet to generate positive earnings and there can be no assurance that we
will ever operate profitably. Our company has a limited operating history and
must be considered in the exploration stage. Our success is significantly
dependent on a successful acquisition, drilling, completion and production
program. Our operations will be subject to all the risks inherent in the
establishment of a developing enterprise and the uncertainties arising from the
absence of a significant operating history. We may be unable to locate
recoverable reserves or operate on a profitable basis. We are in the development
stage and potential investors should be aware of the difficulties normally
encountered by enterprises in the exploration stage. If our business plan is not
successful, and we are not able to operate profitably, investors may lose some
or all of their investment in our company.
Because We Are Small and Do Not Have
Much Capital, We May Have to Limit our Exploration Activity Which May Result in
a Loss of Your Investment.
Because
we are small and do not have much capital, we must limit our exploration
activity. As such we may not be able to complete an exploration program that is
as thorough as we would like. In that event, existing reserves may go
undiscovered. Without finding reserves, we cannot generate revenues and you will
lose your investment.
If
We Are Unable to Successfully Recruit Qualified Managerial and Field Personnel
Having Experience in Oil and Gas Exploration, We May Not Be Able to Continue Our
Operations.
In
addition, in order to successfully implement and manage our business plan, we
will be dependent upon, among other things, successfully recruiting qualified
managerial and field personnel having experience in the oil and gas exploration
business. Competition for qualified individuals is intense. There can be no
assurance that we will be able to find, attract and retain existing employees or
that we will be able to find, attract and retain qualified personnel on
acceptable terms.
As
Our Properties are in the Exploration Stage, There Can be no Assurance That We
Will Establish Commercial Discoveries on Our Properties.
Exploration
for economic reserves of oil and gas is subject to a number of risk factors. Few
properties that are explored are ultimately developed into producing oil and/or
gas wells. Our properties are in the exploration stage only and are without
proven reserves of oil and gas. We may not establish commercial discoveries on
any of our properties.
The
Potential Profitability of Oil and Gas Ventures Depends Upon Factors Beyond the
Control of Our Company.
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 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 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 our company not receiving an adequate return on invested
capital.
Competition
In The Oil And Gas Industry Is Highly Competitive And There Is No Assurance That
We Will Be Successful In Acquiring The Leases.
The oil
and gas industry is intensely competitive. We compete with numerous individuals
and companies, including many major oil and gas companies, which have
substantially greater technical, financial and operational resources and staffs.
Accordingly, there is a high degree of competition for desirable oil and gas
leases, suitable properties for drilling operations and necessary drilling
equipment, as well as for access to funds. We cannot predict if the necessary
funds can be raised or that any projected work will be completed.
The
Marketability of Natural Resources Will be Affected by Numerous Factors Beyond
Our Control Which May Result in Us not Receiving an Adequate Return on Invested
Capital to be Profitable or Viable.
The
marketability of natural resources which may be acquired or discovered by us
will be affected by numerous factors beyond our control. These factors include
market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment, governmental
regulations, land tenure, land use, regulation concerning the importing and
exporting of oil and gas and environmental protection regulations. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in us not receiving an adequate return on invested
capital to be profitable or viable.
Oil
and Gas Operations are Subject to Comprehensive Regulation Which May Cause
Substantial Delays or Require Capital Outlays in Excess of Those Anticipated
Causing an Adverse Effect on Our Company.
Oil and
gas operations are subject to federal, state, and local laws relating to the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations are also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards by regulating the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. Environmental
standards imposed by federal, provincial, or local authorities may be changed
and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us. Additionally, we may be subject to liability for pollution or other
environmental damages which it may elect not to insure against due to
prohibitive premium costs and other reasons. To date we have not been required
to spend any material amount on compliance with environmental regulations.
However, we may be required to do so in future and this may affect our ability
to expand or maintain our operations.
Exploration
Activities are Subject to Certain Environmental Regulations Which May Prevent or
Delay the Commencement or Continuance of Our Operations.
In
general, our exploration activities are subject to certain federal, state and
local laws and regulations relating to environmental quality and pollution
control. Such laws and regulations increase the costs of these activities and
may prevent or delay the commencement or continuance of a given operation.
Compliance with these laws and regulations has not had a material effect on our
operations or financial condition to date. Specifically, we are subject to
legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. In addition, legislation has been
enacted which requires well and facility sites to be abandoned and reclaimed to
the satisfaction of state authorities. However, such laws and regulations are
frequently changed and we are unable to predict the ultimate cost of compliance.
Generally, environmental requirements do not appear to affect us any differently
or to any greater or lesser extent than other companies in the
industry.
We
believe that our operations comply, in all material respects, with all
applicable environmental regulations. Our operating partners maintain insurance
coverage customary to the industry; however, we are not fully insured against
all possible environmental risks.
Exploratory
Drilling Involves Many Risks and We May Become Liable for Pollution or Other
Liabilities Which May Have an Adverse Effect on Our Financial
Position.
Drilling
operations generally involve a high degree of risk. Hazards such as unusual or
unexpected geological formations, power outages, labor disruptions, blow-outs,
sour gas leakage, fire, inability to obtain suitable or adequate machinery,
equipment or labor, and other risks are involved. We may become subject to
liability for pollution or hazards against which it cannot adequately insure or
which it may elect not to insure. Incurring any such liability may have a
material adverse effect on our financial position and operations.
Any
Change to Government Regulation/Administrative Practices May Have a Negative
Impact on Our Ability to Operate and Our Profitability.
The laws,
regulations, policies or current administrative practices of any government
body, organization or regulatory agency in the United States or any other
jurisdiction, may be changed, applied or interpreted in a manner which will
fundamentally alter the ability of our company to carry on our
business.
The
actions, policies or regulations, or changes thereto, of any government body or
regulatory agency, or other special interest groups, may have a detrimental
effect on us. Any or all of these situations may have a negative impact on our
ability to operate and/or our profitably.
Risks Relating to Our Common
Stock:
If
We Fail to Remain Current in Our Reporting Requirements, We Could be Removed
From the OTC Bulletin Board Which Would Limit the Ability of Broker-Dealers to
Sell Our Securities and the Ability of Stockholders to Sell Their Securities in
the Secondary Market.
Companies
trading on the OTC Bulletin Board, such as us, must be reporting issuers under
Section 12 of the Securities Exchange Act of 1934, as amended, and must be
current in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board. If we fail to remain current on our
reporting requirements, we could be removed from the OTC Bulletin Board. As a
result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.
Authorization
of preferred stock.
Our Certificate of Incorporation
authorizes the issuance of up to 5,000,000 shares of preferred stock with
designations, rights and preferences determined from time to time by its Board
of Directors. Accordingly, our Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting, or other rights which could adversely affect the voting
power or other rights of the holders of the common stock. In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although we have no present intention to issue any shares of our
authorized preferred stock, there can be no assurance that the Company will not
do so in the future.
The
Shares are an illiquid investment and transferability of the Shares is subject
to significant restriction
There are
substantial restrictions on the transfer of the Shares. Therefore, the purchase
of the Shares must be considered a long-term investment acceptable only for
prospective investors who are willing and can afford to accept and bear the
substantial risk of the investment for an indefinite period of time. There is
not a public market for the resale of the Shares. A prospective investor,
therefore, may not be able to liquidate its investment, even in the event of an
emergency, and Shares may not be acceptable as collateral for a
loan.
Our
Common Stock is Subject to the "Penny Stock" Rules of the SEC and the Trading
Market in Our Securities is Limited, Which Makes Transactions in Our Stock
Cumbersome and May Reduce the Value of an Investment in Our Stock.
The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:
|
·
|
that
a broker or dealer approve a person's account for transactions in penny
stocks; and
|
|
·
|
the
broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to
be purchased.
|
In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:
|
·
|
obtain
financial information and investment experience objectives of the person;
and
|
|
·
|
make
a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
|
·
|
sets
forth the basis on which the broker or dealer made the suitability
determination; and
|
|
·
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that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
|
Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
ITEM
2: PROPERTIES.
We
maintain our principal office at 1630 York Avenue, Main Floor, New York New York
10028. Our telephone number is 212 315 9705. These facilities are
provided at no charge as a temporary office and mailing address by a
shareholder.
Texas
– Barnett Shale
We
acquired 100% of the working interest position in property located near Grand
Prairie, Texas, from Mr. Jerry Capehart. When it came time to renew
the lease we learned that Mr. Capehart had passed away and the lease had
expired.
We
currently do not have any leases for oil or gas properties.
ITEM
3: LEGAL PROCEEDINGS
From time
to time, we may become involved in various lawsuits and legal proceedings which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are currently not aware
of any such legal proceedings or claims that we believe will have, individually
or in the aggregate, a material adverse affect on our business, financial
condition or operating results.
ITEM
4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART
II
ITEM
5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
The
Company’s common stock is currently traded on the Over the Counter Bulletin
Board (“OTCBB”) under the symbol BBRD.OB. To be quoted on the OTCBB, a market
maker must file an application on our behalf in order to make a market for our
common stock. Trading of our common stock is
limited.
Holders
As of
January 30, 2009, the approximate number of stockholders of record of the Common
Stock of the Company was 50.
Dividends
On
February 2, 2009, the Board of Directors of the Company approved a stock
dividend. The stock dividend will grant each shareholder owning one share of
common stock shall an additional share of common stock. The record date for the
Dividend was established as February 3, 2009, and the Dividend was issued
on approximately February 9, 2009.
On
November 5, 2008, the Board of Directors of the Company approved a stock
dividend, whereby two shares of common stock of the Company would be issued for
every one share of common stock. The record date for the Dividend
was established as November 25, 2008, and the Dividend was issued on
December 5, 2008.
Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon our financial condition, results
of operations, capital requirements, and such other factors as the Board of
Directors deem relevant.
Equity
Compensation Plan Information
We do not
have any equity compensation plan as of the date of this report.
Recent
sales of unregistered securities
On
October 19, 2006 we issued our sole officer and director 1,500,000 shares of
common stock at a deemed price of $0.001 or $166.67 for the time, effort and
expense of incorporating and organizing the corporation.
On
January 3, 2007 we issued Mr. Jerry Capehart 1,500,000 shares of our
common stock at a deemed price of $0.001 or $166.67 as partial payment for the
Johnson Lease.
In June,
2007, we issued shares to 38 individuals that subscribed to a private placement
of our common stock at a price of $0.01 per share.
All
of the above offerings and sales were deemed to be exempt under Rule 506 of
Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of the Company or executive officers
of the Company, and transfer was restricted by the Company in accordance with
the requirements of the Securities Act of 1933. In addition to representations
by the above-referenced persons, we have made independent determinations that
all of the above-referenced persons were accredited or sophisticated investors,
and that they were capable of analyzing the merits and risks of their
investment, and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.
Except as
expressly set forth above, the individuals and entities to whom we issued
securities as indicated in this section of the registration statement are
unaffiliated with us.
In
October, 2008 the Board of Directors voted to issued 5,000,000 shares
of restricted common stock to our Chief Executive officer inb consideration of
his assignment of 100% of a certain agreement with Black Goose
Petroleum Corp.
ITEM
6: SELECTED FINANCIAL DATA
Not
applicable.
ITEM
7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following information should be read in conjunction with the consolidated
financial statements and the notes thereto contained elsewhere in this report.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Information in this Item 7, "Management's
Discussion and Analysis or Plan of Operation," and elsewhere in this 10-K that
does not consist of historical facts, are "forward-looking statements."
Statements accompanied or qualified by, or containing words such as "may,"
"will," "should," "believes," "expects," "intends," "plans," "projects,"
"estimates," "predicts," "potential," "outlook," "forecast," "anticipates,"
"presume," and "assume" constitute forward-looking statements, and as such, are
not a guarantee of future performance. The statements involve factors, risks and
uncertainties including those discussed in the “Risk Factors” section contained
elsewhere in this report, the impact or occurrence of which can cause actual
results to differ materially from the expected results described in such
statements. Risks and uncertainties can include, among others, fluctuations in
general business cycles and changing economic conditions; changing product
demand and industry capacity; increased competition and pricing pressures;
advances in technology that can reduce the demand for the Company's products, as
well as other factors, many or all of which may be beyond the Company's control.
Consequently, investors should not place undue reliance on forward-looking
statements as predictive of future results. The Company disclaims any obligation
to update the forward-looking statements in this report.
Overview
Blackbird
Petroleum Corporation was founded as Ark Development Corporation in October of
2006. We purchased an oil and gas leasehold on November 13, 2006 and
commenced oil and gas operations in the Bartlett Shale near Grand Prairie Texas.
Prior to October 2008, the company’s focus was on technical and geological study
and preparation for test well drilling in the Barnett Shale area of Texas. This
lease was not renewed due to the death of Mr. Capehart, from whom the working
interest was purchased.
In
October 2008, the company entered into an agreement with Antonio Treminio, our
Chairman and Chief Executive Officer, pursuant to which Mr. Treminio sold his
interest in two agreements with Black Goose to the Company in exchange for
15,000,000 shares of the Company’s common stock. The Kahtah
Participation Agreement granted us the right to participate in acquisitions of
drilling rights to 13,000 acres in the Kahntah area of Northeast British
Columbia for lands in “Redeye”, “Lapp” and “Pedigree”. The
South Adsett Participation Agreement granted us the right to participate in
drilling in 28,000 acres in the South Adsett area of British
Columbia. We are now focused on exploration, acquisition, development
and production of oil and natural gas reserves in Western Canada. Our
business strategy is to economically increase reserves, production, and the sale
of natural gas and oil from existing and acquired properties in Western Canada
in order to maximize shareholders’ return over the long term.
We expect
to generate long-term reserve and production growth through drilling activities
and further acquisitions. Our expansion will include exploration,
land acquisition, and production of oil and gas as well as asset and corporate
acquisitions. We believe that our management’s experience and
expertise will enable us identify, evaluate, and develop oil and natural gas
projects. We intend to acquire additional producing oil and
gas property rights where we believe significant additional value can be
created.
Results
of Operations
For
the year ended January 31, 2009, compared to the year January 31,
2008.
Revenues
Revenues
for the year ended October 31, 2008, and 2007 were $-0- and $-0-, respectively,
reflecting our startup nature.
General and Administrative
Expenses
General
and administrative expenses for the year ended October 31, 2008, and 2007 were
$20,909 and $24,016, respectively. General and administrative expenses consisted
primarily of accounting and filing fees.
Impairment of Oil and Gas
Interests
As of
October 31, 2008 we took a $180,000 charge as an expense, reflecting the monies
expended on our oil and gas properties in northern British Columbia prior to our
acquisition.
Net Loss
Our net
loss for the year ended October 31, 2008, and 2007, amounted to ($200,909) and
($29,016), respectively.
From
October 19, 2006 (Date of Inception) through October 31, 2008
Revenues
We have
not earned any revenues from our incorporation on October 19, 2006 to October
31, 2008. We do not anticipate earning revenues until, if and when we drill,
complete and produce from our first successful well.
Operating
Expenses
We
incurred operating expenses in the amount of $414,925 for the period from our
inception on October 19, 2006 to October 31, 2008. These operating expenses were
comprised of an impairment loss on oil & gas property of $180,000,
exploration costs of 190,000 and general and administrative expenses of
$44,925.
Net Loss
Our net
loss for the period from our inception on October 19, 2006 to October 31, 2008
was $414,925. We have not attained profitable operations and are dependent
upon obtaining financing to pursue exploration activities. For these reasons our
auditors believe that there is substantial doubt that we will be able to
continue as a going concern.
Operations
Plans
For the
next twelve months, we expect to pursue oil and gas operations on some or all of
our property in northern British Columbia, including the possible acquisition of
additional acreage through leasing, farm-ins or option and participation
agreements in the drilling of oil and gas wells. We intend to continue to
evaluate additional opportunities in areas where we feel there is potential for
oil and gas reserves and production and may participate in areas other than
those already identified, although we cannot assure that additional
opportunities will be available, or if we participate in additional
opportunities, that those opportunities will be successful.
Oil and
Gas wells have production rates that naturally decline over time, and that
decline must be replaced to maintain or increase total production.
Our
current cash position is not sufficient to fund our cash requirements during the
next twelve months, including operations and capital expenditures. We intend to
seek substantial additional funding through equity and/or debt financing to
support our current and proposed oil and gas operations and capital
expenditures. We cannot assure that continued funding will be
available.
Our
future financial results will depend primarily on (1) our ability to discover or
produce commercial quantities of oil and gas; (2) the market price for oil and
gas; (3) our ability to continue to source and screen potential projects; and
(4) our ability to fully implement our exploration and development program with
respect to these and other matters. We cannot assure that we will be successful
in any of these activities or that the prices of oil and gas prevailing at the
time of production will be at a level allowing for profitable
production
We have
not entered into commodity swap arrangements or hedging transactions. Although
we have no current plans to do so, we may enter into commodity swap and/or
hedging transactions in the future in conjunction with oil and gas production.
We have no off-balance sheet arrangements.
Liquidity
and Capital Resources
The
Company will need additional investments in order to continue operations.
Additional investments are being sought, but the Company cannot guarantee that
it will be able to obtain such investments. Financing transactions may include
the issuance of equity or debt securities, obtaining credit facilities, or other
financing mechanisms. The recent downturn in the U.S. stock and debt markets
could make it more difficult to obtain financing through the issuance of equity
or debt securities. Even if the Company is able to raise the funds required, it
is possible that it could incur unexpected costs and expenses, fail to collect
significant amounts owed to it, or experience unexpected cash requirements that
would force it to seek alternative financing. Further, if the Company issues
additional equity or debt securities, stockholders may experience additional
dilution or the new equity securities may have rights, preferences or privileges
senior to those of existing holders
Net of
fees at the close of the recent equity private placement we had $757 in
available cash. We plan to continue to provide for our capital needs by issuing
debt or equity securities.
We will
require additional financing in order to complete our stated plan of operations
for the next twelve months. We believe that we will require additional financing
to carry out our intended objectives during the next twelve months. There can be
no assurance, however, that such financing will be available or, if it is
available, that we will be able to structure such financing on terms acceptable
to us and that it will be sufficient to fund our cash requirements until we can
reach a level of profitable operations and positive cash flows. If we are unable
to obtain the financing necessary to support our operations, we may be unable to
continue as a going concern. We currently have no firm commitments for any
additional capital.
Even if
we are able to raise the funds required, it is possible that we could incur
unexpected costs and expenses, fail to collect significant amounts owed to us,
or experience unexpected cash requirements that would force us to seek
alternative financing. Further, if we issue additional equity or debt
securities, stockholders may experience additional dilution or the new equity
securities may have rights, preferences or privileges senior to those of
existing holders of our shares of common stock. If additional financing is not
available or is not available on acceptable terms, we will have to curtail our
operations.
We
presently do not have any available credit, bank financing or other external
sources of liquidity. Due to our brief history and historical operating losses,
our operations have not been a source of liquidity. We will need to obtain
additional capital in order to expand operations and become profitable. In order
to obtain capital, we may need to sell additional shares of our common stock or
borrow funds from private lenders. There can be no assurance that we will be
successful in obtaining additional funding.
To date,
we have generated no revenues and have incurred operating losses in every
quarter. Our registered independent auditors have stated in their report
dated January 21, 2009, that we are an early exploration company and have not
generated revenues from operations. These factors among others may raise
substantial doubt about our ability to continue as a going concern.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
See Risk
Factors.
ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The
Reports of Registered Public Independent Accounting Firms, our Consolidated
Financial Statements and Notes thereto appear in a separate section of this Form
10-K (beginning on Page F-1 following Part IV). The index to our Consolidated
Financial Statements is included in Item 15.
ITEM
9: CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
DISCLOSURE
None.
ITEM
9A: CONTROLS & PROCEDURES
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) and pursuant to Rules
13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) as of June 30, 2008. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the fact that
there are resource constraints and that management is required to apply its
judgment in evaluating the benefits of possible controls and procedures relative
to their costs.
Based on
our evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and were fully effective as of October 31, 2008 in
providing reasonable assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate, to allow timely decisions regarding
required disclosure.
Changes
in internal control over financial reporting.
We
regularly review our system of internal control over financial reporting and
make changes to our processes and systems to improve controls and increase
efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more
efficient systems, consolidating activities, and migrating
processes.
There
were no changes in our internal controls over financial reporting (as such term
is defined under Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that
occurred during the period covered by this report on Form 10-Q that has
materially affected, or is reasonably likely to materially affect our internal
control over financial reporting.
ITEM
9B. OTHER INFORMATION
None.
PART
III
ITEM
10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors
and Executive Officers:
NAME
|
AGE
|
TITLES
|
Noah
Clark
|
44
|
Director,
|
Antonio
Treminio
|
39
|
Chief
Executive Officer, CEO and Chairman
|
Jeffrey
Wolin
|
51
|
Secretary,
Vice President of Strategic Planning and
Director
|
Noah
Clark
Noah
Clark served as the company’s sole officer from October 2006 through September
2008. He resigned as president of the corporation and was replaced by
Antonio Treminio in September 2008. Mr. Clark is a self-employed
businessman who has been an independent consultant to both start-up and
established companies in various industries for over 20 years. In April
2007, Mr. Clark acted as a consultant for an internet company whereby he
assisted management with locating a series of domain names relating to the oil
and gas industry. From April 2006 through the present, Mr. Clark has been
an independent consultant to various companies in the energy industry, including
oil and gas companies, environmental solution companies and alternative fuel
companies, whereby he has assisted management with developing an in-depth
familiarization with the company’s business objectives, evaluated business
strategies and recommended changes where appropriate, arranged meetings with and
presentations to institutional and professional individual investors in the U.S.
and Canada, and reviewed and advised the company regarding the structure and
viability of potential financing, merger and/or acquisition transactions.
From February 2004 through April 2006, Mr. Clark was an independent consultant
to companies in the telecom industry. Prior to February 2004, Mr. Clark was an
independent consultant to oil and gas companies in the start-up
phase. Mr. Clark attended East Carolina University majoring in
Industrial Technology.
Antonio
Treminio
Antonio
Treminio was appointed to the Board of Directors and named Chairman and Chief
Executive Officer on September 15, 2008. Since 1996 Mr. Antonio Treminio, has
been involved as a consultant to public traded companies, participating in
structuring mergers and acquisition, re-capitalization, financing in the mining
/ precious metals & energy sector. Mr. Treminio since 2003 has been the
president of Lusierna Asset Management Ltd. In 1993 after attending his studies
in Business Administration at Loyalist College in Belleville, Ontario Mr.
Treminio started his career in the private banking sector with Dean Witter
Reynolds, in 1995 he joined PaineWebber to further his career while focusing on
establishing Strategic Alliances and/or Referral Agreements with top-tier Latin
American financial institutions.
Jeffrey
B. Wolin
Jeffrey
Wolin was appointed by the Board of Directors to serve as Director, Secretary,
and Vice President of Strategic Planning for the Company on December 22,
2008. Mr. Wolin has been the President of Brighton Capital, Ltd., a
boutique investment banking firm representing parties in mergers and
acquisitions, public and private placements, convertible preferred/debt
offerings, senior debt offerings and related services since 1997. Previously,
Mr. Wolin was a practicing corporate attorney with prominent firms in Los
Angeles and Philadelphia. Mr. Wolin is a graduate of the Columbia
University with a degree in Biomedical and Chemical Engineering and a graduate
of the University of Miami School of Law.
All
directors are elected to serve until the next annual meeting of stockholders and
until their successors are elected and qualified.
Officers
are elected by the Board of Directors and serve until their successors are
appointed.
Code
of Ethics
We have
not adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. We have not adopted such a code of ethics
because all of management's efforts have been directed to building the business
of the Company. A code of ethics may be adopted by the board of directors at a
later date.
Committees
of the Board of Directors
We
presently do not have any committees of the Board of Directors. However, our
board of directors intends to establish various committees at a later time.
ITEM
11: EXECUTIVE COMPENSATION
The
following table sets forth certain information regarding the named executive
officers for the fiscal years ended October 31, 2007 and October 31,
2008.
Name and Principal Position
(1)
|
Fiscal Year
|
Annual Salary ($)
|
Annual Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and Non-qualified Deferred
Compensation ($)
|
All Other Compensation
|
Total ($) (4)
|
Noah
Clark,
CEO,
President, Director (2)
|
2008
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
2007
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Antonio
Treminio,
CEO,
Chairman (3)
|
2008
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
(1)
Jeffrey B. Wolin was appointed during the 2009 fiscal year and is therefore not
included in this table.
(2) Noah
Clark resigned his executive officer positions on September 15,
2008
(3) Antonio
Treminio was appointed as a director and executive officer of the Company on
September 15, 2008.
(4) The
Company did not pay salaries to directors or officers during the 2007 and 2008
fiscal years. The also company did not grant any plan-based
compensation awards during the 2007 or 2008 fiscal year.
ITEM
12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of
our common stock as of January 30, 2009 by
· Each
person who is known by us to beneficially own more than 5% of our common
stock
· By each
of our officers and directors
· By all of
our officers and directors as a group
Name
and Address of Beneficial Owner
|
Title
of Class
|
Number
of Shares Beneficially Owned (1)
|
Percentage
Ownership (2)
|
Antonio
Treminio
1630
York Avenue,
New
York, NY 10028
|
Common
Stock
|
15,000,000
|
50.76%
|
|
|
|
|
Noah
Clark
c/o
Blackbird Petroleum Corporation
4225
New Forrest Drive, Plano, Texas 75093
|
Common
Stock
|
0
|
0
|
|
|
|
|
Jeffrey
B. Wolin
19408
Bilmoor Place
Tarzana
CA 91356
|
Common
Stock
|
0
|
0
|
All
officers and Directors as a Group (3 persons)
|
Common
Stock
|
15,000,000
|
50.76%
|
(2) Based
upon 29,550,000 shares issued and outstanding on January 30, 2009.
ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There
have been no transactions, or proposed transactions, which have materially
affected or will materially affect us in which any director, executive officer
or beneficial holder of more than 5% of the outstanding common stock, or any of
their respective relatives, spouses, associates or affiliates, has had or will
have any direct or material indirect interest. We have no policy regarding
entering into transactions with affiliated parties.
ITEM
14: PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit
Fees
The
aggregate fees billed by our previous auditors, for professional services
rendered for the audit of our annual financial statements during the years ended
January 31, 2008 and 2007, and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q during the fiscal years, were
$75,960 and $46,200, respectively.
Our
current auditors did not bill us during the years ended January 31, 2008 and
2007 for services rendered for the audit of our annual financial
statements.
Audit-Related
Fees
Our
current independent registered public accounting firm billed us $14,560 during
the fiscal year ended October 31, 2008 and $4,800 during the fiscal year ended
October 31, 2007 for audit related services.
Tax
Fees
Our
current independent registered public accounting firm billed us $0.00for tax
related work during fiscal years ended October 31, 2008, and billed us $0.00 for
tax related work during the fiscal year ended October 31, 2007.
All
Other Fees
Our
current independent registered public accounting firm did not bill us during the
years ended October 31, 2008 and 2007 for other services.
PART
IV
ITEM
15: EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
Exhibit
No.
|
|
Description
|
3.1
|
|
Articles
of Incorporation (filed as exhibit to SB-2 filed on January 10,
2008)
|
|
|
|
3.2
|
|
Bylaws
of the Company (filed as exhibit to SB-2 filed on January 10,
2008)
|
|
|
|
4.1
|
|
Securities
Purchase Agreement (filed as exhibit to 8-K filed on October 31,
2008)
|
|
|
|
10.1
|
|
Oil
and Gas Lease Purchase Agreement dated January 2, 2007 (filed as exhibit
to SB-2 filed on January 10, 2008)
|
|
|
|
10.2
|
|
Form
of 2006 Subscription Agreement (filed as exhibit to SB-2 filed on January
10, 2008)
|
|
|
|
10.3
|
|
Form
of 2008 Subscription Agreement*
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended.
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended.
|
|
|
|
32.1
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
|
|
|
|
32.2
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
|
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
BLACKBIRD
PETROLEM CORPORATION |
|
|
|
|
|
|
By:
|
/s/ Antonio
Tremino |
|
|
|
By:
Antonio Treminio |
|
|
|
Chairman,
President and Chief Executive Officer |
|
|
|
(Principal
Executive Officer, Principal Financial and Accounting Officer) |
|
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
BLACKBIRD
PETROLEM CORPORATION |
|
|
|
|
|
February
12, 2009
|
By:
|
/s/ Antonio
Tremino |
|
|
|
By:
Antonio Treminio |
|
|
|
Chairman,
President and Chief Executive Officer |
|
|
|
(Principal
Executive Officer, Principal Financial and Accounting Officer) |
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Blackbird Petroleum Corporation (Formerly Ark Development, Inc.)
(An
Exploration Stage Company)
We have
audited the accompanying balance sheets of Blackbird Petroleum Corporation
(Formerly Ark Development, Inc.) (an Exploration Stage Company) as of October
31, 2008 and 2007, and the statements of operations, stockholders’ equity
(deficit), and cash flows for the years ended October 31, 2008 and 2007 and for
the period from inception (October 9, 2006) to October 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 company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Blackbird Petroleum Corporation
(Formerly Ark Development, Inc.) (an Exploration Stage Company) as of October
31, 2008 and 2007, and the results of its operations and its cash flows for the
years ended October 31, 2008 and 2007 and for the period from inception (October
9, 2006) to October 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 5 to the financial statements,
the Company has incurred a net loss of $ 234,925 since inception, has not
attained profitable operations and is dependent upon obtaining adequate
financing to fulfill it exploration activities. These factors raise substantial
doubt that the Company will be able to continue as a going concern. Management’s
plans in regard to these matters are also discussed in Note 5. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/
Madsen & Associates CPA’s, Inc.
Madsen
& Associates CPA’s, Inc.
Salt Lake
City, Utah
January
21, 2009
BLACKBIRD
PETROLEUM CORPORATION
(Formerly Ark
Development, Inc.)
(AN EXPLORATION
STAGE COMPANY)
BALANCE
SHEETS
ASSETS
|
|
|
|
|
|
|
|
|
Oct
31, 2008
|
|
|
Oct
31, 2007
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
757 |
|
|
$ |
13,484 |
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
757 |
|
|
$ |
13,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accrued
expenses
|
|
|
4,182 |
|
|
|
- |
|
Total
Current Liabilities
|
|
|
4,182 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficit):
|
|
|
|
|
|
|
|
|
Preferred
stock, $.001 par value; authorized 5,000,000, none issued
|
|
|
- |
|
|
|
- |
|
Common
stock, $.001 par value; 70,000,000 shares authorized
|
|
|
|
|
|
|
|
|
29,550,000
and 14,550,000 shares issued and outstanding
|
|
|
|
|
|
|
|
|
at
October 31, 2008 and 2007, respectively
|
|
|
29,550 |
|
|
|
14,550 |
|
Additional
paid in capital
|
|
|
201,950 |
|
|
|
36,950 |
|
Stock
subscription receivable
|
|
|
- |
|
|
|
(4,000 |
) |
Deficit
accumulated during exploration stage
|
|
|
(234,925 |
) |
|
|
(34,016 |
) |
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity (Deficit)
|
|
|
(3,425 |
) |
|
|
13,484 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity (Deficit)
|
|
$ |
757 |
|
|
$ |
13,484 |
|
The accompanying notes are
an integral part of these financial statements.
BLACKBIRD
PETROLEUM CORPORATION
(Formerly
Ark Development, Inc.)
(AN
EXPLORATION STAGE COMPANY)
STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended
Oct 31,
|
|
|
(Date
October
9, 2006of nception)
|
|
|
|
2008
|
|
|
2007
|
|
|
to
Oct 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
$ |
- |
|
|
|
|
|
$ |
- |
|
Total
Revenue
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs
|
|
|
- |
|
|
|
5,000 |
|
|
|
190,000 |
|
General
& administrative
|
|
|
20,909 |
|
|
|
24,016 |
|
|
|
44,925 |
|
Impairment
of oil and gas interests
|
|
|
180,000 |
|
|
|
- |
|
|
|
180,000 |
|
Total
Operating Expenses
|
|
|
200,909 |
|
|
|
29,016 |
|
|
|
414,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$ |
(200,909 |
) |
|
$ |
(29,016 |
) |
|
$ |
(414,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock Outstanding
|
|
|
15,000,819 |
|
|
|
8,914,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
(Basic
and Fully Dilutive)
|
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
BLACKBIRD
PETROLEUM CORPORATION
(Formerly
Ark Development, Inc.)
(AN
EXPLORATION STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
9, 2006 (Date
of inception)
|
|
|
|
2008
|
|
|
2007
|
|
|
to
Oct 31, 2008
|
|
Cash
Flows Used in Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(200,909 |
) |
|
$ |
(29,016 |
) |
|
$ |
(230,743 |
) |
Adjustments
to reconcile net (loss) to net cash provided
|
|
|
|
|
|
|
|
|
|
|
|
|
by
operating activites:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services rendered
|
|
|
- |
|
|
|
5,000 |
|
|
|
5,000 |
|
Impairment
of oil and gas interests
|
|
|
180,000 |
|
|
|
- |
|
|
|
180,000 |
|
Increase
in accrued expenses
|
|
|
4,182 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
(16,727 |
) |
|
|
(24,016 |
) |
|
|
(45,743 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
of stock subscription
|
|
|
4,000 |
|
|
|
- |
|
|
|
4,000 |
|
Issuance
of common stock for cash
|
|
|
- |
|
|
|
37,500 |
|
|
|
37,500 |
|
Net
Cash Provided by Financing Activities
|
|
|
4,000 |
|
|
|
37,500 |
|
|
|
41,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash
|
|
|
(12,727 |
) |
|
|
13,484 |
|
|
|
(4,243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at Beginning of Year
|
|
|
13,484 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at End of Year
|
|
$ |
757 |
|
|
$ |
13,484 |
|
|
$ |
(4,243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash
Investing & Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for management services rendered
|
|
|
|
|
|
$ |
5,000 |
|
|
$ |
5,000 |
|
Issuance
of stock for oil and gas interests
|
|
$ |
180,000 |
|
|
|
|
|
|
$ |
180,000 |
|
Issuance
of stock for Stock subscription receivable
|
|
|
|
|
|
$ |
4,000 |
|
|
$ |
4,000 |
|
The accompanying notes are
an integral part of these financial statements.
BLACKBIRD
PETROLEUM CORPORATION
(Formerly
Ark Development, Inc.)
(AN
EXPLORATION STAGE COMPANY)
STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FROM
October 9, 2006 (DATE OF INCEPTION) TO October 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stck
10,000,000
shares authorized
|
|
|
Common
Stock
100,000,000
|
|
|
|
|
|
|
|
|
Deficit
accumulated
|
|
|
|
|
|
|
|
|
|
Par
Value |
|
|
|
|
|
Par
Value |
|
|
Additional |
|
|
Stock |
|
|
during |
|
|
|
|
|
|
Shares
Issued |
|
|
$.001
per share |
|
|
Share Issued
|
|
|
$.001
per share |
|
|
Paid-In
Capital |
|
|
Subscription
Receivable |
|
|
Exploration
Stage |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE-
October 9, 2006 (inception)
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Issuance
of common stock in exchange for services at
|
|
|
|
|
|
|
|
1,500,000 |
|
|
|
1,500 |
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
$.0033
per share October 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,000 |
) |
|
|
(5,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE-
October 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
1,500,000 |
|
|
|
1,500 |
|
|
|
3,500 |
|
|
|
- |
|
|
|
(5,000 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.0033 per share
|
|
|
|
|
|
|
|
1,950,000 |
|
|
|
1,950 |
|
|
|
4,550 |
|
|
|
|
|
|
|
|
|
|
|
6,500 |
|
December
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in exchange for Lease at
|
|
|
|
|
|
|
|
1,500,000 |
|
|
|
1,500 |
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
$.0033
per share January 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash and stock
|
|
|
|
|
|
|
|
1,800,000 |
|
|
|
1,800 |
|
|
|
4,200 |
|
|
|
(4,000 |
) |
|
|
|
|
|
|
2,000 |
|
subscription
receivable at $.0033 per share February 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.0033 per share
|
|
|
|
|
|
|
|
1,350,000 |
|
|
|
1,350 |
|
|
|
3,150 |
|
|
|
|
|
|
|
|
|
|
|
4,500 |
|
March
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.0033 per share
|
|
|
|
|
|
|
|
300,000 |
|
|
|
300 |
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
April
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.0033 per share
|
|
|
|
|
|
|
|
5,100,000 |
|
|
|
5,100 |
|
|
|
11,900 |
|
|
|
|
|
|
|
|
|
|
|
17,000 |
|
May
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.0033 per share
|
|
|
|
|
|
|
|
600,000 |
|
|
|
600 |
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
2,000 |
|
June
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash at $.01 per share
|
|
|
|
|
|
|
|
450,000 |
|
|
|
450 |
|
|
|
4,050 |
|
|
|
|
|
|
|
|
|
|
|
4,500 |
|
July
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,016 |
) |
|
|
(29,016 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE-
October 31, 2007
|
|
|
|
|
|
|
|
|
|
|
14,550,000 |
|
|
|
14,550 |
|
|
|
36,950 |
|
|
|
(4,000 |
) |
|
|
(34,016 |
) |
|
|
13,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receipt
of Subscription Receivable December 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
|
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issance
of common stock for oil and gas interests
|
|
|
|
|
|
|
|
15,000,000 |
|
|
|
15,000 |
|
|
|
165,000 |
|
|
|
|
|
|
|
|
|
|
|
180,000 |
|
valued
at $0.012 per share October 20, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(200,909 |
) |
|
|
(200,909 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE-
October 31, 2008
|
|
|
|
|
|
|
|
|
|
|
29,550,000 |
|
|
|
29,550 |
|
|
|
201,950 |
|
|
|
- |
|
|
|
(234,925 |
) |
|
|
(3,425 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
BLACKBIRD
PETROLEUM CORPORATION
(Formerly
Ark Development, Inc.)
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
OCTOBER
31, 2008
NOTE
1 – NATURE AND PURPOSE OF BUSINESS
Ark
Development, Inc. (the “Company”) was incorporated under the laws of the State
of Nevada on October 9, 2006. The Company’s activities to date have
been limited to organization and capital formation. The Company is
“an exploration stage company” and has acquired an oil and gas lease for
exploration and formulated a business plan to investigate the possibilities of a
viable mineral deposit. The Company has adopted October 31 as its
fiscal year end. Effective November 26, 2008, the Company changed its
name from Ark Development, Inc. to Blackbird Petroleum Corporation.
NOTE
2 – NATURE OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH
EQUIVALENTS
The
Company considers all highly liquid debt instruments purchased with maturity of
three months or less to be cash equivalents.
REVENUE
RECOGNITION
The
Company considers revenue to be recognized at the time the service is
performed.
USE OF
ESTIMATES
The
preparation of the Company’s financial statements requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
these estimates.
FAIR VALUE OF FINANCIAL
INSTRUMENTS
The
Company’s short-term financial instruments consist of cash and cash equivalents
and accounts payable. The carrying amounts of these financial
instruments approximate fair value because of their short-term
maturities. Financial instruments that potentially subject the
Company to a concentration of credit risk consist principally of
cash. During the year the Company did not maintain cash deposits at
financial institution in excess of the $100,000 limit covered by the Federal
Deposit Insurance Corporation. The Company does not hold or issue
financial instruments for trading purposes nor does it hold or issue interest
rate or leveraged derivative financial instruments.
EARNINGS PER
SHARE
Basic
Earnings per Share (“EPS”) is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares
outstanding during the year. Diluted EPS is computed by dividing net
income available to common stockholders by the weighted-average number of common
stock shares outstanding during the year plus potential dilutive instruments
such as stock options and warrants. The effect of stock options on
diluted EPS is determined through the application of the treasury stock method,
whereby proceeds received by the Company based on assumed exercises are
hypothetically used to repurchase the Company’s common stock at the average
market price during the period. Loss per share is unchanged on a
diluted basis as the Company does not have any common stock equivalents
outstanding as of October 31, 2007.
INCOME
TAXES
The
Company uses the asset and liability method of accounting for income taxes as
required by SFAS No. 109 “Accounting for Income Taxes”. SFAS 109
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax basis of certain assets and liabilities. Deferred income
tax assets and liabilities are computed annually for the difference between the
financial statement and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
Deferred
income taxes may arise from temporary differences resulting from income and
expanse items reported for financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or non-current,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are
not related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse. As of October 31, 2008, the Company had a net operating loss
carryforward of $234,925. The related deferred tax asset of approximately
$82,225 has been fully offset by a valuation allowance due to the uncertainty of
the Company being able to realize the benefit in future years.
CONCENTRATION OF CREDIT
RISK
The
Company does not have any concentration of financial credit risk.
RECENT ACCOUNTING
PRONOUNCEMENTS
The
Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact to its financial
statements.
NOTE
3 – OIL AND GAS LEASE AND OIL AND GAS PARTICIPATION INTERESTS
The
Company entered into the purchase of an oil & gas lease located in Palo
Pinto County, Texas on January 3, 2007. This lease was acquired from
a Company engaged in the exploration and development of oil and gas
properties. The Company purchased this lease by issuing 1,500,000
shares of common stock valued at $.0033 per share and by payment of cash in the
amount of $ 5,000 for a total purchase price of $ 10,000. After
the acquisition of this lease, management performed an impairment test to
determine the carrying value of this oil and gas lease. Management
determined that there was no reasonable method to value the claims and has
impaired the cost of this lease and recorded the expense during the period ended
October 31, 2007. This amount has been reflected in the statement of
operations as impairment of oil and gas property.
On
October 20, 2008, the Company purchased an interest in two participation
agreements from the Company’s Chief Executive Officer. The Company
issued 15,000,000 shares of its common stock valued at $.012 per share for an
aggregate value of $180,000 in exchange for these interests. The
interests provide the Company oil and gas drilling rights in the Kahntah area of
Northeast British Columbia. Management determined that there was no
reasonable method to value these oil and gas participation interests and has
impaired the cost of these interests during the year ended October 31,
2008. This amount has been reflected in the statement of operations
as impairment of oil and gas interests. One of the participation
agreements requires the Company to make an additional payment of approximately
$1,148,000 on or before January 1, 2009 to preserve the drilling rights outlined
in the agreement. The Company has not made this required
payment.
NOTE
4 – COMMON STOCK
The
Company issued 1,500,000 shares of its common stock in October 2006 in exchange
for services rendered, valued at $5,000.
During
the year ended October 31, 2007 the Company issued 10,350,000 shares of its
common stock in exchange for cash. 9,900,000 of these shares were
valued at $.0033 and 450,000 of these shares were valued at $.01 for total
aggregate cash received of $37,500.
Also,
during the year ended October 31, 2007, the Company issued 1,200,000 shares of
common stock under stock subscription agreements, at $.0033 per share, for an
aggregate value of $4,000. These amounts are recorded as stock subscription
receivables in the financial statements.
On
November 5, 2008, the Board of Directors of the Company approved a stock
dividend, whereby two shares of common stock of the Company was issued for every
one share of common stock. The record date for the stock dividend was
established as November 25, 2008 and the stock dividend was issued on December
5, 2008. The stock dividend has been retroactively recorded in the
financial statements of the Company as if the stock dividend had occurred at the
inception of the Company.
NOTE
5 – GOING CONCERN
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As shown in the accompanying financial
statements, the Company has no sales and has incurred a net loss of $234,925
since inception. The future of the Company is dependent upon its ability to
obtain financing and upon future profitable operations from the development of
its mineral properties. Management has plans to seek additional
capital through a private placement and public offering of its common stock. The
financial statements do not include any adjustments relating to the
recoverability and classifications of recorded assets, or the amounts of and the
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
F-8