UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28,August 31, 2011
or
.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _________
Commission file number: 000-52782000-52788
Viper Resources, Inc. | ||
(Exact name of registrant as specified in its charter) | ||
Nevada | 26-2113613 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
800 E. Colorado Blvd., Suite Pasadena, California 91101 | ||
(Address of principal executive offices) | ||
(626) 683-7330 | ||
(Registrant’s telephone number, including area code) | ||
(Former Name, if Changed Since Last Report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. Yesx X. No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o. No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer | | Accelerated filer | | |
Non-accelerated filer | | |||
(Do not check if a smaller reporting company) | Smaller reporting company | X. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o. Nox X.
As of April 5,October 14, 2011 there were 81,116,21484,116,214 shares of the issuer’s common stock, par value $0.00001, outstanding.
VIPER RESOURCES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28,AUGUST 31, 2011
TABLE OF CONTENTS
PAGE | ||||
Special Note Regarding Forward Looking Information | 3 | |||
PART I - FINANCIAL INFORMATION | ||||
Item 1. | Financial Statements | 4 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 12 | ||
Item 4. | Controls and Procedures | 13 | ||
PART II - OTHER INFORMATION | ||||
Item 1. | Legal Proceedings | 13 | ||
Item 1A. | Risk Factors | 13 | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 | ||
Item 3. | Defaults Upon Senior Securities | 13 | ||
Item 4. | (Removed and Reserved) | 13 | ||
Item 5. | Other Information | 13 | ||
Item 6. | Exhibits | 13 | ||
SIGNATURES | 14 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on Form 10-Q for the quarter ended February 28,August 31, 2011 discusses financial projections, information or expectations about our products or markets, or otherwise makes statements about future events, such statements are forward-looking. We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties are described, among other places in this Quarterly Report, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
In addition, we disclaim any obligations to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report. When considering such forward-looking statements, you should keep in mind the risks referenced above and the other cautionary statements in this Quarterly Report.
3
PART 1 – FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
PAGE | ||
Balance Sheets as at | 5 | |
Statements of Operations for the three | 6 | |
Statements of Cash Flows for the | 7 | |
Notes to Financial Statements (Unaudited) | 8 |
VIPER RESOURCES, INC | |||||
(Formerly Cobra Oil and Gas Company) | |||||
(An Exploration Stage Company) | |||||
Balance Sheet | |||||
|
|
| |||
|
|
| August 31, 2011 |
| May 31, 2011 |
|
|
| (Unaudited) |
|
|
ASSETS | |||||
Current assets |
|
|
|
| |
| Cash and cash equivalent | $ | 53,128 | $ | 39,984 |
Total assets (all current) | $ | 53,128 | $ | 39,984 | |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
|
|
|
|
|
|
Current liabilities |
|
|
|
| |
| Accounts payable | $ | 13,813 | $ | - |
| Accounts payable - related parties |
| 1,510 |
| 1,510 |
| Accrued interest |
| 167 |
| - |
Total current liabilities |
| 15,490 |
| 1,510 | |
|
|
|
|
|
|
| Loans payable (non-current portion) |
| 20,000 |
| - |
Total liabilities |
| 35,490 |
| 1,510 | |
|
|
|
|
|
|
Stockholders' equity |
|
|
|
| |
| Preferred stock, $.00001 par value; 100,000,000 shares authorized; no shares issued or outstanding |
| - |
| - |
| Common stock, $.00001 par value; 300,000,000 authorized; 84,116,214 shares issued and outstanding as of August 31, 2011 and May 31, 2011 respectively |
| 841 |
| 841 |
| Additional paid in capital |
| 6,743,372 |
| 6,743,372 |
| Deficit accumulated during development stage |
| (6,726,575) |
| (6,705,739) |
Total stockholders' equity |
| 17,638 |
| 38,474 | |
|
|
|
|
|
|
Total liabilities and stockholders' equity | $ | 53,128 | $ | 39,984 | |
|
|
|
|
|
|
See accompanying notes to financial statements |
VIPER RESOURCES, INC | |||||||
(Formerly Cobra Oil and Gas Company) | |||||||
(An Exploration Stage Company) | |||||||
Unaudited Statement of Operations | |||||||
|
|
|
|
|
|
|
|
|
|
| For the three months ended August 31, 2011 |
| For the three months ended August 31, 2010 |
| November 18, 2005 (inception) through August 31, 2011 |
|
|
|
|
|
|
|
|
Revenue | $ | - | $ | - | $ | - | |
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
| |
| General and administrative expenses |
| 20,669 |
| 88,115 |
| 6,707,790 |
Total operating expenses |
| 20,669 |
| 88,115 |
| 6,707,790 | |
|
|
|
|
|
|
|
|
Loss from operations |
| (20,669) |
| (88,115) |
| (6,707,790) | |
|
|
|
|
|
|
|
|
Other income / (expenses) |
|
|
|
|
|
| |
| Loss on disposal of office equipments |
| - |
| - |
| (1,592) |
| Interest expenses |
| (167) |
| - |
| (17,193) |
Total other income / (expense) |
| (167) |
| - |
| (18,785) | |
|
|
|
|
|
|
|
|
Net loss | $ | (20,836) | $ | (88,115) | $ | (6,726,575) | |
|
|
|
|
|
|
|
|
Basic and diluted loss per common shares | $ | (0.00) | $ | (0.00) |
|
| |
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
| 84,116,214 |
| 83,491,214 |
|
| |
|
|
|
|
|
|
|
|
See accompanying notes to financial statements |
VIPER RESOURCES, INC | ||||||||
(Formerly Cobra Oil and Gas Company) | ||||||||
(An Exploration Stage Company) | ||||||||
Unaudited Statement of Cash Flows | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended August 31, 2011 |
| For the three months ended August 31, 2010 |
| November 18, 2005 (inception) through August 31, 2011 |
Cash flows from operating activities |
|
|
|
|
|
| ||
|
| Net loss | $ | (20,836) | $ | (88,115) | $ | (6,726,575) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
| |
|
| Donated office space and services |
| - |
| - |
| 13,500 |
|
| Depreciation |
| - |
| 145 |
| 1,304 |
|
| Exploration costs - lease write downs |
| - |
| - |
| 5,339,871 |
|
| Compensatory stock issuances |
| - |
| - |
| 17,000 |
| Chnanges operating assets and liabilities: |
|
|
|
|
|
| |
|
| Other assets |
| - |
| 15,000 |
| - |
|
| Accounts payable |
| 13,813 |
| - |
| 13,813 |
|
| Accounts payable - related parties |
| - |
| (2,050) |
| 9,807 |
|
| Accrued interest |
| 167 |
| - |
| 167 |
Net cash provided by (used in) operating activities |
| (6,856) |
| (75,020) |
| (1,331,113) | ||
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
| ||
|
| Purchase of equipment and furniture |
| - |
| - |
| (2,896) |
|
| Loss on disposal of equipment and furniture |
| - |
| - |
| 1,592 |
|
| Oil and gas properties |
| - |
| - |
| (691,871) |
Net cash used in investing activities |
| - |
| - |
| (693,175) | ||
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
| ||
|
| Common stock issued for cash |
| - |
| 100,000 |
| 1,940,450 |
|
| Proceeds from loans |
| 20,000 |
| - |
| 136,966 |
Net cash provided by financing activities |
| 20,000 |
| 100,000 |
| 2,077,416 | ||
|
|
|
|
|
|
|
|
|
| Net change in cash and cash equivalent |
| 13,144 |
| 24,980 |
| 53,128 | |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalent at the beginning of period |
| 39,984 |
| 202,557 |
| - | |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalent at the end of period | $ | 53,128 | $ | 227,537 | $ | 53,128 | |
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow Information: |
|
|
|
|
|
| ||
| Cash paid for interest | $ | - | $ | - | $ | - | |
| Cash paid for income taxes | $ | - | $ | - | $ | - | |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities: |
|
| ||||||
| Issuance of securities for services rendered | $ | - | $ | - | $ | - | |
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements |
7
VIPER RESOURCES, INC.
February 28, 2011 | May 31, 2010 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 124,213 | $ | 202,557 | ||||
Total current assets | 124,213 | 202,557 | ||||||
Property and equipment | ||||||||
Office equipment net of $869 and $434 depreciation | 2,028 | 2,462 | ||||||
Oil and gas properties, non producing, full cost method | 96,000 | 96,000 | ||||||
Total property and equipment | 98,028 | 98,462 | ||||||
Other assets | ||||||||
Prepaid expenses | - | 20,000 | ||||||
Total other assets | - | 20,000 | ||||||
Total Assets | $ | 222,241 | $ | 321,019 | ||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 1,410 | $ | 2,050 | ||||
Due to related party | 100 | 1,510 | ||||||
Total current liabilities | 1,510 | 3,560 | ||||||
Stockholders' Equity | ||||||||
Preferred stock, $0.00001 par value; | ||||||||
100,000,000 shares authorized; | ||||||||
none issued and outstanding | ||||||||
Common stock, $0.00001 par value; | ||||||||
100,000,000 shares authorized; | ||||||||
84,116,214 issued and outstanding at November 30, 2010 | ||||||||
and 79,116,214 issued and outstanding at May 31, 2010 | 841 | 791 | ||||||
Additional paid-in capital | 6,743,372 | 6,643,422 | ||||||
Deficit accumulated during the exploration stage | (6,523,482 | ) | (6,326,754 | ) | ||||
Total Stockholders' Equity | 220,731 | 317,459 | ||||||
Total Liabilities and Stockholders' Equity | $ | 222,241 | $ | 321,019 |
UNAUDITED FINANCIAL STATEMENTS
For the three months ended August 31, 2011
NOTE 1 – CONDENSED FINANCIAL STATEMENTS
The accompanying notes are an integral part of these financial statements.
November 18, 2005 (Inception) Through February 28, 2011 | ||||||||||||||||||||
Three Months Ended Febuary 28, | Nine Months Ended February 28, | |||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses | ||||||||||||||||||||
Advertising | - | 1,495 | ||||||||||||||||||
Accounting | 1,500 | 2,600 | 8,850 | 10,900 | 54,265 | |||||||||||||||
Bank Charges | 45 | 634 | 255 | 2,309 | 7,397 | |||||||||||||||
Delay rentals | - | 2,944 | ||||||||||||||||||
Depreciation | 145 | 145 | 434 | 290 | 868 | |||||||||||||||
Directors fees | - | 12,500 | 17,000 | |||||||||||||||||
Exploration costs | - | - | 129,885 | |||||||||||||||||
Insurance | 5,000 | 5,000 | 25,000 | 15,000 | 65,000 | |||||||||||||||
Legal | 7,500 | 51,766 | 39,913 | 152,317 | 330,405 | |||||||||||||||
Office expense | 757 | 1,640 | 3,422 | 12,695 | 28,423 | |||||||||||||||
Rent | 4,140 | 6,000 | 12,359 | 18,739 | 71,733 | |||||||||||||||
Telephone | 582 | 882 | 1,903 | 2,629 | 10,984 | |||||||||||||||
Transfer agent | 457 | 1,793 | 1,407 | 2,553 | 24,574 | |||||||||||||||
Travel | - | 4,774 | 15,438 | 37,982 | ||||||||||||||||
Management services | 30,000 | 30,000 | 90,000 | 105,000 | 338,100 | |||||||||||||||
Write downs - oil and gas properties | 5,243,871 | |||||||||||||||||||
Website/investor communications | 168 | 9,450 | 13,185 | 108,506 | 141,530 | |||||||||||||||
Total expenses | 50,294 | 114,684 | 196,728 | 458,876 | 6,506,456 | |||||||||||||||
Loss from operations | (50,294 | ) | (114,684 | ) | (196,728 | ) | (458,876 | ) | (6,506,456 | ) | ||||||||||
Other income (expense) | ||||||||||||||||||||
(Interest) | - | (5,000 | ) | - | (6,659 | ) | (17,026 | ) | ||||||||||||
Income (loss) before provision for income taxes | (50,294 | ) | (119,684 | ) | (196,728 | ) | (465,535 | ) | (6,523,482 | ) | ||||||||||
Provision for income tax | - | - | - | - | - | |||||||||||||||
Net income (loss) | $ | (50,294 | ) | $ | (119,684 | ) | $ | (196,728 | ) | $ | (465,535 | ) | $ | (6,523,482 | ) | |||||
Net income (loss) per share | ||||||||||||||||||||
(Basic and fully diluted) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||||||
Basic weighted average number of | ||||||||||||||||||||
common shares outstanding | 83,491,214 | 78,384,884 | 83,491,214 | 78,384,884 | ||||||||||||||||
Fully diluted average number of | �� | |||||||||||||||||||
common shares outstanding | 83,491,214 | 78,384,884 | 83,491,214 | 78,384,884 |
November 18, 2005 (Inception) Through February 28,| 2011 | ||||||||||||
Nine Months Ended | ||||||||||||
February 28, | ||||||||||||
2011 | 2010 | |||||||||||
Cash Flows From Operating Activities | ||||||||||||
Net income (loss) during the exploration stage | (196,728 | ) | (465,535 | ) | (6,523,483 | ) | ||||||
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | ||||||||||||
Donated office space and services | - | - | 13,500 | |||||||||
Non-cash expenses | ||||||||||||
Depreciation | 434 | 290 | 868 | |||||||||
Compensatory stock issuances | - | 12,500 | 17,000 | |||||||||
Changes in operating assets and liabilities | ||||||||||||
Accounts payable and accrued liabilities | (2,050 | ) | (390 | ) | 9,808 | |||||||
Other assets | 20,000 | (45,000 | ) | - | ||||||||
Exploration costs - lease write downs | - | - | 5,243,871 | |||||||||
Net cash provided by (used for) operating activities | (178,344 | ) | (498,135 | ) | (1,238,436 | ) | ||||||
Cash Flows From Investing Activities: | ||||||||||||
Fixed assets | - | (2,896 | ) | (2,896 | ) | |||||||
Oil and gas properties | - | (1,000,000 | ) | (691,871 | ) | |||||||
Net cash flows from investing activities | - | (1,002,896 | ) | (694,767 | ) | |||||||
Cash Flows From Financing Activities: | ||||||||||||
Sale of common stock | 100,000 | 1,250,000 | 1,940,450 | |||||||||
Contract payable | 500,000 | - | ||||||||||
Increase in due to related party | - | - | 116,966 | |||||||||
Net cash provided by (used for) financing activities | 100,000 | 1,750,000 | 2,057,416 | |||||||||
Net Increase (Decrease) in Cash | (78,344 | ) | 248,969 | 124,213 | ||||||||
Cash at Beginning of Period | 202,557 | 21,072 | - | |||||||||
Cash at End of Period | $ | 124,213 | $ | 270,041 | $ | 124,213 |
Certain information and gas properties valued at $5,148,000. The Company issued 153,508 common shares for debt relief of $125,263.
NOTE 2 – NOTES PAYABLE
The Company has had no revenue to date.
As of the present value of estimated future net revenues from proved oil and gas reserves in the cost center and the lower of cost or fair value of properties not being amortized, both adjusted for income tax effects, such excess is charged to expense.
NOTE 3 – SHAREHOLDERS’ EQUITY
There is no change in Southern Uintah County Utah, when and if exploration permission is granted by the U S Bureau of Land Management. The transaction was originated in July of 2009 with a value of $4,500,000 consisting of $4,000,000 in stock and $500,000 cash. Due to lack of action on the part of the U S Bureau of Land Management, and the current degree of uncertainty with regard to tar sand extraction techniques as applied to the Company’s lease holdings, the lease was written down to a value of $0 as of the end of the May 2010 fiscal year.
NOTE 4 – SIGNIFICANT TRANSACTIONS
The Company stock valued at $312,000. At the May 2010 fiscal year end the fair market value was determined to be $60,000, with the Company taking a write down expense of $252,000.
NOTE 5 – SUBSEQUENT EVENTS
Management has reviewed material events subsequent to the common stock as the warrants are non-detachable. At November 30, 2010 none of the warrants had been exercised or had expired, leaving a quarter end balance of 9,025,209 warrants.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed elsewhere in this annualquarterly report.
We are in the exploration stage as an oil and gas exploration company and are presentlyduring the quarter ended August 31, 2011 we engaged in limited oil and gas activities in Utah and Montana.activities. We had minimal operations and generated no revenues during the quarter ended February 28, 2011 or the fiscal year ended MayAugust 31, 2010.2011. Our ability to develop and maintain a meaningful level of revenues from oil and gas operations is dependent on our ability to successfully acquire and drill exploration and development wells and complete producing property acquisition.
At the present time, we have no developed properties and no production.
During the next 12 months, we intend to evaluate and determine whether to expand or discontinue our oil and gas operations. We may also seek to identify possible merger candidates in the oil and gas industry or in other fields.
In its report dated August 10, 2010,September 13, 2011, our auditors, Ronald R. Chadwick, PCSam Kan & Company expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. We have generated no operating revenues since our inception. We had an accumulated deficit of $6,523,482 and $6,326,754$6,726,575 as of February 28, 2011 and MayAugust 31, 2010, respectively.2011. Our continuation as a going concern is dependent upon future events, including our ability to raise additional capital and to generate positive cash flows.
Our current business plan strategy is to develop our properties and any otherthe prospects that we may acquire interests in. We intend to fund any additional lease acquisitions and any seismic costs needed to further define the prospects from additional financing. No assurance can be given that such additional financing will be available to us as and when needed or, if available, the terms on which it will be available.
Subject to receipt of necessary financing and the evaluation of our proposed oil and gas operations, we plan to spend approximately $1,000,000$100,000 in the next 12 months on explorationoil and development activities such as seismic data acquisition, additional lease acquisition, technical studies and participating in joint venture development and exploration drilling.
We will require financing to meet working capital costs, including the cost of reviewing and negotiating transactions and other ordinary general and administrative costs such as regulatory compliance, investor relations, advisory services, officer’s salaries, office and general expenses, professional fees, travel and entertainment and rent and related expenses. We estimate that the level of working capital needed for these general and administrative costs for the next twelve months will be approximately $200,000.$150,000. However, this estimate is subject to change, depending on the number of transactions in which we ultimately become involved. In addition, funding will be required for follow-on development of working interest obligations of any successful exploration prospects.
Oil and gas exploration requires significant outlays of capital and in many situations may offer a limited probability of success. We hope to enhance our chances for success by effectively using available technology, rigorously evaluating sub-surface data, and, to the extent possible, managing dry-hole and financial risks.
We intend to rely on synergistic partnering with sophisticated industry partners. The ideal partner would tend to be a regionally focused independent which has a large seismic database, a solid grasp on the play’s history, and a lead in understanding technology to exploit the play. However, there is no assurance that we will be able to successfully negotiate any such partnering agreement or raise the necessary financing to invest in such a venture, or that any such venture will yield us any revenues or profits.
We will face competition from firms that are well-established, successful, better capitalized and, in many instances, willing to pay more for properties than what we might consider prudent. Thus, our success will depend on the execution of our business model to
·
identify available transactions;
·
quickly evaluate which transactions are most promising; and
·
negotiate a creative transaction structure.
Presently we have onefour full-time employee consisting of Massimiliano Pozzoni, our Presidentexecutive officers, Dianwen Ju, Jimmy Wang, Xiao Chen and Chief Executive and Financial Officer. We do not expect significant changesVincent Wang. Changes in the number of employees during the next twelve months.months will be a function of the level of business activity.
We intend to contract out certain technical and administrative functions on an as-needed basis in order to conduct our operating activities. Our management team will select and hire these contractors and manage and evaluate their work performance.
Results of Operations
Revenues
We have had no revenues since our inception.
Expenses
Due to decreasesa decrease in legal fees, travelgeneral and administrative expenses, website/investor communications expenses, and directors’ fees, our operating expenses during the three and nine months ended February 28,August 31, 2011 decreased to $50,294 and $196,728$20,669 from $114,684 and $458,876$88,115 during the three and nine months ended February 28,August 31, 2010.
Net Loss
We incurred a net lossesloss for the three and nine months ended February 28,August 31, 2011 of $50,294 and $196,728, respectively,$20,836 and incurred a net loss for the three and nine months ended February 28,August 31, 2010 of $119,684 and $465,535, respectively.$88,115. The decrease in net loss was directly attributable to thea decrease in our operatinggeneral and administrative expenses.
Liquidity and Capital Resources
At February 28,August 31, 2011, we had working capital of $122,703$37,638 compared to working capital of $198,997$38,474 at May 31, 2010.2011. Current liabilities decreasedincreased to $1,510$15,490 at February 28,August 31, 2011 from $3,560$1,510 at May 31, 2010.2011. Current assets decreasedincreased to $124,213$53,128 at February 28,August 31, 2011 from $202,557$39,984 at May 31, 2010.2011. The decreaseincrease in working capital and current assets at February 28,August 31, 2011 compared to May 31, 20102011 was due to a decreasean increase in cash.
Critical Accounting Policies and Estimates
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.
Income Tax
The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss 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 than 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.
Net Income (Loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company’s preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
Revenue Recognition
Revenue is recognized on an accrual basis as earned under contract terms. The Company has had no revenue to date.
Oil and Gas Interests
The Company follows the full-cost method of accounting for oil and natural gas properties. Under this method, all costs incurred in the exploration, acquisition, and development, including unproductive wells, are capitalized in separate cost centers for each country. Such capitalized costs include contract and concessions acquisition, geological, geophysical, and other exploration work, drilling, completing and equipping oil and gas wells, constructing production facilities and pipelines, and other related costs.
The capitalized costs of oil and gas properties in each cost center are amortized on a composite units of production method based on future gross revenues from proved reserves. Sales or other dispositions of oil and gas properties are normally accounted for as adjustments of capitalized costs. Gain or loss is not recognized in income unless a significant portion of a cost center’s reserves is involved. Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired. If the net capitalized costs of oil and gas properties in a cost center exceed an amount equal to the sum of the present value of estimated future net revenues from proved oil and gas reserves in the cost center and the lower of cost or fair value of properties not being amortized, both adjusted for income tax effects, such excess is charged to expense.
Since the Company has not produced any oil or gas, a provision for depletion has not been made.
Financial Instruments
The carrying value of the Company’s financial instruments, including cash and cash equivalents, as reported in the Company’s balance sheet, approximates fair value.
Stock Based Compensation
The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.
Recent Accounting Pronouncements
In April 2010, new accounting guidance was issued for the milestone method of revenue recognition. Under the new guidance, an entity can recognize revenue from consideration that is contingent upon achievement of a milestone in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. This guidance is effective prospectively for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The Company has adopted the provisions of SFAS No. 123(r)this guidance effective July 1, 2010, which are effective in general for transactions entered into or modified after June 15, 2005. The adoption did not have a material effectimpact on its consolidated financial statements.
In February 2010, the FASB issued guidance to remove the requirement for an entity that files financial statement with the SEC to disclose a date through which subsequent events have been evaluated. The adoption of this guidance during our current fiscal quarter did not have any impact on our Consolidated Financial Statements.
On July 1, 2009, Financial Accounting Standards Board ("FASB") Accounting Standards CodificationTM ("ASC") became the sole source of authoritative Generally Accepted Accounting Principles ("GAAP") literature recognized by the Financial Accounting Standards Board for financial statements issued for interim and annual periods ending after September 15, 2009. Rules and interpretive releases of the Security Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Except for applicable SEC rules and regulations and a limited number of grandfathered standards, all other sources of GAAP for nongovernmental entities were superseded by the issuance of ASC. ASC did not change GAAP, but rather combined the sources of GAAP and the framework for selecting among those sources into a single source. Accordingly, the adoption of ASC had no impact on the financial results of the Company.
In June 2009, the FASB issued FAS 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles," which now resided with ASC 105, "Generally Accepted Accounting Principles." ASC 105 will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non- SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.The Company does not expect the adoption of ASC 105 to have an impact on the Company's results of operations, financial condition or cash flows.
In June 2009, the FASB issued FAS 167, "Amendments to FASB Interpretation No. 46(R)," which now resides with ASC 810, "Consolidation." ASC 810 is intended to (1) address the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the Company.
In June 2009, the FASB issued FAS 140/166, "Accounting for Transfers of Financial Assets," an amendment of FAS 140, which now resides with ASC 860, "Transfers and Servicing." ASC 860 is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets: the effects of a transfer on its financial position, financial performance , and cash flows: and a transferor's continuing involvement, if any, in transferred financial assets. This statement must be applied as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of ASC 860 to have an impact on the Company's results of operations, financial condition or cash flows.
In May 2009, the FASB issued FAS 165, "Subsequent Events," which now resides with ASC 855, "Subsequent Events." This pronouncement establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). ASC 855 requires and entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material impact on the Company's financial condition or results of operation.
In May, 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, “Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and SFAS No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard isdid not expected to have a material effect on the Company’s results of operations or financial position.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
Effect of Inflation and Changes in Price
Our future revenues, future rate of growth, results of operations, financial condition and ability to borrow funds or obtain additional capital, as well as the carrying value of our properties, are substantially dependent upon prevailing prices of oil and natural gas. If the price of oil and natural gas increases (decreases), there could be a corresponding increase (decrease) in the operating cost that we are required to bear for operations, as well as an increase (decrease) in revenues. Inflation has had a minimal effect on the operating activities of the Company.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Our Disclosure Controls
Under the supervision and with the participation of our chief executive officer and chief financial officer, Massimiliano Pozzoni, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended February 28,August 31, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not presently a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.
ITEM 1A.
RISK FACTORS
Not applicable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We made no sales of equity securities during the three months ended February 28,August 31, 2011.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
(REMOVED AND RESERVED)
ITEM 5.
OTHER INFORMATION
Not applicable.
ITEM 6.
EXHIBITS
(a)
Exhibits.
31.1
Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer
31.2
Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial Officer
32.1
Rule 1350 Certification of Chief Executive Officer
32.2
Rule 1350 Certification of Chief Financial Officer
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VIPER RESOURCES, INC.
Dated: October 14, 2011
By:/s/ Dianwen Ju
Dianwen Ju
President and Chief Executive Officer
By:/s/ Xiao Chen
Xiao Chen
Chief Financial Officer
14