U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED March 31, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (the "Act")
Commission file number: 0-9336
STANDARD ENERGY CORPORATION
(Name of Small Business Issuer as specified in its charter)
Utah 87-0338149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
447 Bearcat Drive
Salt Lake City, Utah 84115-2517
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 364-9000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: $.01
Par Value Common Stock
Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Act during the preceding 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
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 Issuer's knowledge, in
definitive proxy or information statement incorporated by reference
in Part III of this Form 10-KSB, or any amendment to this Form 10-
KSB .
The Issuer's revenue for the fiscal year ended March 31, 2008 was
approximately $54,060.
-1-
As of July 14, 2008, 188,309,554 shares of the Issuer's common
stock were issued and outstanding of which 55,375,737 shares were
held by non-affiliates. As of July 14, 2008, the aggregate market
value of shares held by non-affiliates, based upon the closing
price reported by the Bulletin Board market reporting system,
operated by Nasdaq of $0.03 bid, was approximately $1,661,272.
TABLE OF CONTENTS
Page
PART I.................................................. 4
Item 1. DESCRIPTION OF BUSINESS......................... 4
General............................................... 4
Oil and Gas Leases.................................... 4
Leasing Programs...................................... 6
Geologic Information Services......................... 7
Oil and Gas Exploration and Production................ 8
Competition........................................... 8
Research and Development of the Biofuels Technology... 9
Government Regulations................................ 10
Insurance............................................. 10
Environmental Matters................................. 10
Employees............................................. 11
Item 2. PROPERTIES...................................... 11
Headquarters.......................................... 11
Oil and Gas Leaseholds................................ 11
Item 3. LEGAL PROCEEDINGS............................... 11
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS................................ 12
PART II................................................. 12
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS............. 12
Price Range of Common Stock........................... 12
Approximate Number of Equity Security Holders......... 12
Dividends............................................. 13
Shares Issued in Unregistered Transactions............ 13
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.............. 14
General............................................... 14
Results of Operations................................. 15
Financial Condition................................... 16
Plan of Operation..................................... 18
Inflation............................................. 19
Recent Accounting Pronouncements...................... 19
Off-Balance Sheet Arrangements........................ 19
Management's Conflicts of Interest.................... 19
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..... 20
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Table of Contents Continued
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE................ 20
Item 8A. CONTROLS AND PROCEDURES........................ 20
Disclosure Controls and Procedures.................... 20
Management's Annual Report on Inernal Controls Over
Financial Reporting................................... 20
Changes in Internal Controls.......................... 21
Evaluation of Disclosure Controls and Procedures...... 22
PART III................................................ 22
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT............................. 22
Identification of Directors and Executive Officers.... 22
Significant Employees................................. 23
Family Relationships.................................. 23
Other Involvement in Certain Legal Proceedings........ 23
Administration Actions................................ 24
Compliance with Section 16(a)......................... 24
Code of Ethics........................................ 24
Audit Committee Financial Reports..................... 24
Item 10. EXECUTIVE COMPENSATION......................... 24
Summary Annual Compensation Table..................... 24
Compensation Pursuant to Plans........................ 25
Other Compensation.................................... 25
Compensation of Directors............................. 25
Termination of Employment and Change of Control
Arrangements........................................ 25
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.......................... 26
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 26
Transactions with Management and Others............... 26
Forward Looking Statements............................ 27
Indebtedness of Management............................ 27
Parents of Company.................................... 27
PART IV................................................. 28
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K............................ 28
Exhibits to Form 10-KSB............................. 28
Reports on Form 8-K................................. 28
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES......... 28
Exhibit 31.......................................... 29
SIGNATURE PAGE...................................... 30
Exhibit 32 Chief Executive Officer Certification.... 31
SIGNATURE PAGE...................................... 32
-3-
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Standard Energy Corporation's ("the Company") principal
business is, and historically has been, the acquisition of
unproven oil and gas leaseholds with the intent of reselling or
drilling and developing such leaseholds with third-parties.
Historically, the Company has acquired primarily federal oil and
gas leaseholds through the BLM leasing program. The Company also
obtains leases through purchases in competitive bidding programs
offered by various state agencies, principally the States of Utah
and Wyoming.
Fundamentally, the Company has two principal businesses.
They are its traditional oil and gas lease activities including
producing and non-producing lease and royalty holdings and its
"Biofuel Projects".
The Company, which is known within the industry as a buyer
and seller of leases, typically is approached by a potential
buyer for one or more of its leasehold interests. Negotiations
generally ensue and a dollar price and retained royalty interest
is agreed upon and a sale concludes.
Oil and Gas Leases
The Company had limited participation in the Leasing
Programs from 1986 through the year ended March 31, 2008, except
through its participation agreements with certain unrelated third
parties on a limited basis. The Company presently has limited
funds available to participate in such Leasing Programs due to
the deposit feature penalizing many of the less capitalized
participants and provides a substantial advantage to Leasing
Program participants which have greater financial resources than
the Company. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations")
The location and gross and net acreage of the Company's
inventory of oil and gas leaseholds at March 31, 2008 were
approximately as follows:
Location Gross Acres Net Acres
Utah 4,596 3,338
Wyoming 4,267 4,267
Total 8,863 7,605
A gross acre consists of 100% of the working interest. A net
acre is calculated by gross acres multiplied by the percentage of
working interest owned.
-4-
The above chart does not include the Company's interest in
unrelated third-party leasehold acquisitions and leasehold sales.
Third-party leasehold inventory was approximately 10,000 gross
acres at fiscal year ended March 31, 2008. Also during the fiscal
period, the Company's ability to acquire additional leaseholds
was adversely affected. Because the Company has no financial
basis in such leaseholds, the Company's financial statements and
the foregoing acreage charts do not reflect the acquisition of
such newly acquired leaseholds. As third-party leasehold sales
take place, revenue is recorded under line item "Sales of oil and
gas leasehold interest".
Management has adopted a policy of periodically evaluating
each of the leaseholds held by the Company to determine whether
the current market value of a leasehold justifies making
additional rental payments and abandons (writes off) those
leaseholds for which it does not wish to continue making rental
payments. The amount of acreage abandoned and sold by the Company
in each of the last two fiscal years has caused the Company's
balance of inventory to increase over the course of such period,
primarily due to the upturn in the domestic oil industry. No
independent appraisals are obtained by the Company on leases
purchased, nor is there an independent committee of the Board of
Directors which evaluates any of its leases.
The Company's policy is to acquire and hold leaseholds in
inventory for a period generally not longer than five years in
order to maximize the gain to the Company on such leasehold
costs. The Company does not advertise for the sale of leases
owned by it, but rather believes that most of its leasehold
purchasers become aware of the Company's leaseholds through an
examination of BLM records or other means. During the Company's
two fiscal years ended March 31, 2008 and 2007, revenues from oil
and gas lease royalties during such period were approximately
$52,110 and $66,394 respectively. (See "Consolidated Financial
Statements")
The Company's oil and gas leasehold inventory remains at
approximately 15,000 net acres at the year ended March 31, 2008,
including leaseholds acquired under third-party agreements.
Although its leasing activity was reduced substantially due to
the sharp decline in exploration activities during the last five
fiscal years, the Company believes it can continue its present
lines of business, including the purchase and sale of newly
acquired oil and gas leaseholds, due to the increase in price of
domestic oil and gas during the past two years.
-5-
The Company retains a royalty interest, ranging from 1% to
6%, in substantially all of the leaseholds which it has resold.
Since 1981, the Company has not received any substantial earnings
from retained royalty interests in resold leaseholds. The
majority of the leases acquired by the Company are leaseholds
granted by the BLM subject to a 12-1/2% gross royalty interest in
favor of the federal government's BLM.
The majority of the Company's inventory of undeveloped
leases are subject to the jurisdiction of the BLM, with the
balance being leased from agencies of various Rocky Mountain
states. As a result of the advance lease deposits required under
the Leasing Programs, and the Company's current working capital
difficulties, it may be expected that the percentage of leases
acquired in the future from such states may increase. BLM
leaseholds granted under the Leasing Program are leased by the
BLM at an annual rental of $1.50 per acre, and $2.00 per acre for
leases acquired and held for more than five years.
The majority of the Company's BLM leasehold inventory at
March 31, 2008 consists of BLM leaseholds granted after January
1, 1994, and generally have an initial term of ten years, which
may be extended for an additional two years if during the initial
term such leasehold is "improved" by the commencement of drilling
activities thereon. Aggregate rentals paid by the Company during
the years ended March 31, 2008 and 2007 for all oil and gas
properties leased by it were approximately zero and zero,
respectively. The Company retains the right to reacquire the
lease if the purchaser fails to make rental payments due to the
BLM on leases sold to unrelated third-parties by the Company.
Leasing Programs
The federal government's Leasing Program is administered by
the BLM pursuant to the Minerals Leasing Act of 1920, as amended.
Under such Act, properties are made available to the public by
means of a competitive bidding system. Properties receiving no
bid are assigned to the Leasing Program. In the Leasing Program,
applicants filing for a given leasehold by a set date are deemed
to have filed simultaneously with other applicants and thus are
eligible to participate in the drawing. Under the Leasing
Program, applicants are required to deposit the first year rental
payments for each property applied for at the time of filing an
application. Funds advanced to the BLM as deposits do not bear
interest.
-6-
During fiscal 2008, the BLM took approximately 50 days, from
the date funds were required to be deposited, to process refunds
of deposits with respect to unawarded leases, which permitted
participants to "rollover" their refunds into payments of advance
deposits in the subsequent Leasing Program drawing period.
However, there can be no assurance as to how long the BLM will
take to refund such deposits in the future.
The BLM has on several previous occasions, since the Mineral
Leasing Act of 1920, suspended and/or modified the BLM Leasing
Program. No assurance can be given that current Leasing Programs
will not be subsequently eliminated, modified or suspended, or
that the Company will be able to actively participate in or
derive profits from the Leasing Programs.
Geological Information Services
The Company, through its wholly-owned subsidiary, Petroleum
Investment Company ("PIC"), provides a variety of geologic lease
evaluation services. PIC makes available to subscribers monthly
reports containing information which evaluates leases offered in
the Leasing Programs. Such information includes comprehensive
geologic data, recommendations and reports with respect to
leaseholds offered in the Leasing Programs, including PIC's
evaluation of the production prospects of such leaseholds and,
frequently, an estimated resale value for such leaseholds, the
names of selected participants, results of auction sales and
drawings, and other information. In addition to such monthly
reports, PIC also sells information with respect to individual
oil and gas properties throughout the Rocky Mountain area.
The geologic and other information which PIC makes available
through its reporting services is obtained from different
sources, including PIC's internal files which contain well and
land oil and gas exploration data on a historical basis in the
nine-state area comprising the Rocky Mountain region. Such data
is interpreted and summarized by PIC's part-time in-house
geologists and landmen.
PIC, through a wholly-owned subsidiary, also provides oil
and gas mapping services with respect to properties located
throughout the Rocky Mountain region. PIC prepares base survey
and geologic maps on various scales, reflecting significant oil
and gas well drilling activity in a particular area.
-7-
During the Company's two fiscal years ended March 31, 2008
and 2007, revenues contributed to the Company's consolidated
revenues by PIC were approximately $1,950 and $1,650,
respectively. The revenue increase contributed by PIC for such
fiscal periods, as compared to prior fiscal years, reflects the
depth of the changing domestic oil and gas industry. Low oil
prices since the initial 1986 collapse of worldwide oil prices
caused PIC to terminate the services of several employees,
including its geologists. Should higher oil prices hold for
several years it is possible that PIC could again produce higher
revenues for the consolidated business of the Company. (See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations")
Oil and Gas Exploration and Production
The Company's oil and gas exploration and production
operations are presently insignificant and no reserve information
is available.
Competition
The Company experiences substantial competition in its
business of buying and selling oil and gas leaseholds. The
Company's competitors include oil companies, as well as numerous
independent operators, many of whom have substantially greater
resources than the Company and its affiliates. The Leasing
Programs, and in particular, the feature which requires advance
deposit of annual lease rentals at the time of applying for such
leases, has the effect of favoring companies with financial
resources greater than the Company's and its affiliates'.
With respect to its geologic information services, the
Company experiences competition from individual operators who
advise as to the geologic potential of properties listed for
lease under the Leasing Programs and other oil and gas
properties, as well as from publishers of newsletters providing
certain information similar to that which the Company makes
available to its subscribers. The Company believes itself to be a
factor in the geologic information services industry in the Rocky
Mountain States, premised upon the quality and volume of its land
records, the number of subscribers to its publications and the
extremely limited number of competitors, comprised mostly of
individuals, offering similar, but what management believes to be
less complete services to the general public.
The Company's competitors in oil and gas exploration,
development and production include major oil companies, numerous
independent oil and gas companies, individual proprietors and
drilling programs. Many of such competitors possess greater
financial resources than those available to the Company.
-8-
Research and Development of the Biofuels Technology
Essentially, the Company has two principal businesses. They
are its traditional oil and gas exploration and production
business that has, during the past 29-years, provided in excess
of $13,000,000 to conduct the research and development ("R&D")
effort to commercialize its second business, the commercial
development of its "Biofuels Technology", designed to
economically solve the critical problem of disposing of municipal
solid waste ("Municipal Waste") through the 100% recycle of
"paper waste" into useful products saleable at a profit.
Management of the Company believes its R&D efforts have
produced trade secret and know-how protection which, in the
future, should produce valuable patent protection to the
Company's technologies from the Company's long experience and
work conducted at its former "Research Center" in Utah.
Based on its R&D efforts, the Company believes a "Biofuels
Project" would be the first business to economically produce
ethanol transportation fuel from low-cost organic cellulosic
materials ("Celmat") consisting of mostly paper products easily
harvested from Municipal Waste through new generation enviro-
friendly manufacturing plants fed by Municipal Waste, which
Biofuel Plants would combine recycling, electric power and
ethanol fuel production and bottled co2 recovery at several
regional Biofuels Plant sites.
The Company further believes that its innovative Biofuels
Technology would create a profit generating solution for three
major contemporary domestic issues. First, it would provide an
opportunity to significantly reduce the volume of Municipal Waste
that currently must be landfilled or incinerated. Second, it
offers a low-cost method of producing ethanol fuel, the only
known commercially viable and publicly accepted renewable low-
cost and low-polluting transportation fuel that the Company
believes someday will compete in price at the gas pump with
gasoline. Third, it offers a low-cost method of producing and
generating electric power from ultra clean burning lignin fuel.
The reason for such optimism is high gasoline prices and the high
"Tip Fee" currently paid by municipalities to landfills and
dispose of Municipal Waste.
The Company's former Research Center provided the Company
with sufficient data to design and construct the 12-Module design
Biofuels Project for the 100% recycle solution to the disposal of
Municipal Waste. The 12-Module proprietary design package data is
available to entities expressing a written desire to invest funds
in a Biofuels Project. Written materials include flow sheets,
mass and energy balance, vendor equipment suppliers, construction
design, operating plans, insurance guarantees and qualification
of the selected construction contractors.
-9-
A Biofuels Project, fundamentally, is only an engineering
concept where the Company is contemplating the construction
retrofit of an existing industrial Municipal Waste plant complex
utilizing the Company's Biofuels Technology to manufacture
electricity, ethanol transportation fuel and other saleable
products derived and harvested from the contents of Municipal
Waste.
The Company is pursuing financing ideas through its wholly-
owned subsidiaries. Final engineering plans and final financial
arrangements with unrelated third-parties for financing and
engineering contracts on a Biofuels Project were not finalized or
completed as of July 14, 2008.
Government Regulations
The Company's business is subject to extensive federal,
state and local regulation. Management believes that the Company
operations are in material compliance with applicable laws, but
is unable to predict what additional government regulations, if
any, affecting the Company's business, may be enacted in the
future; how existing or future laws and regulations might be
interpreted; or whether the Company will be able to comply with
such laws and regulations either in the markets in which it
presently conducts business or wishes to commence business.
There can be no assurance that either the states or the
federal government would not impose additional regulations upon
the Company's activities which might adversely affect the
Company's business.
Insurance
The Company does not currently have in force general
liability insurance coverage but does have renters liability
coverage on its headquarters office space. There can be no
assurance the coverage limits of the Company's policy would be
adequate, or that the Company can obtain liability insurance in
the future on acceptable terms, or at all.
Environmental Matters
The Company is not aware of any pending or threatened claim,
investigation, or enforcement action regarding environmental
issues which if determined adversely to the Company, would have
an adverse effect upon the capital expenditures, earnings, or
competitive position of the Company.
-10-
Employees
As of July 14, 2008, the Company had three employees,
including two executive officers and one part time employee. In
addition, the Company's practice in connection with the Leasing
Programs is to contract with geologists and landmen to assist the
Company in the preparation of geologic information reports, etc.
as needed. None of the Company's employees are represented by a
union or subject to a collective bargaining agreement and the
Company has never experienced a work stoppage. The Company
believes its employee relations to be good.
Item 2. PROPERTIES
Headquarters
The Company's executive offices are located in a 2,500
square foot building. The premises are on a month to month
payment from a non-affiliated party, at an annual rental of
approximately $18,000 per year. Management is of the opinion that
such cost is comparable to or below normal rates in the area and
believes that such facilities are adequate for the Company needs
in the proximate future.
Oil and Gas Leaseholds
The location and gross and net acreage of the Company's
inventory of oil and gas leaseholds at March 31, 2008 was
approximately as follows:
Location Gross Acres Net Acres
Utah 4,596 3,338
Wyoming 4,267 4,267
Total 8,863 7,605
A gross acre consists of 100% of the working interest. A net
acre is calculated by gross acres multiplied by the percentage of
working interest owned.
Item 3. LEGAL PROCEEDINGS
On August 30, 2007 a Complaint of Civil Action was filed in
the Third Judicial District Court, State of Utah in and for the
County of Salt Lake. Salt Lake Department, against Standard
Energy Corporation (the "Company"), and Dean W. Rowell,
individually ("its affiliates"). The Complaint alleges that the
Company and its affiliates failed to make payments as required by
said Contract with Wells Fargo Bank. The Complaint asserts a
claim for the sum of $105,243.55, plus interest thereafter at the
Contract rate of 19.80% per annum, until paid in full and a
claim for court-ordered attorneys costs. The Company and its
affiliates believe the Complaint to be highly inflated and will
vigorously defend its position. The Company and its affiliates
-11-
have discussed this case with its attorneys and believe that the
amount accrued on the balance sheet is more than enough to cover
the claim. The Company and its affiliates have engaged the law
firm of Cohne, Rappaport & Segal to represent their interest in
this matter. At the request of our counsel and due to the
Plaintiff not doing anything, Judge Quinn dismissed the case
without prejudice on June 23, 2008.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the Company's shareholders for
a vote during the fiscal year ended March 31, 2008.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
Price Range of Common Stock
The Company's shares of Common Stock are traded on the over
the counter Bulletin Board ("OTCBB") electronic quotation
service, operated by The Bulletin Board, Inc., an affiliate of
The Nasdaq Stock Market, Inc. The following table sets forth the
high and low bid quotations of the Company's common stock for the
periods indicated, as reported by the OTCBB. The quotations set
forth below represent prices between dealers and do not include
retail markups, markdowns or commissions and may not represent
actual transactions.
Bid Price
High Low
Fiscal Year 2007
First Quarter .......... $ 0.13 $ 0.03
Second Quarter .......... 0.05 0.02
Third Quarter .......... 0.04 0.03
Fourth Quarter .......... 0.09 0.03
Fiscal Year 2008
First Quarter .......... $ 0.06 $ 0.04
Second Quarter .......... 0.06 0.02
Third Quarter .......... 0.04 0.02
Fourth Quarter .......... 0.05 0.02
Fiscal Year 2009
First Quarter .......... $ 0.05 $ 0.01
Approximate Number of Equity Security Holders:
Title of Class holders as of July 14, 2008
Common Stock, par value $0.01 per share: 1,500
Preferred Stock, par value $0.01 per share: None Issued
-12-
As of July 14, 2008, there were 188,309,554 shares of common
stock outstanding and approximately 1,500 stockholders of record.
The number of stockholders of record does not include an
indeterminate number of stockholders whose shares are held by
brokers and fiduciary depositories in "street name". Management
believes there are in excess of 3,000 beneficial stockholders of
the Company's common stock, including fiduciary depository firms.
Dividends
The Company has neither declared nor paid any dividends on
its Common Stock since the inception of the Company, and the
Board of Directors does not contemplate the payment of dividends
in the foreseeable future. Any decision as to the future payment
of dividends will depend on the earnings and financial position
of the Company and such other factors as the Board of Directors
may deem relevant. It is the present intention of management to
utilize all available funds for the development of the Company's
business.
Shares Issued in Unregistered Transactions
The Company issued shares of our common stock in
unregistered transactions from 2002 through 2008. All of the
following shares of common stock issued were issued in non-
registered transactions in reliance on Section 4(2)of the
Securities Act of 1933, as amended (the "Securities Act"). Shares
issued in 2006 were issued pursuant to Rule 504 of Regulation D
promulgated under the Securities Act of 1933, as amended, and
issued as follows:
Fiscal Year 2007
On February 5, 2007, E.S. Bunting bought 100,000 newly
issued shares of the Company's common stock at $0.05 per share in
exchange for $5,000 cash. Harold P. McEvan Trust, bought 200,000
newly issued shares of the Company's common stock at $0.05 per
shares in exchange for $10,000 and Dennis Ashley bought 10,000
shares of the newly issued shares of the Company's common stock
at $0.05 per shares in exchange for $500. These share are to be
held for investment purposes.
Fiscal Year 2008
On September 18, 2007, Donald Falls an unrelated third party
bought 1,500,000 newly issued shares of the Company's common
stock at $0.025 per share in exchange for $37,500 cash. These
share are to be held for investment purposes.
-13-
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company's principal business is, and historically has
been, the acquisition of unproven oil and gas leaseholds with the
intent of reselling or drilling and developing such leaseholds
with third-parties. Historically, the Company has acquired
primarily federal oil and gas leaseholds through the BLM leasing
program. The Company also obtains leases through purchases in
competitive bidding programs offered by various state agencies,
principally the States of Utah and Wyoming.
Fundamentally, the Company has two principal businesses.
They are its traditional oil and gas lease activities including
producing and non-producing lease and royalty holdings and its
"Biofuel Projects".
The Company, which is known within the industry as a buyer
and seller of leases, typically is approached by a potential
buyer for one or more of its leasehold interests. Negotiations
generally ensue and a dollar price and retained royalty interest
is agreed upon and a sale concludes.
During the 2008 fiscal period, the Company continues to
research and develop (R&D) its Biofuel Technologies for the
recycle of ordinary municipal solid waste (MSW), garbage, trash,
paper and plastic material streams into recycled saleable
products and the recovery of cellulosic materials ("Celmat")
believed by the Company to be convertible into approximately
(1/3) lignin fuel for generating electric power, approximately
(1/3) bottled CO2 gas, and ethanol convertible into approximately
(1/3) E85 transportation fuels.
As a result of its R&D efforts, management believes the
Company has developed what appears to be a commercial application
of its Biofuel Technology for the future recovery of Celmat
Wastes. A Biofuels Project would mostly likely be located in the
western and Northeast U.S. where Municipal Waste landfills and
transfer stations charge the highest dump rates ("Tip Fee") in
the U.S. for the disposal of Municipal Waste and other cellulosic
waste materials.
There can be no assurance that the required capital will be
available to construct a Biofuels Project and there can be no
assurance that the Biofuels Technology will perform on a
commercial basis. The Company's future operating results will
depend on its ability to obtain adequate financing to construct a
Biofuels Project. Expenses incurred for a Biofuels Project would
be accounted for under line item "Biofuel Project Costs".
-14-
Results of Operations
The Company realized revenues of $54,060 for the fiscal year
ended March 31, 2008, compared with $68,044 for the corresponding
period ended March 31, 2007. Cash requirements during the period
were obtained from a combination of internally generated cash
flow from operations, loans, asset sales, and the sale of Rule
144 investment stock to private individuals.
There were zero revenues realized for in oil and gas
leasehold sales for the fiscal period ended March 31, 2008, and
zero revenues in sales for the corresponding period ended March
31, 2007. Revenues from the sale of the Company's geologic
information services were $1,950 for the fiscal period ended
March 31, 2008, compared with $1,650 for the corresponding period
ended March 31, 2007. Revenues from the Company's geologic
information services have declined steadily from the collapse of
world crude oil prices in 1986. Recent world crude oil and
natural gas price increases may stimulate domestic drilling
activity which could, once again, create a need for the Company's
geologic information services. Revenue from oil production was
$52,110 for the fiscal period ended March 31, 2008, compared to
$66,394 for the corresponding period ended March 31, 2007. Oil
production revenues are down due to declining production on
Company leaseholds.
The Company incurred expenses related to its oil and gas
leasehold sales of zero for the fiscal period ended March 31,
2008, compared to zero for the comparable period ended March 31,
2007. Expenses associated with the Company's geologic information
services were $7,174 for the fiscal period ended March 31, 2008,
compared to $6,287 for the comparable period ended March 31,
2007. Expenses associated with the Company's oil production and
exploration activities were zero for the fiscal period ended
March 31, 2008, due to the abandonment in fiscal 1998 of the
Company's last operated well. There were no costs for the
comparable period ended March 31, 2007, due to the Company's
exploration inactivity. General and administrative expense for
the fiscal month period ended March 31, 2007 were $140,582,
compared to $164,392 for the comparable period ended March 31,
2007. These low figures reflect the Company's basic inactivity in
its oil and gas sector.
-15-
During the previous three year period all of the Company's
R&D costs were expensed under line item General and
Administrative expense. During the 2008 fiscal period, the
Company created a line item for R&D costs to better distinguish
expenses between general and administrative expenses and the
expenses related to its various biofuels plant projects. These
costs are being accounted for under line item "Project Costs" and
were $96,428 for the fiscal period ended March 31, 2008, compared
to $183,925 for the comparable period ended March 31, 2007.
The Company's net loss for the 2008 fiscal period ended
March 31, 2008 was $265,947, compared to $100,138 for comparable
2007 fiscal period and it expects to operate at a loss for the
2008 fiscal period, due to continued R&D costs incurred for its
several current Biofuels Project, and costs related to its oil
and gas business. Biofuel Project costs when appropriate will be
accounted for under line item "Research and Development Costs".
(See "Consolidated Financial Statements")
The Company does not expect to realize significant cash
flows from the sale of leasehold interests, geologic information
services, or oil production and exploration activities during
fiscal 2008, nor does it expect significant leasehold sales in
the foreseeable future, as the domestic oil industry activity
continues unchanged due to uncertain high world crude oil and
natural gas prices.
The Company has available at March 31, 2008, unused tax
operating loss carry forward of approximately $2,000,000 that may
be applied against future taxable income through 2026. No tax
benefit has been reported in the financial statements, because
the Company believes there is a 50% or greater chance the carry
forwards will expire unused. Accordingly, the potential tax
benefits of the loss carry forwards are offset by a valuation
account of the same amount.
Financial Condition
On January 11, 2007, Delta Petroleum Corp's (Delta) website
deltapetro. com/PressRelease reported . . .
"The GreenTown State 32-42 has been completed in 8 of 12 pay
intervals, and production tested at a combined rate of 2.0
million cubic feet of gas per day (Mmcfg/d) and 500 barrels of
condensate per day (Bc/d)." And said further . . .
"The GreenTown State 36-11 has been completed in 2 of 12 pay
intervals, and production tested at a combined rate of 4.5
Mmcfg/d and 125 Bc/d" and that "the wells are located 7.5 miles
apart yet appear very analogous, with 1,077 and 906 feet of
potential productive clastics, respectively, over the 12 separate
intervals".
-16-
Delta also said "it is projecting that future wells will be
drilled to an average depth of 9,800' for expected costs of $3.0
to $3.5 million each. Initial expectations are that wells will be
drilled on 80-acre spacing. Numerous well locations are being
permitted and drilling activity should resume within the next 60
days."
The Company and its affiliate, Trachyte, own 100% interest
in approximately 6,000 adjacent federal, state and fee lands to
the two Delta discovery wells and could be of great potential
importance to future Company operations.
Management continues to explore additional financing
alternatives for ongoing and future operations of the Company.
There is no assurance that the efforts of management to locate
and secure additional financing will be successful, and the
failure to secure a Biofuels Project financing would
substantially alter management's assumptions as herein presented.
Revenue decreased in the Company's overall oil and gas lease
royalties which are related to effects of the worldwide
fluctuation of oil and gas prices. The fluctuation of oil and
gas prices could also cause a fluctuation of the amount of
oil/gas produced by the various well operators.
The Company had limited participation in the Leasing
Programs for the fiscal period ended March 31, 2008, except
through its participation agreements with certain unrelated third
parties on a limited basis. The Company presently has limited
funds available to participate in the Leasing Programs. The
Company's limited ability to participate in the BLM's leasing
program and to obtain oil and gas leaseholds for resale due to a
lack of funds could continue to effect its future operations.
The Company's most significant assets are its oil and gas
production income, its oil and gas leaseholds held for resale,
approximating 15,000 net acres at March 31, 2008, including
leaseholds acquired under its unrelated third-party agreements,
together with its plan for the full development of a Biofuels
Project.
In order to continue in existence the Company is in need of
additional financing from outside sources or from internal
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management can
give no assurances that it will be successful in its endeavors to
resolve its cash flow difficulties or that it will be able to
retain and ultimately recover its costs in oil and gas leaseholds
held for resale. The financial statements do not include any
adjustments relating to the amounts and classification of assets,
liabilities, income or expenses that might be necessary should
the Company be unable to successfully resolve these uncertainties
and continue in existence.
-17-
The Company foresees a need for additional equity financing
in order to continue in existence, and may, in the future, seek
to raise additional funds through asset sales, bank and/or other
loans, debt, or equity offerings. Any such equity offerings,
asset sales, or other financing may either be private or public
and may result in substantial dilution to the then existing
shareholders of the Company. Because of uncertainties existing in
the domestic oil and gas industry and a Biofuels Project, the
Company is not in a position to forecast future earnings or cash
flow. The Company's future is very fluid and largely dependent on
factors outside of its management's control.
For the fiscal period ended March 31, 2008, Dean W. Rowell,
the President of the Company, continues to secure and guarantee
loans for the Company and he has guaranteed one credit card up to
approximately $110,000 with an outstanding balance of
approximately $109,459 at the end of the period, and is currently
in default.
Since fiscal 1991, Trachyte has materially supported the
Company financially largely due to Mr. Rowell's efforts to secure
loans from Trachyte for the Company and contribute the value of
an assumed salary of $50,000 per year to additional paid in
capital. The several transactions with Trachyte have provided the
financial means for the Company to pursue its R&D of the biofuels
technologies and the commercialization of a Biofuels Project.
Without such additional contributions by Mr. Rowell the Company
would have been unable to pursue these goals. Final plans and
final financial arrangements had not been completed for a
Biofuels Project at March 31, 2008.
Plan of Operation
There have been no significant changes in capitalization or
financial status during the past two years that are not reflected
in the financial statements. The Company's plan of operation
during the next twelve (12) months includes the following:
1. Pursue financing for a Biofuels Project.
2. Continue R&D, testing Municipal Waste processing
equipment and testing existing and newly developed
cellulose enzymes.
3. Continue the design and development of a Biofuels
Project into three businesses -- Municipal Waste
recycle, ethanol fuel production and electric power
generation.
-18-
4. Pursue oil and gas lease acquisition with third party
investors and investigate the possibility of entering
into the wholesale electric power generation business.
5. Continue to receive royalty income through Company
owned overriding royalty interests.
Inflation
Inflation continues to apply moderate upward pressure on the
cost of goods and services including those purchased by the
Company. Management believes the net effect of inflation on
operations has been minimal during the past two years.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that will have
a material impact on the Company's financial statements.
Off-Balance Sheet Arrangements
There are currently no off-balance sheet arrangements.
Management's Conflicts of Interest
Material conflicts of interest exist and will continue to
exist between the Company, Trachyte, and Mr. Rowell, who is also
the President of Trachyte, a privately-held Utah corporation,
whose current major activities are the exploration and production
of oil and gas resources. The Company's policy is to offer any
new oil and gas property purchase first to the Company and then
to Trachyte if the Company is unable to accept the financial
obligation of any transaction. At July 14, 2008, Mr. Rowell
beneficially owned approximately 64% of the common stock of the
Company and 100% of the common stock of Trachyte.
Mr. Rowell owes a duty of due care and fair dealing to both
the Company and Trachyte and the resolution of duties and
conflicts in favor of one company over the other may impair his
duties to each company. It is likely that any conflict of
interest between the Company and Trachyte requiring a
determination may have to be settled in favor of the Company to
the detriment of Trachyte, as well as to the detriment of the
current and future shareholders of Trachyte.
On November 12, 2007, Trachyte sold oil and gas lease ML-
50405 to the Company for $57,600. The lease is part of the
Company's Greentown field development plans. Due to the Company
cash flow situation, Trachyte agreed to accept cash payment for
the lease over a 6-month period and upon final payment by the
Company to Trachyte, Trachyte will make record title assignment
to Standard. On July 3, 2008 Trachyte extended for 1-year the
time to pay the balance owed to them by the Company on lease ML-
50405. -19-
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is submitted as a
separate section at the rear of this Form 10-KSB report.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
Item 8A. CONTROL AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Based on an evaluation for the period ended March 31, 2008,
our chief executive officer and chief financial officer,
conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined
in the Securities Exchange Act of 1934 ("SEC"), Rules 13a-15.
Based upon that evaluation, our chief executive officer and chief
financial officer concluded that as of March 31, 2008, our
our disclosure controls and procedures were effective to ensure
that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified by the SEC's rules and forms.
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required
to be disclosed in our reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures, include, without limitation,
controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange
Act is accumulated and communicated to management, including our
chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
Management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in
Exchange Act Rule 13a-15(f). Management conducted an evaluation
of the effectiveness of the internal control over financial
reporting as of March 31, 2008. Because of inherent limitations,
internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures
may deteriorate.
-20-
A material weakness is a control deficiency, or combination
of control deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. As a
result of management's assessment, management has determined that
a material weakness exists, which is reflected by accounting
personnel within the Company not having a thorough understanding
of GAAP in order to prevent material errors from occuring. This
appeared to play a part in many of the proposed adjustments
discovered during the audit for both the general ledger as well
as the financial statements and disclosures. In order to address
and resolve this weakness we will appoint an independent CPA to
oversee and review our internal controls.
This report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to
attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only
management's report in the SEC filing.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in our internal controls
over financial reporting that occurred during our last fiscal
period ended Mach 31, 2008 that materially affect, our internal
control over financial reporting.
The term "internal control over financial reporting" is
defined as a process by, or under the supervision of, the
registrant's principal executive and principal financial
officers, or persons performing similar functions, and effected
by the registrant's board of directors, management and other
personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principals and includes those
policies and procedures that (a) pertain to the maintenance of
records that is reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the
registrant, (b) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principales, and that receipts and expenditures of the registrant
are being made only in accordance with authorization of
management and directors of the registrant and (c) Provide
reasonable assurance regarding or timely detection of
unauthorized acquisition, use or disposition of the registrant's
assets that could have a material effect on the financial
statements.
-21-
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on an evaluation under the supervision and with the
participation of Management, as of a date within 90 days of the
filing date of this Annual Report on Form 10-KSB, our principal
executive officer and principal financial officer have concluded
that our disclosures controls and procedures (as defined in Rule
13a-14(c) and 25d-14(c) and 15d-14(c) under the Securities Act of
1934, are effective to ensure the information required to be
disclosed in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the
time specified in SEC rules and forms.
Because of the Company's inherent limitations, internal
control over financial reporting may not prevent or detect
misstatements and projections of any evaluation of effectiveness
to future periods subject to the risks that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the polices or procedures may deteriorate.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
Identification of Directors and Executive Officers
The current directors and executive officers of the Company,
who will serve until the next annual meeting of shareholders or
until their successors are elected or appointed and qualified,
are set forth below:
Name Age Position
Dean W. Rowell 70 CEO/President/Chairman
Pamela K. Nelson 50 Vice President/Secretary
Michael M. Cannon 60 Director
Dean W. Rowell has been Chairman of the Board, President and
Chief Executive Officer and Chief Financial Officer of the
Company since its inception in April 1978 and was last elected by
shareholders in 1996. Mr. Rowell has been involved in the oil and
gas exploration and production industries for over 40 years.
Prior to serving in his present capacities with the Company, he
served as the president of a number of privately-held energy
related companies. Mr. Rowell is also a director and President of
the Company's wholly-owned subsidiaries, PIC, EnviroSystems and
Biofuels. Mr. Rowell devotes approximately 80% of his time to the
Company.
-22-
Pamela K. Nelson was last elected in 1996 and has been a
Director of the Company since September 1978 and became a Vice
President of the Company in 1979 and Corporate Secretary in 1983.
Ms. Nelson has been involved in landwork and leasing services to
the oil and gas industry for the last 32 years. Ms. Nelson is
also a director, Vice President, Corporate Secretary and Manager
of land and lease operations for the Company's wholly-owned
subsidiary, PIC. She is a director, Vice President, Corporate
Secretary of EnviroSystems, and Biofuels, all wholly-owned
subsidiaries of the Company. She devotes all of her paid time to
the Company.
Michael M. Cannon, a cum laude graduate of the University of
Utah, joined the Company in March 1982 and in September 1982
became a Vice President and Director, with responsibility for
marketing and corporate communications. From January 1979 to
March 1982, Mr. Cannon was President of an advertising and public
relations agency, Cannon Communications, a substantial number of
whose clients were members of the United States House of
Representatives and the Senate. From November 1976 to January
1979, Mr. Cannon served as the press secretary for Gunn McKay, a
United States Representative from the State of Utah. In 1985 Mr.
Cannon served as a state director of the Independent Petroleum
Association of Mountain States and was. Mr. Cannon is presently
self-employed as a consultant in the Communications industry.
Mr. Cannon resigned as an Officer of the Company, effective July
1, 1985, but remains as an outside Director being last elected in
1996, Mr. Cannon has been associated with the Company for over
15-years, and is a director of the Company's wholly-owned
subsidiaries, PIC, and EnviroSystems.
Each Director shall hold office until the next annual
meeting of shareholders or until his successor shall have been
duly elected and qualified. Officers are elected annually by, and
serve at the pleasure of, the Board of Directors.
Significant Employees
None
Family Relationships
There are no family relationships among the Company's
officers and directors.
Other Involvement in Certain Legal Proceedings
There have been no events under the bankruptcy act, no
criminal proceedings and no judgements or injunctions material to
the evaluation of the ability and integrity of any executive
officer of the Company in last five years.
-23-
Administration Action
None
Compliance With Section 16(a)
Section 16 of the Securities Act of 1934 requires the filing
of reports for sales of the Company's common stock made by
officers, directors and 10% or greater shareholders. A Form 3,
and Form 4 must be filed within two days after the sale or
purchase transaction. Based upon the review of Form 4, Form 3,
and/or Form 5 filed with the Company, the Company is not aware of
any delinquent filings of such forms by any reporting person.
Code of Ethics
We have not adopted a formal ethics policy for our chief
executive officer or senior financial officers, due to our status
as a Bulletin Board company with few management personnel. We
believe that our Board can successfully oversee and manage our
existing officers and employees. However, we believe that an
ethics policy is important and intend to consider adopting such a
policy in the future.
Audit Committee Financial Expert
The Board of Directors have determined that the company does
not have an audit committee financial expert serving on an audit
committee, due to our status as a Bulletin Board company with few
management personnel.
Item 10. EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation
paid by the Company for services rendered during the last three
years to the Company's Chief Executive Officer and to the
Company's most highly compensated executive officers other than
the CEO, whose annual salary and bonus exceeded $100,000:
Summary of Annual Compensation Table
Other Annual
Compensation Restricted
Name of Principal Commissions Awards Stock Option
Position Year Salary & Bonuses (Auto) Awards Awards
Dean W. Rowell 2008 $50,000(1) -0- $8,145 -0- -0-
President/CEO 2007 $50,000(1) -0- $6,000 -0- -0-
2006 $50,000(1) -0- $4,000 -0- -0-
__________
(1) Represents the value of Mr. Rowell's contributed services.
-24-
None of the Company's executive officers received aggregate
cash and cash equivalent compensation exceeding $100,000 in any
of the last three fiscal years. No options to purchase any of the
Company's securities were granted to any reporting person during
the fiscal year ended March 31, 2008. During the same period,
Rowell elected to sell stock in the Company due to limited
corporate cash flow to partially compensate Rowell in absence of
a salary.
Compensation Pursuant to Plans
None of the executive officers of the Company are parties to
an employment agreement with the Company. Dean W. Rowell, the
Company's Chairman of the Board, President, Chief Executive and
Chief Financial Officer will continue to serve the Company as
determined by the Board of Directors without a salary or
employment agreement. On April 1, 1997, the Company continues to
provide Rowell with credit cards and with automobiles at a cost
of approximately $18,145 per year.
The Company has no other "plans" (as such term is used in
Item 402 of Regulation S-K) with respect to further executive
compensation.
Other Compensation
Not applicable.
Compensation of Directors
Directors of the Company receive no compensation for
services as such.
Termination of Employment and Change of Control Arrangements
Not applicable.
-25-
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the number of shares
beneficially owned, as of July 14, 2008, by each Director of the
Company, by all officers and Directors as a group and by all
persons known to the Company as owning or possessing voting
control over five (5%) percent or more of the Company's
outstanding shares of Common Stock:
Number Percentage
of Shares of Shares
Name and Address Owned Outstanding
Dean W. Rowell (1) 120,967,113 64.0%
Pamela K. Nelson 12,991,124 7.0%
Michael M. Cannon 13,000 .0%
All Officers and Directors
as a group 133,971,237 71.0%
___________
(1) This figure includes all shares owned by Trachyte.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
Geologic and other information which PIC has or develops is
available to Rowell as an officer of the Company, and he may use
such information for the benefit of the Company in determining
which leases to buy or sell. Such information is also available
to Rowell, without cost, in connection with Rowell's
participation in the Leasing Programs.
On November 12, 2007, Trachyte sold oil and gas lease
ML-50405 to the Company for $57,600. The lease is part of the
Company's Greentown field development plans. Due to the Company
cash flow situation, Trachyte agreed to accept cash payment for
the lease over a 6-month period and upon final payment by the
Company to Trachyte, Trachyte will make record title assignment
to Standard. On July 3, 2008 Trachyte extended for 1-year the
time to pay the balance owed to them by the Company on lease ML-
50405.
-26-
During the fiscal period ended March 31, 2008, the Company
continued to experience severe cash flow difficulties which have
continued into the 2008 fiscal period.
Forward Looking Statements
The forgoing discussion in "Management's Discussion and
Analysis of Financial Condition and Results of Operation" contain
forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Act") and Section
21E of the Act, which reflect Managements current views with
respect to the future events and financial performance. The
Company cautions that words used in this document such as
"experts", "anticipates", "believes" and "may" as well as similar
words and expressions identify and refer to statements describing
events that may or may not occur in the future, including among
other things, statements relating to anticipated growth and
increased profitability, as well as to statements relating to the
Company's strategic plan, including plans to develop a Biofuels
Project and to selectively acquire other companies. These
forward-looking statements and the matters to which they refer to
are subject to considerable risks and uncertainties that may
cause actual results to be materially different from those
described in this document, including, but not limited to future
financial performance and future events, competitive pricing for
services, costs of obtaining capital as well as national,
regional and local economic conditions. Actual results could
differ materially from those addressed in the forward-looking
statements. Due to such uncertainties and risks, readers are
cautioned not to place undue reliance on such forward-looking
statements, which speak only as of the date of this Form 10-KSB
report.
Indebtedness of Management
Reference is made to Section above entitled "Transactions
with Management and Others".
Parents of Company
The only parents of the Company, as defined in 12b-2 of the
Exchange Act, are the officers and directors of the Company. For
information regarding the share holdings of the Company's
officers and directors, see Item 11.
-27-
PART IV
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
Exhibits to Form 10-KSB
Exhibits filed with this Report are incorporated by
reference and set forth below:
Exhibit 31: Entitled "Certificate of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002".
Exhibit 32: Entitled "Certification Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002".
The financial statement information required by this portion
of Item 13 is submitted as a separate section at the rear of this
Report entitled "Independent Auditors' Report".
Reports on Form 8-K
There were no Form 8-K's filed by the Company during the
fiscal year ended March 31, 2008.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees - The aggregate fees billed by HJ & Associates
for professional services rendered for the audit of our annual
financial statements included in our Annual Report on Form 10-KSB
for the fiscal years ended March 31, 2008 and March 31, 2007 and
for the quarterly financial statements on Form 10-QSB were
approximately $26,000 and $16,000, respectively. There were no
other fees charged to the Company by HJ & Associates.
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
-28-
Exhibit "31"
CERTIFICATE OF CHIEF EXECUTIVE AND CHIEF EXECUTIVE
OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dean W. Rowell, certify that:
1. I have reviewed this annual report on Form 10KSB of Standard
Energy Corporation;
2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition results
of operations and cash flows of the registrant as of, and for,
the periods presented in this Annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and we have;
(a) designed such disclosure controls and procedures to
ensure hat material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days of
this annual report) the "Evaluation Date"); and
(c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function);
-29-
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involved
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
SIGNA TURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STANDARD ENERGY CORPORATION
By: /s/ Dean W. Rowell
Dean W. Rowell
President
July 14, 2008
Salt Lake City, Utah
-30-
EXHIBIT "32"
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBAN ES-OXLEY ACT OF 2002
In connection with the Annual Report of Standard Energy (the
"Company") on Form 10-KSB for the period ending March 31, 2008,
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Dean W. Rowell, Chief Executive Officer
(Chief Financial Officer) of the Company, certify, pursuant to 18
U.S.C. subsection 1350, as adopted pursuant to subsection 906 of
the Sarbanes-Oxley Act of 2002, that to the best of my knowledge
and belief:
(1) The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial
condition and result of operations of the Company.
/s/Dean W. Rowell
Dean W. Rowell
Chief Executive Officer (Chief Financial Officer)
Date: July 14, 2008
-31-
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STANDARD ENERGY CORPORATION
By: /s/ Dean W. Rowell
Dean W. Rowell
President
July 14, 2008
Salt Lake City, Utah
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated:
Signature Capacity Date
/s/ Dean W. Rowell President and Director July 14, 2008
Dean W. Rowell (Principal Executive,
Financial and Accounting
Officer)
/s/ Pamela K. Nelson Vice President July 14, 2008
Pamela K. Nelson Corporate Secretary,
Treasurer and Director
/s/ Michael M. Cannon Director July 14, 2008
Michael M. Cannon
-32-
STANDARD ENERGY CORPORATI ON
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL ST ATEMENTS
March 31, 2008
-F1-
C O N T E N T S
Report of Independent Registered Public Accounting Firm.... 33
Consolidated Balance Sheet................................. 34
Consolidated Statements of Operations...................... 36
Consolidated Statements of Stockholders' Equity............ 37
Consolidated Statements of Cash Flows...................... 38
Notes to the Consolidated Financial Statements............. 40
-F2-
Report of Independent Regisered Public Accounting Firm
The Board of Directors
Standard Energy Corporation and Subsidiaries
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of
Standard Energy Corporation and Subsidiaries as of March 31, 2008,
and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years ended
March 31, 2008 and 2007. These consolidated 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Standard Energy Corporation and Subsidiaries
as of March 31, 2008, and the results of their operations and their
cash flows for the two years ended March 31, 2008 and 2007, in
conformity with U. S. generally accepted accounting principles.
We were not engaged to examine management's assertion about the
effectiveness of Standard Energy Corporations and Subsidiaries's
internal control over financial reporting as of March 31, 2008
included in the accompanying "Management's Annual Report on
Internal Control Over Financial Reporting" and, accordingly, we do
not express an opinion thereon.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 6 to the consolidated financial
statements, the Company is currently experiencing cash flow
difficulties which raises substantial doubt about its ability to
continue as a going concern. Management s plans with regard to
these matters are also described in Note 6. The consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
July 14, 2008
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Balance Shee t
ASSETS
March 31,
CURRENT ASSETS 2008
Cash $ 2,588
Accounts Receivable 6,475
Marketable Securities (Note 11) 1,555
Total Current Assets 10,618
PROPERTY AND EQUIPMENT, net (Note 2) 122,008
OTHER ASSETS
Cash surrender value life insurance 6,332
Oil and gas leases held for resale (Note 3) 108,039
Pledged drilling bonds (Note 3) 25,000
Total Other Assets 139,371
TOTAL ASSETS $ 271,997
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Balance Shee t (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES March 31,
2008
Accounts payable and accrued expenses $ 56,427
Revolving line of credit (Note 10) 109,459
Note payable (Note 9) 12,180
Note payable - related party (Note 5) 16,700
Total Current Liabilities 194,766
LONG TERM DEBT
Note payable (Note 10) 52,016
Total Long Term Debt 52,016
Total Liabilities 246,782
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.01 per share:
10,000,000 shares authorized, no shares issued
and outstanding 0
Common stock, par value $0.01 per share:
200,000,000 shares authorized, 188,309,554 shares
issued and outstanding 1,893,469
Additional paid-in capital 8,068,591
Treasury stock (83,253)
Accumulated other comprehensive income 290
Accumulated deficit (9,853,882)
Total Stockholders' Equity 25,215
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 271,997
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements o f Operations
For the Years Ended
March 31,
2008 2007
REVENUES
Oil and gas information services $ 1,950 $ 1,650
Oil and gas lease royalties 52,110 66,394
Total Revenues 54,060 68,044
EXPENSES
Oil and gas information services 7,174 6,287
Depreciation, depletion/amortization 15,391 8,721
Biofuels Project costs 96,428 183,925
General and administrative 140,582 164,392
Total Expenses 259,575 363,325
OPERATING LOSS (205,515) (295,281)
OTHER INCOME (EXPENSE)
Loss on Disposition of Asset (12,120) 0
Gain on Forgiveness of Debt 0 23,946
Gain (Loss) on Sale of Marketable
Securities (33,981) 173,692
Interest and other income 5,810 14,369
Interest expense (20,141) (16,864)
Total Other Income (Expense) (60,432) 195,143
NET LOSS $ (265,947) $ (100,138)
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 187,608,734 186,543,718
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrelated gain on
marketable securities (26,778) 18,080
TOTAL COMPREHENSIVE LOSS $ (292,725) $ (82,058)
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the Years Ended March 31, 2008 and 2007
Additional
Treasury Stock Common
Stock Paid-In Accumulated
Shares Amount Shares
Amount Capital Deficit
Balance, March 31, 2006 1,037,420 $ (83,253) 186,499,554 $
1,875,369 $ 7,933,691 $ (9,487,797)
Contributed capital for
services rendered by an
officer 0 0 0
0 50,000 0
Common stock issued
for purchase cash at
$0.05 per share 0 0 310,000
3,100 12,400 0
Net loss for the year
ended March 31, 2007 0 0 0
0 0 (100,138)
Balance, March 31, 2007 1,037,420 $ (83,253) 186,809,554 $
1,878,469 $ 7,996,091 $ (9,587,935)
Contributed capital for
services rendered by an
officer 0 0 0
0 50,000 0
Common stock issued
for purchase cash at
$0.05 per share 0 0 1,500,000
15,000 22,500 0
Net loss for the year
ended March 31, 2008 0 0 0
0 0 (265,947)
Balance, March 31, 2008 1,037,420 $ (83,253) 188,309,554 $
1,893,469 $ 8,068,591 $ (9,853,882)
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements o f Cash Flows
For the Years Ended
March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (265,947) $ (100,138)
Adjustments to reconcile net loss to
net cash used by operating activities:
Loss on disposition of asset 12,120 0
Depreciation, depletion and
amortization 15,391 8,721
Contributed capital for services
rendered by an officer 50,000 50,000
Realized gain on sale of marketable
securities 33,981 (173,692)
Changes in assets and liabilities:
(Increase)Decrease in accounts receivable 2,035 (1,321)
Increase in accounts payable and
accrued expenses 649 18,124
Net Cash used by Operating
Activities (151,771) (198,306)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of fixed assets (54,423) (72,889)
Proceeds from disposition of fixed assets 28,000 2,166
Proceeds from sale of marketable
securities 285,604 481,643
Payments for purchase of marketable
securities 0 (468,350)
Payments for oil & gas lease (Trachyte) (41,585) 0
Change in cash value life insurance 14,472 (5,113)
Net Cash Provided (Used) by Investing
Activities 232,068 (62,543)
CASH FLOWS FROM FINANCING ACTIVITIES
Common Stock issued for cash 37,500 15,500
Payments on line of credit and notes
payable (211,152) (8,304)
Proceeds from line of credit and notes
payable 68,440 234,151
Net Cash Provided (Used) by Financing
Activities (105,212) 241,347
NET DECREASE IN CASH (24,915) (19,502)
CASH AT BEGINNING OF YEAR 27,503 47,005
CASH AT END OF YEAR $ 2,588 $ 27,503
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
March 31,
2008 2007
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
CASH PAID FOR:
Interest $ 7,464 $ 5,656
Income taxes $ 0 $ 0
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for payment on note
payable and accrued interest
related party $ 0 $ 0
Common stock issued for land
related party $ 0 $ 0
The accompanying notes are an integral part of these consolidated
financial statements
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was organized under the laws of the State of Utah on
April 3, 1978. The Company's principal business activity is the
acquisition and resale of unproven oil and gas leaseholds. The
Company also provides a variety of geologic lease evaluation
services and information. Further, the Company receives royalty
income from leasehold interests held by the Company.
Principles of Consolidation
The consolidated financial statements include the accounts of
Standard Energy Corporation and its wholly-owned subsidiaries,
Standard EnviroSystems, Inc., and Petroleum Investment Company
"(collectively the Company)". Significant intercompany accounts and
transactions have been eliminated in consolidation.
Oil and Gas Leasehold Interests Held for Resale
The Company's inventory of oil and gas leasehold interests held
primarily for resale to other parties is valued at the lower of the
costs to acquire the interests or market. Cost of sales is based
on the cost of the specific leasehold interest sold.
Oil and Gas Activities
The Company follows the successful efforts method of accounting for
its oil and gas exploration and production activities as prescribed
by Statement No. 19 of the Financial Accounting Standards Board.
Property and Equipment
Property and equipment are valued at cost and, are depreciated or
amortized principally by the straight-line method over their
estimated useful lives. The useful lives of property and equipment
for purposes of financial reporting range from five to seven years.
Accounts Receivable
Accounts receivable are carried at the expected net realizable
value. The allowance for doubtful accounts is based on
management's assessment of the collectivity of specific customer
accounts and the aging of the accounts receivables. If there were
a deterioration of a major customer's creditworthiness, or actual
defaults were higher than historical experience, our estimates of
the recoverably of the amounts due to us could be overstated, which
could have a negative impact on operations.
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes royalty revenue from various oil and gas
leases held in Utah and Wyoming. Royalty revenue (oil production
revenue) is earned as it is extracted from the Company's leased
properties and when the amount is reasonably determinable and
collection assured.
Marketable Securities
The Company follows the provisions of SFAS 115 regarding
marketable securities. The Company's securities investments that
are bought and held principally for the purpose of selling them
in the near term are classified as trading securities. Trading
securities are recorded at fair value on the balance sheet in
current assets, with the change in fair value during the period
included in earnings.
Securities investments that the Company has the positive intent
and ability to hold to maturity are classified as held-to-
maturity securities and recorded at amortized cost in investments
and other assets. Securities investments not classified as
either held-to-maturity or trading securities are classified as
available-for-sale securities. Available-for-sale securities are
recorded at fair value in investments and other assets on the
balance sheet, with the change in fair value during the period
excluded from earnings and recorded net of tax as a separate
component of equity. If however a decrease in value is thought
to be "other than temporary" the loss will be included in
earnings. All marketable securities held by the Company have been
classified as available-for-sale securities.
Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely that not that some portion
or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates on the date of enactment.
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net deferred tax assets consist of the following components as of
March 31, 2008 and 2007:
2008 2007
Deferred tax assets
NOL Carryover $ 905,910 $ 819,702
Contribution Carryover 4,311 4,311
Total Deferred Tax Asset 0 0
Deferred tax liabilities: 0 0
Valuation allowance (910,221) (824,013)
Net deferred tax asset $ 0 $ 0
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate to pretax
income from continuing operations for the years ended March 31,
2008 and 2007 due to the following:
2008 2007
Book income $ (103,719) $ (39,054)
Stock for services 19,500 19,500
Depletion (8,952) (11,249)
Other 1,404 (289)
Unrealized Loss 7,277 0
Valuation allowance 84,490 31,092
$ 0 $ 0
At March 31, 2008, the Company had net operating loss
carryforwards of approximately $2,320,000 that may be offset
against future taxable income from the year 2008 through 2028.
No tax benefit has been reported in the March 31, 2008
consolidated financial statements since the potential tax benefit
is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Should a
change in ownership occur, net operating loss carryforwards may be
limited as to use in the future years.
-F12-
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basic Loss Per Share
The computation of basic loss per share of common stock is based
on the weighted average number of shares of common stock
outstanding during the periods presented.
For the Year Ended
March 31, 2007
Loss Shares Per Share
(Numerator) (Denominator) Amount
$ (100,138) 186,543,718 $ (0.00)
For the Year Ended
March 31, 2008
Loss Shares Per Share
(Numerator) (Denominator) Amount
$ (265,947) 187,608,734 $ (0.00)
Cash Flows Statement
For purposes of statements of cash flows, the Company considers
all highly liquid debt investments purchased with a maturity of
three months or less to be cash equivalents.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at cost,
less accumulated depreciation as of March 31, 2008:
Vehicle $ 81,019
Oil & Gas Properties 149,153
Computers 7,711
Furniture and fixtures 51,393
Printing systems 35,648
Well and land files and maps 305,000
Total 629,924
Less: accumulated depreciation (507,916)
Total $ 122,008
Depreciation expense for the years ended March 31, 2008 and 2007
was $15,391 and $8,721, respectively.
NOTE 3 - OIL AND GAS PROPERTIES
The Company's primary oil and gas businesses, brokerage of
leasehold interests and sales related to its information services,
have decreased significantly over the past few years. At March 31,
2008, the Company was holding oil and gas leases for resale with a
cost basis of $108,039.
The Company has negotiated agreements with certain non affiliates
to provide capital to jointly participate in a leasing program for
oil and gas leases. Under these agreements, the Company provides
raw data and services to identify potential leases. The Company
earns approximately 40% gross interest in each leasehold obtained.
Because the Company has no cost in the leases, its share of the net
proceeds is recognized as revenue when the leases are sold and are
recorded as sales of oil and gas leasehold interests.
In connection with its lease brokerage activities, the Company has
included in other assets pledged certificates of deposit in the
amount of $25,000 which are to secure a statewide oil and gas lease
bond in the State of Utah and an individual lease bond in the State
of Wyoming.
-F14-
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Office Lease
The Company entered into a lease extension agreement for office
space which commenced December 15, 2002 for a term of one year with
monthly lease payments of $1,500 per month. The office space is
being rented on a month to month basis.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the years ended March 31, 2008 and 2007, an officer of the
Company contributed services valued at $50,000 and $50,000,
respectively, which is recorded as an increase in additional paid-
in capital.
On November 12, 2007, Trachyte sold oil and gas lease ML-50405 to
the Company for $57,600. The lease is part of the Company's
Greentown field development plans. Due to the Company cash flow
situation, Trachyte agreed to accept cash payment for the lease
over a 6-month period and upon final payment by the Company to
Trachyte, Trachyte will make record title assignment to Standard.
On July 3, 2008 Trachyte extended for 1-year the time to pay the
balance owed to them by the Company on lease ML-50405.
On April 1, 2007, the Company allowed Mr. Rowell's daugther, Karen
Rowell to rent on a month to month basis the 2007 Saturn Sky if she
would make the payment to the company of $380.15 per month. As of
March 31, 2008, Ms. Rowell had paid $4,406.12 to the Company
towards the rental of the car. The rental period ended on June 30,
2008 at which time Ms. Rowell agreed to return the car to the
Company.
NOTE 6 - GOING CONCERN
These financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred
significant losses in the past which have resulted in working
capital and accumulated deficits. These deficits have been caused
primarily from the Company's investment in Biomass International,
Inc. (a development stage company) and significantly reduced
revenues from sales of its oil and gas leasehold interests and
information services. Because of the currently changing conditions
in the oil and gas industry, coupled with the Company's cash flow
difficulties, the Company's ability to retain and ultimately
recover its investments in oil and gas leaseholds held for resale
and other assets of the Company, is uncertain at this time. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in this regard are
to seek additional financing through loans or through the issuance
of equity securities and to seek increased sales related to its oil
-F15-
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 6 - Continued
and gas businesses. However, management can give no assurance
that it will be successful in its endeavor to resolve its cash
flow difficulties or that it will be able to retain and
ultimately recover its cost in oil and gas leaseholds held for
resale and the other assets of the Company. The financial
statements do not include any adjustments relating to the
recoverably and classification of liabilities, income or expenses
that might be necessary should the Company be unable to continue
as a going concern.
NOTE 7 - CAPITAL STOCK
Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock,
$0.01 par value with such rights, preferences and designations
and to be issued in such series as determined by the Board of
Directors. No shares are issued and outstanding at March 31,
2008.
NOTE 8 - NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS
During the year ended March 31, 2008, the Company adopted the
following accounting pronouncements which had no impact on the
financial statement or results of operations:
- SFAS No. 141, Business Combinations
- SFAS No. 157, Fair Value
- SFAS No. 159, Fair Value Option for Financial Assets and
Financial Liabilities - including an amendment of FASB
Statement No. 115
- SFAS No. 160, Noncontrolling Interest in Consolidated
Financial Statements
- SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities
In addition, during the year ended March 31, 2008, FASB
Interpretations No. 45 and No. 46, along with various Emerging
Issues Task Force Consensuses (EITF) were issued and adopted by the
Company and has no impact on its financial statements.
NOTE 9 - NOTE PAYABLE
Note payable to vehicle financing agency,
Note 1 Note 2 Note 3 Total
Monthly Payment $ 380.15 $ 631.41 $ 612.24
Interest Rate 10.90% 11.90% 11.90%
Principal Balance 12,082 26,175 25,939 $64,196
Less Current Portion 3,300 4,480 4,400 12,180
Long term Portion $ 8,782 $ 21,695 $ 21,539 $52,016
-F16-
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
Future maturities of long term debt are as follows:
For the year ended
March 31,
2010 $ 16,626
2011 14,358
2012 13,121
2013 7,911
Total $ 52,016
NOTE 10 - REVOLVING LINES OF CREDIT
Line of credit due to Wells Fargo
Business currently in default,
bearing interest at 12.5%, unsecured. $ 109,459
$ 109,459
NOTE 11 - CURRENT ASSETS AVAILABLE FOR SALE EQUITY SECURITIES
Included in current assets are available-for-sale equity
securities. The following summarizes the aggregate market value,
cost, gross unrealized holding gains and losses and income tax
effect of available-for-sale securities:
March 31
2008 2007
Market Value $ 1,555 $ 347,919
Cost 27,719 320,850
Gross unrealized holding gains
before income tax effect 290 27,069
Income tax effect 0 0
Gross unrealized holding gains,
net of income tax effect,
included in stockholders' equity 290 27,069
Realized gains (losses) on available-for-sale securities amounted
to $(33,981) for the year ended March 31, 2008 and $173,692 for
the year ended March 31, 2007. Proceeds from sales of available-
for-sale securities amounted to $510,717 for the year ended March
31, 2008, $481,643 for the year ended March 31, 2007. The
Company uses the specific identification method to determine the
cost of securities sold.
-F17-
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
March 31, 2008 and 2007
NOTE 12 - INCOME TAXES
The Company or one of its subsidiaries files income tax returns
in the U.S. federal jurisdiction, and Utah. With few exceptions,
the Company is no longer subject to U.S. federal and Utah income
tax examinations by tax authorities for years before 2004.
The Company adopted the provisions of FASB Interpretation No. 48
Accounting for Uncertainty in Income Taxes, on April 1, 2007. As
a result of the implementation of Interpretation 48, the Company
recognized approximately $0 increase in the liability for
unrecognized tax benefits which was accounted for as a reduction
to the April 1, 2007, balance of retained earnings.
Included in the balance at March 31, 2008, are $0 of tax
positions for which the ultimate deductibility if highly certain
but for which there is uncertainty about the timing of such
deductibility. Because of the impact of deferred tax accounting,
other than interest and penalties, the disallowance of the
shorter deductibility period would not affect the annual
effective tax rate but would accelerate the payment of cash to
the taxing authority to an earlier period.
The Company recognizes interest accrued related to unrecognized
tax benefits in interest expense and penalties in operating
expenses. During the years ended March 31, 2008, 2007 and 2006,
the Company recognized approximately $0, $0, and $0 in interest
and penalties. The Company had approximately $0 and $0 for the
payment of interest and penalties accrued at March 31, 2008, and
2007, respectively.
NOTE 13 - LEGAL PROCEEDINGS
On August 30, 2007 a Complaint of Civil Action was filed in the
Third Judicial District Court, State of Utah in and for the
County of Salt Lake. Salt Lake Department, against Standard
Energy Corporation (the "Company"), and Dean W. Rowell,
individually ("its affiliates"). The Complaint alleges that the
Company and its affiliates failed to make payments as required by
said Contract with Wells Fargo Bank. The Complaint asserts a
claim for the sum of $105,243.55, plus interest thereafter at the
Contract rate of 19.80% per annum, until paid in full and a
claim for court-ordered attorneys costs. The Company and its
affiliates believe the Complaint to be highly inflated and will
vigorously defend its position. The Company and its affiliates
have discussed this case with its attorneys and believe that the
amount accrued on the balance sheet is more than enough to cover
the claim. The Company and its affiliates have engaged the law
firm of Cohne, Rappaport & Segal to represent their interest in
this matter. At the request of our counsel and due to the
Plaintiff not doing anything, Judge Quinn dismissed the case
without prejudice on June 23, 2008.
-F18-