DR
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
[ ]
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ X ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from April 30, 2007 to December 31, 2007
OR
[ ]
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ………………………………
Unbridled Energy Corporation
(Exact name of Registrant as specified in its charter)
British Columbia
(Jurisdiction of incorporation or organization)
Suite 400, 2424 4th Street S.W., Calgary, Alberta, Canada T2S 2T4
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the Company’s classes of capital or common stock as of the close of the period covered by the annual report. 44,533,968
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ___ No xxx
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes [ ] No [X]
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 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 ninety days. Yes_X_ No___
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer xxx
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP [ ]
International Financial Reporting Standards as issued
Other [ X]
by the International Accounting Standards Board [ ]
Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17_X_ Item 18 ___
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes___ No ____ N/A_X_
EXPLANATORY NOTE
This Amendment No. 1 on Form 20-F/A (the “Amendment”) to our annual report on Form 20-F for the fiscal year ended December 31, 2007, as filed with the Securities and Exchange Commission on June 30, 2008, is being filed solely for the purpose of correcting a typographical error that occurred during the EDGAR filing process in Note 9(3)(ii) to the financial statements. The total number of share purchase warrants outstanding in the Table has been corrected, and the financial statements are included in this amendment in their entirety.
This Amendment consists of a cover page, this explanatory note, the audited financial statements, signature page, and the required certifications.
Other than as expressly set forth herein, this Amendment No. 1 does not, and does not purport to, amend or restate any other information contained in the Annual Report nor does this Amendment No. 1 reflect any events that have occurred after the Annual Report was filed.
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT-MONTH PERIOD ENDED DECEMBER 31, 2007
AND THE YEAR ENDED APRIL 30, 2007
(Stated in Canadian Dollars)
BDO Dunwoody LLP Chartered Accountants | #604 – 750 West Pender Street Vancouver, BC, Canada V6C 2T7 Telephone: (604) 689-0188 Fax: (604) 689-9773 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors,
Unbridled Energy Corporation
(A Development Stage Company)
We have audited the consolidated balance sheets of Unbridled Energy Corporation (A Development Stage Company) as at December 31, 2007 and April 30, 2007 and the consolidated statements of operations and deficit and cash flows for the eight-month period ended December 31, 2007 and the years ended April 30, 2007, 2006 and 2005. We have also audited the consolidated statements of operations and deficit and cash flows for the period from October 6, 2003 (Date of Inception) to December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance 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 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.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2007 and April 30, 2007 and the results of its operations and its cash flows for the eight-month perio d ended December 31, 2007, the years ended April 30, 2007, 2006 and 2005 and for the period from October 6, 2003 (Date of Inception) to December 31, 2007, in accordance with Canadian generally accepted accounting principles.
(signed) “BDO Dunwoody LLP”
Chartered Accountants
Vancouver, Canada | |
April 28, 2008, except for Notes 17 and 19, which are dated as of June 13, 2008 |
COMMENTS BY THE AUDITORS FOR U.S. READERS ON CANADA-US REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern such as those described in Note 1 to the consolidated financial statements. Our report to the directors dated April 28, 2008, except for Notes 17 and 19, which are dated as of June 13, 2008, is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors’ report when these are adequately disclosed in the financial statements.
(signed) “BDO Dunwoody LLP”
Chartered Accountants
Vancouver, Canada | |
April 28, 2008, except for Notes 17 and 19, which are dated as of June 13, 2008 |
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and April 30, 2007
(Stated in Canadian Dollars)
December 31, | April 30, | ||
ASSETS | 2007 | 2007 | |
Current | |||
Cash and cash equivalents | $ 509,382 | $ 3,488,898 | |
Amounts receivable – Note 13 | 591,779 | 84,338 | |
GST recoverable | 482,458 | 66,326 | |
Prepaid expenses and deposits | 159,071 | 61,776 | |
1,742,690 | 3,701,338 | ||
Amounts receivable – Note 13 | 744,986 | - | |
Funds held in Trust – Note 3 | 102,221 | 111,010 | |
Reclamation deposits – Note 4 | 231,276 | - | |
Property and equipment – Notes 5 and 13 | 17,627,482 | 14,642,725 | |
$ 20,448,655 | $ 18,455,073 | ||
LIABILITIES | |||
Current | |||
Accounts payable and accrued liabilities – Note 10 | $ 3,128,775 | $ 1,178,028 | |
Note payable – Note 6 | 49,565 | - | |
3,178,340 | 1,178,028 | ||
Bank loan – Note 7 | 3,055,682 | _- | |
Asset retirement obligation – Note 8 | 373,983 | 250,482 | |
6,608,005 | 1,428,510 | ||
SHAREHOLDERS’ EQUITY | |||
Share capital – Note 9 | 23,522,495 | 21,714,570 | |
Share subscriptions received | - | 582,490 | |
Contributed surplus – Note 9 | 2,485,337 | 1,531,650 | |
Deficit | (12,167,182) | (6,802,147) | |
13,840,650 | 17,026,563 | ||
$ 20,448,655 | $ 18,455,073 | ||
Nature of Operations and Ability to Continue as a Going Concern – Note 1
Commitments – Notes 5, 9 and 12
Subsequent Events – Notes 9 and 17
APPROVED BY THE DIRECTORS: | ||||
“Joseph H. Frantz Jr.” | Director | “Robert D. Penner” | Director | |
Joseph H. Frantz Jr. | Robert D. Penner |
See accompanying notes to the consolidated financial statements
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
for the eight-month period ended December 31, 2007 and the years ended April 30, 2007, 2006 and 2005 and for the period from October 6, 2003 (Date of Inception) to December 31, 2007
(Stated in Canadian Dollars)
October 6, 2003 | |||||
Eight months | (Date of | ||||
ended | Inception) to | ||||
December 31, | Years ended April 30, | December 31, | |||
2007 | 2007 | 2006 | 2005 | 2007 | |
Revenue | |||||
Oil and gas production (net of royalties) | $ 192,654 | $ 181,877 | $ - | $ - | $ 374,531 |
Interest | 17,496 | 4,023 | - | - | 21,519 |
210,150 | 185,900 | - | - | 396,050 | |
Expenses | |||||
Accounting and audit fees – Note 10 | 91,435 | 110,375 | 35,750 | 25,000 | 265,574 |
Bank charges | 1,475 | 1,664 | 292 | 137 | 3,598 |
Consulting – Note 10 | 390,076 | 374,542 | - | - | 764,618 |
Depletion, depreciation and accretion | 127,889 | 82,774 | - | - | 210,663 |
Financial marketing | 309,923 | - | - | - | 309,923 |
Foreign exchange loss | 18,021 | - | - | - | 18,021 |
Investor relations | 109,721 | 146,926 | - | - | 256,647 |
Interest and finance fees | 141,313 | - | - | - | 141,313 |
Legal fees – Note 10 | 157,969 | 229,662 | 73,174 | - | 460,805 |
Office and miscellaneous | 104,991 | 18,447 | 18,953 | 2,783 | 150,068 |
Payroll and benefits – Note 10 | 483,113 | 245,470 | - | - | 728,583 |
Production costs | 152,398 | 101,224 | - | - | 253,622 |
Professional fees – Note 10 | 176,153 | 60,000 | 40,000 | 30,000 | 321,153 |
Regulatory and transfer agent fees | 47,125 | 30,140 | 25,342 | 6,114 | 108,721 |
Rent | 123,088 | 79,389 | - | - | 202,477 |
Stock-based compensation – Note 9 | 897,088 | 1,157,906 | 149,875 | 22,385 | 2,227,254 |
Travel and promotion | 163,066 | 122,606 | 863 | 711 | 286,535 |
3,494,844 | 2,761,125 | 344,249 | 87,130 | 6,709,575 | |
Loss before other items: | (3,284,694) | (2,575,225) | (344,249) | (87,130) | (6,313,525) |
Write-down of oil and gas properties– Note 5 | (2,080,341) | (5,184,841) | - | - | (7,265,182) |
Loss on disposal of equipment | - | - | (5,275) | - | (5,275) |
Write-off of mineral property costs | - | - | (367,765) | - | (367,765) |
Loss before income taxes | (5,365,035) | (7,760,066) | (717,289) | (87,130) | (13,951,747) |
Future income tax recovery – Note 11 | - | 1,784,565 | - | 24,654 | 1,784,565 |
Net loss and comprehensive loss for the period | (5,365,035) | (5,975,501) | (717,289) | (62,476) | (12,167,182) |
Deficit, beginning of the period | (6,802,147) | (826,646) | (109,357) | (46,881) | |
Deficit, end of the period | $ (12,167,182) | $ (6,802,147) | $ (826,646) | $ (109,357) | |
Basic and diluted loss per share | $ (0.12) | $ (0.22) | $ (0.08) | $ (0.01) | |
Weighted average number of common shares outstanding | 43,469,344 | 27,423,741 | 9,224,940 | 5,766,899 |
See accompanying notes to the consolidated financial statements
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the eight-month period ended December 31, 2007 and the years ended April 30, 2007, 2006 and 2005 and for the period from October 6, 2003 (Date of Inception) to December 31, 2007
(Stated in Canadian Dollars)
October 6, | |||||||
Eight months | 2003 (Date of | ||||||
Ended | Inception) to | ||||||
December 31, | Years ended April 30, | December 31, | |||||
2007 | 2007 | 2006 | 2005 | 2007 | |||
Operating Activities | |||||||
Net loss for the period | $ (5,365,035) | $ (5,975,501) | $ (717,289) | $ (62,476) | $ (12,167,182) | ||
Adjustments to reconcile net loss used in operations: | |||||||
Future income tax recovery | - | (1,784,565) | - | (24,654) | (1,784,565) | ||
Stock-based compensation | 897,088 | 1,157,906 | 149,875 | 22,385 | 2,227,254 | ||
Loss on disposal of equipment | - | - | 5,275 | - | 5,275 | ||
Write-off of mineral property costs | - | - | 367,765 | - | 367,765 | ||
Write-down of oil and gas properties | 2,080,341 | 5,184,841 | - | - | 7,265,182 | ||
Depletion, depreciation and accretion | 127,889 | 82,774 | - | - | 210,663 | ||
Changes in non-cash working capital balances related to operations: | |||||||
Amounts receivable | (41,382) | - | - | - | (41,382) | ||
GST recoverable | (416,132) | (31,250) | (27,248) | 796 | (482,458) | ||
Prepaid expenses and deposits | (97,295) | (49,900) | (11,876) | - | (159,071) | ||
Accounts payables and accrued liabilities | 369,178 | 43,512 | 1,113,190 | 10,753 | 1,542,487 | ||
Asset retirement obligation | - | 224,157 | - | - | 250,482 | ||
Due to a related party | - | (5,000) | 2,325 | - | - | ||
(2,445,348) | (1,153,026) | 882,017 | (53,196) | (2,765,550) | |||
Investing Activities | |||||||
Funds held in Trust | 8,789 | (111,010) | - | - | (102,221) | ||
Reclamation deposits | (231,276) | - | - | - | (231,276) | ||
Acquisition of oil and gas properties | (4,569,310) | (14,078,193) | (1,972,125) | - | (20,645,953) | ||
Mineral property costs | - | - | (219,756) | (18,003) | (356,769) | ||
Acquisition of equipment | (129,652) | (165,316) | (13,271) | - | (308,239) | ||
Proceeds from disposal of equipment | - | - | 7,000 | - | 7,000 | ||
(4,921,449) | (14,354,519) | (2,198,152) | (18,003) | (21,637,458) | |||
…/cont’d
See accompanying notes to the consolidated financial statements
Continued
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the eight-month period ended December 31, 2007 and the years ended April 30, 2007, 2006 and 2005 and for the period from October 6, 2003 (Date of Inception) to December 31, 2007
(Stated in Canadian Dollars)
October 6, | |||||
Eight months | 2003 (Date of | ||||
Ended | Inception) to | ||||
December 31, | Years ended April 30, | December 31, | |||
2007 | 2007 | 2006 | 2005 | 2007 | |
Financing Activities | |||||
Advances from bank loan | 3,055,682 | - | - | - | 3,055,682 |
Proceeds from note payable | 49,565 | - | - | - | 49,565 |
Proceeds from issuance of common shares, net | 1,282,034 | 17,064,676 | 2,154,752 | 469,940 | 21,807,143 |
Share subscriptions received | - | (846,160) | 1,428,650 | - | - |
4,387,281 | 16,218,516 | 3,583,402 | 469,940 | 24,912,390 | |
Increase (decrease) in cash and cash equivalents | (2,979,516) | 710,971 | 2,267,267 | 398,741 | 509,382 |
Cash and cash equivalents, beginning of the period | 3,488,898 | 2,777,927 | 510,660 | 111,919 | - |
Cash and cash equivalents, end of the period | $ 509,382 | $ 3,488,898 | $ 2,777,927 | $ 510,660 | $ 509,382 |
Supplementary disclosure of cash flow information: | |||||
Cash paid for: | |||||
Interest | $ 23,826 | $ - | $ - | $ - | $ 23,826 |
Income taxes | $ - | $ - | $ - | $ - | $ - |
Non-Cash Transactions – Note 15
See accompanying notes to the consolidated financial statements
UNBRIDLED ENERGY CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the eight-month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars)
Note 1
Nature Of Operations and Ability to Continue as a Going Concern
Unbridled Energy Corporation (“the Company”) is engaged in the exploration for and the development of petroleum and natural gas in Canada and the United States.
The Company was incorporated under the laws of the Province of British Columbia on October 6, 2003. On July 19, 2006, the Company changed its name to Unbridled Energy Corporation.
During the current period, the Company changed its year end from April 30 to December 31.
These financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2007, the Company had not yet achieved profitable operations, has accumulated losses of $12,167,182 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
Note 2
Significant Accounting Policies
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Canada and are stated in Canadian dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgement. Actual results may differ from these estimates.
The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 2
Note 2
Significant Accounting Policies – (cont’d)
a)
Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Unbridled Energy USA Inc., Unbridled Energy New York LLC and Unbridled Energy Ohio LLC. All inter-company balances and transactions have been eliminated on consolidation.
b)
Cash and Cash Equivalents
Cash and cash equivalents consist of amounts on deposit with banks and investments in short-term deposits with original maturities of less than three months.
c)
Foreign Currency Translation
The Company’s foreign operations are of an integrated nature. Monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities are translated at historical exchange rates. Revenues and expenses are translated at rates of exchange prevailing on the dates of the underlying transaction. Gains or losses on translation are included in the determination of net earnings or losses.
d)
Property and Equipment
i)
Capitalized Costs
The Company follows the full cost method of accounting for its petroleum and natural gas operations. Under this method, all costs related to the exploration for and development of petroleum and natural gas reserves are capitalized into cost centres on a country-by-country basis. Costs include lease acquisition costs, geological and geophysical expenses and costs of drilling both productive and non-productive wells and equipment costs. Proceeds from the sale of properties are applied against capitalized costs and gains or losses are not recognized unless such sale would alter the depletion rate by more than 20%.
ii)
Depletion and Depreciation
Depletion and depreciation of petroleum and natural gas properties, net of estimated salvage or residual value, is provided using the unit-of-production method based upon estimated gross proven petroleum and natural gas reserves as determined by independent engineers. For depletion and depreciation purposes, relative volumes of petroleum and natural gas production and reserves are converted at the energy equivalent conversion rate of 6,000 cubic feet of natural gas to one barrel of crude oil.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 3
Note 2
Significant Accounting Policies – (cont’d)
d)
Property and Equipment – (cont’d)
ii)
Depletion and Depreciation – (cont’d)
Office equipment is depreciated on a straight-line basis over its estimated useful life of five to seven years. Additions are depreciated at half the annual rate in the year of acquisition.
Leasehold improvements are amortized on a straight line basis over the life of the lease.
iii)
Impairment Test
In applying the full cost method, the Company calculates a ceiling test whereby the carrying value of property and equipment is compared to the sum of the undiscounted cash flows expected to result from the future production of proven reserves. Cash flows are based on third party quoted forward prices, adjusted for transportation and quality differentials. Should the ceiling test result in an excess of carrying value, the Company would then measure the amount of impairment by comparing the carrying amounts of property and equipment to an amount equal to the estimated net present value of future cash flows from proven plus probable reserves. A risk-free interest rate is used to arrive at the net present value of the future cash flows. Any excess carrying value would be recorded as a permanent impairment.
The cost of unproved properties is excluded from the ceiling test and is subject to a separate impairment test. Periodically management assesses the recoverability of unproved properties. Impairment, if any, is added to the costs subject to depletion.
e)
Asset Retirement Obligation
The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred and records a corresponding increase in the carrying value of the related long-lived asset. The fair value is determined through a review of engineering studies, industry guidelines and management’s estimate on a site-by-site basis. The liability is subsequently adjusted for the passage of time and is recognized as an accretion expense in the Statements of Operations. The liability is also adjusted due to revisions in either the timing or the amount of the original estimated cash flows associated with the liability. The increase in the carrying value of the asset is amortized using the unit of production method based on estimated gross proved reserves. Actual costs incurred upon settlement of the asset retirement obligations are charged against the asset retireme nt obligation to the extent of the liability recorded.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 4
Note 2
Significant Accounting Policies – (cont’d)
f)
Future Income Taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method future tax assets and liabilities are determined based on differences between financial reporting and income tax balances of assets and liabilities, and are measured using substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on future tax assets and liabilities of a change in tax rates is recognized in operations in the period in which the change is substantively enacted. A valuation allowance is recorded against a future income tax asset if it is more likely than not that the asset will not be realized.
g)
Flow-Through Shares
Effective March 19, 2004, the Canadian Institute of Chartered Accountants issued additional guidance on the accounting treatment of Canadian flow-through shares through its Emerging Issues Committee Abstract (“EIC”) No. 146. All flow-through shares issued by the Company on or after March 19, 2004 are accounted for in accordance with this Abstract. The Abstract recommends that upon renunciation to the shareholders, the Company will reduce share capital and recognize a temporary future income tax liability for the amount of tax reduction renounced to the shareholders. In instances where the Company has sufficient available tax loss carry forwards or other deductible temporary differences available to offset the renounced tax reduction is more likely-than-not able to utilize these tax losses before expiring, the realization of the deductible temporary differences will be credited to income in the period of renunciation.
h)
Stock-Based Compensation
The Company uses the fair value method of accounting for options granted. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model and charged to earnings over the vesting period with a corresponding increase in the contributed surplus. Upon the exercise of the stock options, consideration received together with the amount previously recognized in contributed surplus is recorded as an increase to share capital.
i)
Joint Operations
Substantially all of the exploration and production activities of the Company are conducted jointly with others. These financial statements reflect only the Company’s proportionate interest in such activities.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 5
Note 2
Significant Accounting Policies – (cont’d)
j)
Measurement Uncertainty
The amounts recorded for depletion and depreciation of property and equipment, the ceiling test and unproved property impairment are based on estimates of gross proven reserves, production rates, oil and gas prices, futures costs and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes and estimates in future periods could be significant.
Inherent in the fair value calculation of asset retirement obligations are numerous assumptions and judgments, including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal and regulatory environments. To the extent future revisions to these assumptions impact the fair value of the existing asset retirement obligation liability, a corresponding adjustment is made to the property and equipment balance.
The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes of estimates in future periods could be significant.
k)
Basic and Diluted Loss Per Common Share
Basic loss per share (“LPS”) is calculated by dividing loss applicable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted LPS reflects the potential dilution that could occur if potentially dilutive securities are exercised or converted to common stock. Due to the losses, potentially dilutive securities were excluded from the calculation of diluted LPS, as they were anti-dilutive. Therefore, there is no difference in the calculation of basic and diluted LPS. Common equivalent shares (consisting of shares issuable on the exercise of options and warrants) totalling 19,930,577 shares (April 30, 2007 – 20,386,255) have been excluded from the calculation of diluted loss per share because the effect is anti-dilutive.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 6
Note 2
Significant Accounting Policies – (cont’d)
l)
Revenue Recognition
Revenues associated with the sale of crude oil and natural gas are recorded when the title passes to the customer. Interest income is recognized on a pro rata basis over the investment term.
m)
Adoption of New Accounting Standards
Effective January 1, 2007, the Company adopted five new Canadian Institute of Chartered Accountants (“CICA”) accounting standards: (a) Handbook Section 1530,Comprehensive Income; (b) Handbook Section 3855,Financial Instruments – Recognition and Measurement; (c) Handbook Section 3861,Financial Instruments – Disclosure and Presentation; (d) Handbook Section 3865,Hedges; and (e) Handbook Section 1506,Accounting Changes. The main requirements of these new standards and the resulting financial statement impact are described below.
Consistent with the requirements of the new accounting standards, the Company has not restated any prior period amounts as a result of adopting the accounting changes. The effect of the adoption of these standards is summarized below:
i)
Comprehensive Income, Section 1530:
This standard requires the presentation of a statement of comprehensive income and its components. Comprehensive income includes both net earnings and other comprehensive income. Other comprehensive income includes holding gains and losses on available for sale investments, gains and losses on certain derivative financial instruments and foreign currency gains an losses relating to self-sustaining foreign operations, all of which are not included in the calculation of net earnings until realized. The adoption of this section had no impact upon the Company’s consolidated financial statements.
ii)
Financial Instruments – Recognition and Measurement, Section 3855:
This standard sets out criteria for the recognition and measurement of financial instruments for fiscal years beginning on or after October 1, 2006. This standard requires all financial instruments within its scope, including derivatives, to be included on the balance sheet and measured either at fair value or, in certain circumstances when fair value may not be considered most relevant, at cost or amortized cost. Changes in fair value are to be recognized in either the Statements of Operations or the statement of comprehensive income.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 7
Note 2
Significant Accounting Policies – (cont’d)
m)
Adoption of New Accounting Standards – (cont’d)
ii)
Financial Instruments – Recognition and Measurement, Section 3855:
– (cont’d)
All financial assets and liabilities are recognized when the Company becomes a party to the contract creating the item. As such, any of the Company’s outstanding financial assets and liabilities at the effective date of adoption are recognized and measured in accordance with the new requirements as if these requirements had always been in effect.
All financial instruments are classified into one of the following five categories: held-for-trading, held to maturity, loans and receivables, available for sale financial assets, or other financial liabilities. Initial and subsequent measurement and recognition of changes in the value of financial instruments depends on their initial classification:
•
Held to maturity investments, loans and receivables, and other financial liabilities are initially measured at fair value and subsequently measured at amortized cost. Amortization of premiums or discounts and transaction costs are amortized into net earnings (loss), using the effective interest method.
•
Available for sale financial assets are measured at fair value, with unrealized gains and losses recorded in other comprehensive income until the asset is realized, at which time they will be recorded in net earnings (losses).
•
Held for trading financial instruments is measured at fair value. All gains and losses resulting from changes in their fair value are included in the Statements of Operations in the period in which they arise.
•
All derivative financial instruments are classified as held for trading financial instruments and are measured at fair value, even when they are part of a hedging relationship. All gains and losses resulting from changes in their fair value are included in the Statements of Operations in the period in which they arise.
In accordance with this new standard, the Company has classified its financial instruments as follows:
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 8
Note 2
Significant Accounting Policies – (cont’d)
m)
Adoption of New Accounting Standards – (cont’d)
ii)
Financial Instruments – Recognition and Measurement, Section 3855:
– (cont’d)
-
Amounts receivable are classified as loans and receivables. They are recorded at cost, which on initial recognition represents their fair value. Subsequent valuations are recorded at amortized cost using the effective interest method.
-
Accounts payable and accrued liabilities, note payable and bank loan are classified as other liabilities. They are initially measured at fair value. Subsequent valuations are recorded at amortized cost using the effective interest method.
The adoption of this section had no impact upon the Company’s consolidated financial statements as of May 1, 2007.
iii)
Financial Instruments – Disclosure and Presentation, Section 3861:
This standard sets out standards which address the presentation of financial instruments and non-financial derivates, and identifies the related information that should be disclosed. These standards also revise the requirements for entities to provide accounting policy disclosures, including disclosure of the criteria for designating as held-for-trading those financial assets or liabilities that are not required to be classified as held-for-trading; whether categories of normal purchases and sales of financial assets are accounted for at trade date or settlement date; the accounting policy for transaction costs on financial assets and financial liabilities classified as other than held-for-trading; and provides several new requirements for disclosure about fair value.
The Company has chosen to recognize all transaction costs in the Statements of Operations on financial liabilities that have been designated as other than held for trading.
iv)
Hedging, Section 3865:
This standard specifies the circumstances under which hedge accounting is permissible and how hedge accounting may be performed. The Company currently does not hold any financial instruments designated for hedge accounting.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 9
Note 2
Significant Accounting Policies – (cont’d)
m)
Adoption of New Accounting Standards – (cont’d)
v)
Accounting Changes, Section 1506:
Section 1506 revised the standards on changes in accounting policy, estimates or errors to require a change in accounting policy to be applied retrospectively (unless doing so is impracticable or is specified otherwise by an new accounting standard), changes in estimates to be recorded prospectively, and prior period errors to be corrected retrospectively. Voluntary changes in accounting policy are allowed only when they result in financial statements that provide reliable and more relevant information. In addition, these revised standards call for enhanced disclosures about the effects of changes in accounting policies, estimates and errors on the financial statements. The impact of this new standard cannot be determined until such time as the Company makes a change in accounting policy, other than the changes resulting from the implementation of the new CICA Handbook standards discussed in this note.
n)
Recent Accounting Pronouncements
Assessing Going Concern
The Canadian Accountability Standards Board (“AcSB”) AcSB amended CICA Handbook Section 1400, to include requirements for management to assess and disclose an entity’s ability to continue as a going concern. This section applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008.
Cash Distributions
CICA Handbook Section 1540, Cash Flow Statements, has been amended to require additional disclosures where cash distributions are made in accordance with a contractual obligation for cash distributions. The revised requirements are effective for interim and annual financial statements for fiscal years ending on or after March 31, 2007. The adoption of this Section did not result in any changes on the disclosure within the financial statements.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 10
Note 2
Significant Accounting Policies – (cont’d)
n)
Recent Accounting Pronouncements– (cont’d)
Capital Disclosures
The AcSB issued CICA Handbook Section 1535 “Capital Disclosures” The section specifies the disclosure of (i) an entity’s objectives, policies, and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The Company is currently evaluating the impact of the adoption of this new Section on its consolidated financial statements. This new Section relates to disclosures and did not have an impact on the Company’s financial results. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007.
Goodwill and Intangible Assets
The AcSB issued CICA Handbook Section 3064 which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs. This new section establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets. Standards concerning goodwill remain unchanged from the standards included in the previous Section 3062. The section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. Accordingly, the Company will adopt the new standards for its fiscal year beginning January 1, 2009. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. The Company is currently evaluating the impact of the adoption of this new Section on its consolidated financial statements.
International financial reporting standards (“IFRS”)
In 2006, AcSB published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 11
Note 2
Significant Accounting Policies – (cont’d)
n)
Recent Accounting Pronouncements – (cont’d)
Financial Instruments
CICA Handbook Section 3862, Financial Instruments - Disclosure, increases the disclosures currently required to enable users to evaluate the significance of financial instruments for an entity's financial position and performance, including disclosures about fair value. CICA Handbook Section 3863, Financial Instruments – Presentation, replaces the existing requirements on the presentation of financial instruments, which have been carried forward unchanged. These standards are effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007. The Corporation is currently evaluating the impact of the adoption of these changes on the disclosure and presentation within its financial statements.
Note 3
Funds held in Trust
Funds held in Trust represents $102,221 (USD$103,521) (April 30, 2007 - $111,010) held in a certificate of deposit, of which $99,130 (USD$100,000) has been assigned to the New York Department of Environmental Conservation as collateral for the Company’s Chautauqua Wells well plugging obligations. The certificate of deposit bears interest at 4.59%.
Note 4
Reclamation deposits
The amount of $231,276 (April 30, 2007 - $nil) is a security deposit held in trust by the Alberta Energy Resources Conversion Board as financial assurance for possible reclamation liabilities. The amount in trust is periodically reviewed and adjusted based on the financial status of the Company.
Note 5
Property and Equipment
December 31, 2007 | |||
Accumulated | |||
Depletion and | |||
Cost | Depreciation | Net | |
Petroleum and natural gas properties | $17,506,274 | $ 124,558 | $ 17,381,716 |
Leasehold improvements | 213,412 | 39,057 | 174,355 |
Office equipment | 81,556 | 10,145 | 71,411 |
$17,801,242 | $ 173,760 | $ 17,627,482 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 12
Note 5
Property and Equipment – (cont’d)
April 30, 2007 | |||
Accumulated | |||
Depletion and | |||
Cost | Depreciation | Net | |
Petroleum and natural gas properties | $14,554,446 | $69,113 | $14,485,333 |
Leasehold improvements | 120,563 | 5,742 | 114,821 |
Office equipment | 44,753 | 2,182 | 42,571 |
$14,719,762 | $77,037 | $14,642,725 |
As of December 31, 2007, the Company recorded a write-down of oil and gas properties of $2,080,341 (April 30, 2007 - $5,184,841) from an impairment loss (Note 5 (a)(ii)).
The Company did not capitalize any general and administrative costs during the period ended December 31, 2007 and the year ended April 30, 2007. As at December 31, 2007, petroleum and natural gas properties include the cost of unproved properties in Canada and the USA in the amounts of $14,866,444 and $889,738 respectively (April 30, 2007 - $12,292,156 and $553,229), which has been excluded from the depletion calculation and future capital costs of $nil (2006 - $224,157) have been included in the depletion calculation.
The Company applied the annual ceiling test to its capitalized assets at December 31, 2007 and determined that there was no impairment of costs. For the purposes of the December 31, 2007 impairment test of petroleum and natural gas properties, the following benchmark prices were used:
Oil | Natural Gas | |
Reference | Reference | |
(US$/bbl) | (US$/Mmbtu) | |
2008 | 89.00 | 7.465 |
2009 | 85.70 | 7.948 |
2010 | 82.20 | 8.950 |
2011 | 78.60 | 8.950 |
2012 | 77.50 | 9.100 |
Thereafter inflation | Does not exceed 2.0% per year | |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 13
Note 5
Property and Equipment – (cont’d)
Petroleum and Natural Gas Properties:
a)
Canada Oil and Gas Properties
i)
Chambers Property
By an agreement dated January 12, 2006, the Company acquired by assignment of a farm-out and participation agreement a 20% working interest in the Chambers Elkton well 3-17-4-11-W5 located in the Province of Alberta, Canada.
As consideration for the assignment, the Company issued 3,000,000 common shares of the Company, valued at $3,750,000 and reimbursed $77,000 for seismic and completion costs incurred. Under the terms of the agreement, the Company paid 25% of the cost of drilling, completing and abandonment costs on the well. The working interest of 20% is subject to a combined 8.5% gross overriding royalty (“GORR”).
Pursuant to a separate purchase and sale agreement dated April 14, 2006, the Company acquired an additional 5% working interest and an 8% GORR on a 7% working interest in the same Chambers Elkton well. As consideration, the Company paid $475,000. The Company also agreed to acquire a 30% working interest in another well on the prospect, the Chambers 7-18 well.
Pursuant to a separate Farm In and Option to Purchase Agreement dated April 18, 2007, the Company agreed to incur additional costs related to the drilling and completion, capping or abandoning of the Chambers 16-21-41-11 option well along with its joint venture partners for an interest in the 16-21 well and incremental earned interest in the Chambers 3-17 and Chambers 7-18 wells, which is to be determined based on the proportionate share of actual costs incurred.
At December 31, 2007, principal operations have not yet commenced and the Chambers property is considered to be in the preproduction stage. To December 31, 2007, the Company has incurred costs, net of incidental revenues, of $14,866,444 for acquisition and drilling.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 14
Note 5
Property and Equipment – (cont’d)
Petroleum and Natural Gas Properties – (cont’d)
a)
Canada Oil and Gas Properties – (cont’d)
ii)
Tsuu T’ina First Nation Property
By an assignment and assumption agreement dated March 31, 2006, the Company secured the option to acquire up to a 50% participating interest in a joint venture with Arapahoe Energy Corporation (“Arapahoe”) in certain petroleum and natural gas rights on the Tsuu T’ina First Nation (Sarcee Indian Reserve) West of Calgary, Canada. The Company agreed to pay $750,000 cash and reimburse Arapahoe up to a maximum of $2,000,000, finance a portion of the seismic program on the property and drill two test wells on the property. To December 31, 2007, the Company has incurred costs, net of revenues, of $7,265,182 for acquisition and drilling.
At December 31, 2007 principal operations have not yet commenced and the Tsuu T’ina property is considered to be in the preproduction stage. Management assessed the recoverability of this unproved property and recognized a write-down at December 31, 2007 totalling $2,080,341 (April 30, 2007 - $5,184,841), which represented the remaining carrying value of the property.
b)
US Oil and Gas Properties
i)
Oil and Gas Property, New York
By a purchase and sale agreement dated March 28, 2007, together with another agreement of the same date, the Company acquired a 50% interest in oil and gas leases located in the Chautauqua County, New York. The property is in production and consists of 61 gross and approximately 29.65 net wells.
ii)
Oil and Gas Property, Ohio
By a Leasehold Acquisition, Ownership, Development and Operation Agreement dated March 31, 2007, as amended by a subsequent letter agreement dated May 1, 2007, the Company acquired approximately 15,500 net acres of oil and gas leases located in Jackson County, Ohio. In December 31, 2007, the company acquired approximately 7,500 net acres in the region, for a total of approximately 23,000 net acres. At December 31, 2007, principal operations have not yet commenced and the property is considered to be in the pre-production stage. As at December 31, 2007, the Company has incurred acquisition costs of $889,738.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 15
Note 6
Note Payable
December 31, | April 30, | ||
2007 | 2007 | ||
HH Allegiance New York, LLC | $ 49,565 | $ - |
The note payable is due to HH Allegiance New York, LLC, a joint venturer in the Chautauqua Wells, and is issued in connection with the purchase of a certificate of deposit and issuance of a letter of credit to collateralize well plugging obligations. The note is unsecured and bears interest at 4.59%. The principal is repayable following the satisfaction of any well plugging obligations on the wells to which the letter of credit is related to, the sale of the wells, or other event which terminates the obligation of the Company to maintain the certificate of deposit.
Note 7
Bank loan
The Company executed a Business Loan Agreement and Promissory Note for letters of credit with Huntington National Bank. Funds from this debt facility are being applied to the ongoing development of the Company’s existing reserve base in the Appalachian Basin, USA, further development of the Company’s project in the Chambers area of the Western Canadian Sedimentary Basin, and for general corporate purposes.
The facility provides for a borrowing base up to USD$6,000,000, as determined from time to time by the lender based on the Company’s oil and gas reserves. At December 31, 2007, the available borrowing base was $4,163,460 (USD$4,200,000) and the Company has drawn $3,055,682 (USD$3,082,500) from the facility.
The loan bears interest of LIBOR plus 250 basis points (7.52750% as at December 31, 2007) and is repayable on November 16, 2009. The loan is secured by the Company’s reserves in Chautauqua County, New York, USA. The Company is required to make monthly interest payments. In the event that the loan balance exceeds the available borrowing base, the Company is required to reduce the loan balance by repaying the excess portion.
The loan includes certain non-financial and financial covenants, including but not limited to a requirement to maintain a minimum adjusted EBITDA to adjusted current liability ratio of 1.25:1.00, commencing six months after the Company begins selling gas from the Chambers 3-17 and Chamber 16-21 wells.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 16
Note 8
Asset Retirement Obligation
The following table presents the reconciliation of the carrying amount of the obligations associated with the retirement of the Company’s property and equipment:
December 31 2007 | April 30, 2007 | |
Asset retirement obligation, beginning of the year | $ 250,482 | $ 26,325 |
Liabilities incurred | 101,987 | 219,127 |
Accretion | 21,514 | 5,030 |
Asset retirement obligation, end of the period | $ 373,983 | $ 250,482 |
The following significant assumptions were used to estimate the asset retirement obligations:
December 31 2007 | April 30 2007 | |
Credit-adjusted risk-free discount rate | 7.% | 6% |
Inflation rate | 3% | 3% |
Expected timing of cash flows | Estimated year a well becomes economic, 2008 to 2047 |
Note 9
Share Capital
a)
Authorized:
Unlimited common shares without par value
Unlimited preferred shares without par value
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 17
Note 9
Share Capital – (cont’d)
b)
Issued: common shares
Number of Common Shares | Amount | |
Balance, April 30, 2006 | 16,169,166 | $ 6,635,943 |
Issue of shares for cash: | ||
Private placements - at $1.05 | 7,700,000 | 8,085,000 |
- at $1.10 | 400,000 | 440,000 |
- at $0.70 | 3,931,800 | 2,752,260 |
- at $0.65 | 5,501,000 | 3,575,650 |
- at $0.55 | 665,000 | 365,750 |
- at $0.50 | 5,920,000 | 2,960,000 |
Pursuant to the exercise of warrants - at $0.80 | 15,000 | 12,000 |
Issue of shares for a finders’ fee | 163,830 | 104,673 |
Share issue costs | - | (1,432,141) |
Tax effect of flow-through share renunciation | - | (1,784,565) |
Balance, April 30, 2007 | 40,465,796 | $ 21,714,570 |
Issue of shares for cash: | ||
Private placements - at $0.50 | 2,735,000 | 1,367,500 |
- at $0.55 | 150,000 | 82,500 |
- at $0.45 | 1,183,172 | 532,427 |
Share issue costs | - | (174,502) |
Balance, December 31, 2007 | 44,533,968 | $ 23,522,495 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 18
Note 9
Share Capital – (cont’d)
b)
Issued: common shares – (cont’d)
During the period ended December 31, 2007, the Company had the following transactions:
i)
In May 2007, the Company issued a private placement of 2,735,000 units at $0.50 per unit. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional common share of the Company at $0.85 per share for a two year period.
ii)
In May 2007, the Company issued non-brokerage 150,000 flow-through shares at $0.55 per share.
iii)
In October 2007, the Company issued a private placement of 1,183,172 units at $0.45 per share. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional common share of the Company at $0.75 per share for a one year period.
In connection with the private placements noted in (i) and (iii) above, the Company paid total share issuance costs of $117,903 in cash and issued 171,150 broker’s warrants. Each broker’s warrant entitles the holder to purchase one common share of the Company at $0.55 per share for a two year period. The fair value of each warrant was $0.33, totalling $56,599, and was calculated using the Black Scholes option pricing model with the following weighted average assumptions:
Expected dividend rate | $ Nil | |
Expected volatility | 100% | |
Risk free interest rate | 4.54% | |
Expected term | 2 years |
During the year ended April 30, 2007, the Company had the following transactions:
In May 2006, the Company issued 3,514,000 flow-through shares at $1.05 per share and a non-brokerage private placement of 4,186,000 units at $1.05 per unit. In connection with this private placement, the Company issued a total of 5,210,000 share purchase warrants. Each share purchase warrant entitled the holder to purchase one additional common share at $1.65 per share for a one year period.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 19
Note 9
Share Capital – (cont’d)
b)
Issued: common shares – (cont’d)
In September 2006, the Company issued a non-brokerage private placement of 400,000 at $1.10 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant entitled the holder to purchase one additional common share at $1.31 per share for a two year period.
In December 2006, the Company completed 3,931,800 flow-through shares at $0.70 per share and a private placement of 5,501,000 units at $0.65 per share. Each unit consisted of one common share and one share purchase warrant. Each purchase warrant entitled the holder to purchase one additional common share at $1.00 per share for a two year period.
In April 2007, the Company issued 665,000 flow-through shares at $0.55 per share. In addition, the Company also issued a private placement of 5,920,000 at $0.50 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant entitled the holder to purchase one additional common share at $0.85 per share for a two year period.
In connection with the private placements noted above, the Company issued a total of 1,255,255 warrants as finders’ fees to various unrelated parties. The exercise price is ranging from $0.55 per share to $0.70 per share with exercisable period of two years. The weighted average fair value of the warrants was at $0.17 per warrant, totalling $201,484, and was calculated using the Black Scholes option pricing model with the following weighted average assumptions:
Expected dividend rate | Nil | |
Expected volatility | 70% | |
Risk free interest rate | 3.98% | |
Expected term | 2 years |
c)
Contributed surplus:
December 31 2007 | April 30 2007 | |
Balance, beginning of period | $ 1,531,650 | $ 172,260 |
Stock based compensation | 897,088 | 1,157,906 |
Issuance of warrants | 56,599 | 201,484 |
Balance, end of period | $ 2,485,337 | $ 1,531,650 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 20
Note 9
Share Capital – (cont’d)
d)
Escrow:
In accordance with an Escrow Agreement dated September 28, 2004, 3,701,666 common shares of the Company were subject to escrow and may not be transferred, assigned or otherwise dealt with without the consent of the TSX Venture Exchange (“TSX”). The release of these shares is subject to the approval of the TSX and may be released as to 10% upon the listing of the Company’ shares and 15% every six months thereafter until all the escrowed shares have been released from escrow. During the period ended December 31, 2007, there were 555,250 shares released from escrow, leaving a balance of 555,250 shares held in escrow at December 31, 2007.
e)
Commitments:
i)
Stock-based Compensation Plan
The Company has granted share purchase options to directors, employees and consultants to purchase common shares of the Company. These options are granted with an exercise price equal to the market price of the Company’s stock at the date of the grant. Unless stated otherwise, the options vest as to 12.5% on TSX approval and 12.5% every three months thereafter until fully vested. The maximum number of options outstanding is limited to 10% of the total shares issued and outstanding. A summary of the status of the stock option plan as of December 31, 2007, April 30, 2007, 2006 and 2005 and the changes during the periods then ended as follows:
Weighted | ||
Average | ||
Exercise | ||
Number | Price | |
Outstanding, April 30, 2004 | - | - |
Granted | 744,166 | $0.25 |
Outstanding, April 30, 2005 | 744,166 | $0.25 |
Forfeited | (744,166) | $0.25 |
Granted | 650,000 | $1.32 |
Outstanding, April 30, 2006 | 650,000 | $1.32 |
Granted | 1,850,000 | $1.35 |
Cancelled | (400,000) | $1.41 |
…/cont’d
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 21
Note 9
Share Capital – (cont’d)
e)
Commitments: – (cont’d)
i)
Stock-based Compensation Plan – (cont’d)
Weighted | ||
Average | ||
Exercise | ||
Number | Price | |
Outstanding, April 30, 2007 | 2,100,000 | $1.33 |
Granted | 1,015,000 | $0.75 |
Cancelled | (350,000) | $1.35 |
Outstanding, December 31, 2007 | 2,765,000 | $1.10 |
Exercisable, December 31, 2007 | 1,647,500 | $1.26 |
Exercisable, April 30, 2007 | 1,141,528 | $1.34 |
During the period ended December 31, 2007, the Company granted 1,015,000 to its directors, officers and consultants and their vesting terms are as follows:
Number of | |
Options | Vesting term |
715,000 | 12.5% on date of grant and 12.5% every three months thereafter |
200,000 | 25% every three months from date of grant |
100,000 | 33 1/3% every six months from date of grant |
As at December 31, 2007, there are 2,765,000 sharepurchase options outstanding entitling the holders thereof the right to purchase one common share for each option held as follows:
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 22
Note 9
Share Capital – (cont’d)
e)
Commitments: – (cont’d)
i)
Stock-based Compensation Plan – (cont’d)
Number of Options | Exercisable | Exercise Price | Expiry Date |
100,000 | 100,000 | $1.32 | January 2, 2008* |
400,000 | 400,000 | $1.32 | March 28, 2008* |
50,000 | 12,500 | $0.75 | July 18, 2010 |
150,000 | - | $0.50 | October 15, 2010 |
150,000 | 131,250 | $1.41 | May 14, 2011 |
700,000 | 525,000 | $1.32 | August 17, 2011 |
400,000 | 300,000 | $1.32 | September 5, 2011 |
715,000 | 178,750 | $0.75 | July 18, 2012 |
100,000 | - | $0.75 | November 20, 2012 |
2,765,000 | 1,647,500 |
* These options expired unexercised.
During the period ended December 31, 2007, stock-based compensation of $897,088 (April 30, 2007 - $1,157,906; April 30, 2006 - $149,875; April 30, 2005 - $22,385) was expensed by the Company.
Assumptions used in determining the fair value of the options vested in the periods are as follows:
December 31, | April 30, | ||||
2007 | 2007 | 2006 | 2005 | ||
Weighted average fair value of options granted | $0.44 | $0.99 | $1.32 | $0.25 | |
Expected dividend yield | 0.0% | 0.0% | 0.0% | 0.0% | |
Expected volatility | 100% | 91% | 419% | 35% | |
Risk-free interest rate | 4.50% | 4.07% | 2.88% | 3.0% | |
Expected term | 4.6 years | 5 years | 2 years | 2 years |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 23
Note 9
Share Capital – (cont’d)
e)
Commitments – (cont’d)
ii)
Share Purchase Warrants
Warrant transactions and the number of warrants outstanding are summarized as follows:
December 31, | April 30, | |||
2007 | 2007 | |||
Weighted | Weighted | |||
Average | Average | |||
Number of | Exercise | Number of | Exercise | |
Warrants | Price | Warrants | Price | |
Balance, beginning of year | 18,286,255 | $1.12 | 2,478,750 | $0.80 |
Granted | 4,089,322 | $0.81 | 18,286,255 | $1.12 |
Exercised | - | $ - | (15,000) | $0.80 |
Expired/cancelled | (5,210,000) | $1.65 | (2,463,750) | $0.80 |
Balance, end of year | 17,165,577 | $0.89 | 18,286,255 | $1.12 |
April 30, | April 30, | |||
2006 | 2005 | |||
Weighted | Weighted | |||
Average | Average | |||
Number of | Exercise | Number of | Exercise | |
Warrants | Price | Warrants | Price | |
Balance, beginning of year | 240,000 | $0.25 | - | - |
Granted | 2,478,750 | $0.80 | 240,000 | $0.25 |
Exercised | (240,000) | $0.25 | - | - |
Balance, end of year | 2,478,750 | $0.80 | 240,000 | $0.25 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 24
Note 9
Share Capital – (cont’d)
e)
Commitments – (cont’d)
ii)
Share Purchase Warrants
At December 31, 2007, the following share purchase warrants were outstanding and exercisable:
Number of Shares | Exercise Price | Expiry Date |
400,000 | $1.31 | September 19, 2008 |
1,183,172 | $0.75 | October 26, 2008 |
5,477,720* | $1.00 | December 13, 2008 |
558,466* | $0.70 | December 13, 2008 |
50,659* | $0.70 | December 29, 2008 |
175,000* | $1.00 | February 8, 2009 |
26,250* | $0.70 | February 8, 2009 |
456,050* | $0.55 | April 27, 2009 |
5,932,110* | $0.85 | April 27, 2009 |
171,150 | $0.85 | May 17, 2009 |
2,735,000 | $0.85 | May 17, 2009 |
17,165,577 |
* During the term of these warrants if the common shares of the Company close at or above $1.85 (affecting 6,388,160 warrants) or $2.00 (affecting 6,288,095 warrants) per share for more than 20 consecutive trading days, then the Company, at its option, will be entitled to accelerate the expiry of the warrants at that time to a term of 30 calendar days.
Note 10
Related Party Transactions
The Company incurred the following costs and expenses with a company with a common director, and directors and officers of the Company:
December 31, | April 30, | |||
2007 | 2007 | 2006 | 2005 | |
Accounting and audit fees | $ - | $ 4,000 | $ 18,500 | $ 6,000 |
Consulting | 181,583 | 177,740 | - | - |
Deferred exploration costs | - | - | 35,097 | - |
Legal fees | 35,535 | 42,585 | 33,801 | - |
Payroll and benefits | 47,375 | - | - | 26,086 |
Professional | - | - | 40,000 | 30,000 |
Share issue costs | - | - | - | 26,086 |
$ 264,493 | $ 224,325 | $ 127,398 | $ 62,086 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 25
Note 10
Related Party Transactions
These charges were in the normal course of operations and were measured by the exchange amount, which is the amount agreed upon by the transacting parties.
Included in payroll and benefits noted above were directors fees of $47,375 (April 30, 2007 - $nil; April 30, 2006 - $Nil; April 30, 2005 - $Nil). Included in consulting and professional noted above were management fees of $121,160 (April 30, 2007 - $60,000; April 30, 2006 - $40,000; April 30, 2005 - $30,000).
Included in accounts payable and accrued liabilities is $31,750 due to directors for directors fees (April 30, 2007 - $Nil). The payables are unsecured with no specific terms of repayment.
Note 11
Income Taxes
At December 31, 2007, the Company has accumulated non-capital losses in Canada and net-operating losses in the U.S., which are available to reduce taxable income of future years. The non-capital losses expire as follows:
US | Canada | Total | |
2011 | $ - | $ 21,000 | $ 21,000 |
2015 | - | 87,000 | 87,000 |
2026 | - | 229,000 | 229,000 |
2027 | 737,000 | 3,336,000 | 4,073,000 |
$ 737,000 | $ 3,673,000 | $ 4,410,000 |
The provision for income taxes in the Statements of Operations differs from the amount that would be computed by applying the expected tax rate to the loss before income taxes. The expected tax rate used was 34.12% (April 30, 2007 – 34.12%). The principal reasons for differences between such expected income taxes and the amount actually recorded are as follows:
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 26
Note 11
Income Taxes – (cont’d)
December 31 | April 30, | |||
2007 | 2007 | 2006 | 2005 | |
Expected income taxes recovery | $ (1,831,000) | $ (2,043,000) | $ (243,000) | $ (31,000) |
Add (deduct): | ||||
Foreign income taxed at other Than Canadian statutory rate | 8,000 | - | - | - |
Stock-based compensation | 306,000 | 395,000 | 51,000 | - |
Effect of reduction in statutory rate | 461,000 | - | - | - |
Other permanent differences | (17,000) | 28,000 | 117,000 | (10,651) |
Valuation allowance | 1,073,000 | (164,565) | 75,000 | 16,997 |
Future income tax recovery | $ - | $ (1,784,565) | $ - | $ (24,654) |
Future income tax assets or liabilities on the balance sheet are comprised of temporary differences. The significant components of the Company’s future tax assets are as follows:
December 31, | April 30, | |
2007 | 2007 | |
Share issue costs | $ 248,000 | $ 354,000 |
Property and equipment | 676,000 | 20,000 |
Asset retirement obligation | 55,000 | 73,000 |
Non-capital losses | 1,206,000 | 665,000 |
2,185,000 | 1,112,000 | |
Valuation allowance | (2,185,000) | (1,112,000) |
$ - | $ - |
Note 12
Commitments
The Company has committed to annual minimum rental payments (excluding operating costs and other fees) for office premises as follows:
2008 | $ 228,181 |
2009 | 228,682 |
2010 | 240,394 |
2011 | 178,683 |
2012 | 158,112 |
Thereafter | 158,112 |
$ 1,192,164 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 27
Note 13
Amounts Receivable
During the period ended December 31, 2007, the Company’s major Joint Venture partner in the Chambers prospect, Altima Resources Ltd. (Altima), failed to perform financially with regard to their obligations under signed authorizations for expenditures totalling $2,194,986. The Company is now exercising its rights under the Canadian Association of Petroleum Landmen Operating Procedure agreement to recover this amount, including setting off Altima’s share of income from the Chambers 3-17 well and initiating a legal action to sell Altima’s interest in the prospect to reduce the receivable.
Given the uncertainty regarding the collectibility of the accounts receivable from Altima, the Company has recorded $1,150,000 as petroleum and natural gas costs during the period ended December 31, 2007 to reflect additional costs which the Company has borne on drilling this well. Any recovery will be recorded as a reduction of the petroleum and natural gas properties in the period that it occurs. At December 31, 2007, $1,044,986 is included in amounts receivable due from Altima, of which $300,000 was received subsequent to December 31, 2007.
Note 14
Financial Instruments
a)
Fair Values of Financial Assets and Liabilities
Financial instruments consist mainly of cash and cash equivalents, amounts receivable, funds held in trust, reclamation deposits, accounts payable and accrued liabilities, bank loan and note payable. At December 31, 2007 and April 30, 2007, there are no significant differences between the carrying amounts reported on the balance sheet and their estimated fair values.
b)
Credit Risk
Substantially all of the Company’s cash and cash equivalents are held at chartered banks and as such the Company is exposed to the risks of the institutions.
The majority of the amounts receivable is in respect of oil and natural gas operations. The Company generally extends unsecured credit to these customers and, therefore, the collection of accounts receivable may be affected by changes in economic or other conditions and may, accordingly, impact the Company’s overall credit risk. Management believes the risk is mitigated by the size and reputation of the companies to which they extend credit. The Company has not experienced any material credit loss in the collection of receivables in the past other than with Altima which has been allowed for (Note 13).
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 28
Note 14
Financial Instruments – (cont’d)
c)
Commodity Price Risk
The Company’s operations are exposed to commodity price fluctuations. Management monitors commodity prices and initiates instruments to manage exposure to these risks when it deems appropriate.
d)
Foreign Exchange Risk
The Company is exposed to fluctuations in the rate of exchange in respect of its US operations. A portion of the Company’s cash and cash equivalents, accounts receivable, accounts payable, notes payable and bank loan are denominated in US dollars and, consequently, the Company is subject to the risk of fluctuating foreign exchange rates.
Note 15
Non-Cash Transactions
Investing and financing activities that do not have a direct impact on current cash flows are excluded from the Consolidated Statements of Cash Flows. The following transactions have been excluded from the Consolidated Statements of Cash Flows:
-
During the period ended December 31, 2007, the Company capitalized $101,987 asset retirement costs.
-
During the period ended December 31, 2007, the Company issued 171,150 broker’s warrants as finder’s fee with a fair value of $56,599.
-
During the period ended December 31, 2007, the Company utilized shares subscriptions of $582,490 received at April 30, 2007.
-
During the year ended April 30, 2007, the Company issued 1,255,255 broker’s warrants as finder’s fee with a fair value of $201,484.
-
During the year ended April 30, 2006, the Company issued 3,000,000 common shares valued at $1.25 per share for a total of $3,750,000 pursuant to an oil and gas properties acquisition agreement.
-
During the year ended April 30, 2005, the Company issued 100,000 common shares valued at $0.10 per share for a total value of $10,000 pursuant to a mineral property option agreement.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 29
Note 16
Geographic Segments
The Company has one segment and operates in two geographic regions as follows:
December 31 2007 | |||
Canada | United States | Total | |
Oil and gas revenue, net | $ - | $ 192,654 | $ 192,654 |
Property and equipment | $ 15,080,632 | $ 2,546,850 | $ 17,627,482 |
April 30 2007 | |||
Canada | United States | Total | |
Oil and gas revenue, net | $ - | $ 181,877 | $ 181,877 |
Property and equipment | $ 12,434,694 | $ 2,208,031 | $ 14,642,725 |
Note 17
Subsequent Events
a)
Repricing of share purchase options
In January 2008, the Company’s Board of Directors has approved the re-pricing for certain outstanding director, officer and consultant stock options, presently exercisable at $1.32 and $1.41 per share to purchase up to 1,200,000 shares, to be exercisable at a reduced exercise price of $0.75 per share. This amendment is subject to the acceptance of the TSX, and the approval of the disinterested shareholders, which approval the Company plans to seek at its next general meeting.
b)
Issuance of shares
i)
In May 2008, the Company issued a private placement of 19,964,350 units at $0.30 per unit. Each unit consists on one common share and one-half share purchase warrant. Each whole share purchase warrant entitles the holder to purchase one additional common share of the Company at $0.45 per share for an eighteen month period.
ii)
In May 2008, the Company issued a private placement of 5,435,300 flow-through shares at a price of $0.33 per flow-through share.
iii)
In connection with the private placements noted in (i) and (ii) above, the Company paid total share issuance costs of $369,791 in cash and 477,884 broker’s warrants. Each broker’s warrant entitles the holder to purchase one common share of the Company at $0.45 per share for an eighteen month period.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 30
Note 18
Comparative figures
Certain of the comparative figures have been reclassified to conform to the current year’s presentation.
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America
The financial statements have been prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”) which differ in certain respects with those principles and practices that the Company would have followed had its financial statements been prepared in accordance with accounting principles and practices generally accepted in the United States of America (“US GAAP”).
The Company’s accounting principals generally accepted in Canada differ from accounting principles generally accepted in the United States of America as follows:
a)
Mineral Property Costs
Under Canadian GAAP, acquisition costs including staking costs are capitalized. In accordance with EITF 04-2 under US GAAP, acquisition costs only are considered tangible assets and are capitalized. The capitalized acquisition costs are reviewed by management for impairment whenever circumstances change which could indicate that the carrying amount of these assets may not be recoverable based on proven and probable reserves.
Under Canadian GAAP, exploration expenditures include all direct and indirect exploration activities and are capitalized. Under US GAAP, exploration expenditures include only direct exploration activities and are expensed as incurred unless commercial feasibility is established.
During the year ended April 30, 2006, management determined that there was impairment on the capitalized costs and terminated the option agreement on the mineral property. Accordingly, the acquisition costs and exploration expenditures were written-off.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 31
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
b)
Oil and Gas Properties
The Company performs an impairment test that limits net capitalized costs to the discounted estimated future net revenue from proved and risked probable oil and natural gas reserves plus the cost of unproved properties less impairment, using forward prices. For Canadian GAAP the discount rate used must be equal to a risk free interest rate. Under US GAAP, companies using the full cost method of accounting for oil and gas producing activities perform a ceiling test on each cost centre using discounted estimated future net revenue from proved oil and gas reserves using a discount rate of 10 per cent. Prices used in the US GAAP ceiling tests are those in effect at year-end. The amounts recorded for depletion and depreciation have been adjusted in the periods following the additional write-downs taken under US GAAP to reflect the impact of the reduction of depletable costs.
A U.S. GAAP difference also exists relating to the basis of measurement of proved reserves that is utilized in the depletion calculation. Under US GAAP, depletion charges are calculated by reference to proved reserves estimated using constant prices. Under Canadian GAAP, depletion charges are calculated by reference to proved reserves using future prices.
The differences have an immaterial impact on the Company’s financial statements, and therefore, no adjustments have been recorded.
c)
Net Loss per Share and Escrow Shares
Under US GAAP, performance-based escrow shares are considered to be contingently issuable until the performance criteria has been satisfied and are excluded from the computation of the weighted average of shares outstanding. The Company's escrow shares are not performance-based and therefore no adjustments have been made to the calculation of loss per share.
d)
Flow-through Shares
Under US GAAP, proceeds from the issuance of flow-through shares are allocated between the offering of shares and the sale of tax benefits. The allocation is calculated based on the difference between the fair value of the stock issued and the sale of tax benefits. The difference between the fair value and the proceeds is recognized as a liability for accounting purposes. The liability is relieved and the corresponding future tax liability is recognized when the Company renounces its exploration expenditures to the flow-through share investors. The difference between the liability recognized at the time of issuance and the deferred tax liability upon renunciation will be included as income tax expenses.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 32
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
There were no flow-through shares issued during the years ended April 30, 2006 and 2005.
During the year ended April 30, 2007, the Company issued 7,246,800 flow-through shares for proceeds of $5,825,510. As at April 30, 2007, a total of 875,000 shares ($595,250) had not been renounced, resulting in a year-end liability of $202,385.
During the period ended December 31, 2007, the Company issued 150,000 flow-through shares for proceeds of $82,500. As at December 31, 2007, a total of 1,025,000 ($677,750) flow-through shares had not been renounced, resulting in a year-end liability of $230,435.
e)
New Accounting Standards
In 2007 and 2006, the FASB issued new and revised standards, all of which were assessed by Management to be not applicable to the Company with the exception of the following:
-
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to increase consistency and comparability in fair value measurements and to expand their disclosures. The new standard includes a definition of fair value as well as a framework for measuring fair value. The standard was set to be effective for fiscal periods beginning after November 15, 2007. On December 14, 2007, the FASB issued proposed FSP FAS 157-b to defer Statement 157’s effective date for all non-financial assets and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until years beginning after November 15, 2008. This standard should be applied prospectively, except for certain financial instruments where it must be applied retroactively as a cumulative-effect adjustment to the balance of opening retained earnings in the year of adoption. The Company is currently evalu ating the impact of this standard on its financial statements.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 33
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
e)
New Accounting Standards – (cont’d)
-
On February 15, 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Liabilities (SFAS 159). FAS 159 provides an entity the option to report selected financial assets and liabilities at fair value and establishes new disclosure requirements for assets and liabilities to which the fair value option is applied. The standard is effective for fiscal periods beginning after November 15, 2007. The standard requires prospective application except when an entity elects the fair value option for items existing as of the date of adoption; the difference between the carrying amount and the fair value should be included in a cumulative effect adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of this standard on its financial statements.
-
In December 2007, the FASB issued SFAS 141R “Business Combinations” which is effective for fiscal years beginning after December 15, 2008. SFAS 141R, which will replace FAS 141, is applicable to business combinations consummated after the effective date of December 15, 2008. The Company is currently evaluating the impact that the adoption of SFAS No. 141R might have on its financial position or results of operations.
-
In December 2007, the FASB also issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB 51”. SFAS No. 160 will change the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. SFAS No. 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of SFAS 160 might have on its financial positions or results of operations.
-
In March 2008, the FASB issued SFAS 161 “Disclosures about Derivative Instruments and Hedging Activities – an amendment of SFAS 133. This Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company is currently evaluating the impact that the adoption of SFAS 161 might have on its financial position or results of operations.
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 34
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
e)
New Accounting Standards – (cont’d)
The impact on the financial statements is as follows:
October 6 | |||||
Eight | 2003 (Date of | ||||
Months | Inception) | ||||
Ended | to | ||||
December 31 | Years ended April 30, | December 31, | |||
Statements of Operations | 2007 | 2007 | 2006 | 2005 | 2007 |
Net loss for the period per Canadian GAAP | $(5,365,035) | $(5,975,501) | $(717,289) | $(62,476) | $(12,167,182) |
Mineral property exploration expenditures | - | - | (219,756) | (4,813) | (325,654) |
Property acquisition costs and exploration costs written-off | - | - | 367,765 | - | 367,765 |
Net loss for the period under US GAAP | $(5,365,035) | (5,975,501) | $(569,280) | $(67,289) | $(12,125,071) |
Basic and diluted loss per share: | |||||
Canadian GAAP | $ (0.12) | $ (0.22) | $ (0.08) | $ (0.01) | |
US GAAP | $ (0.12) | $ (0.22) | $ (0.06) | $ (0.01) |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 35
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
d)
New Accounting Standards – (cont’d)
Eight | ||||
Months | ||||
Ending | ||||
December 31 | Years ended April 30, | |||
Statements of Cash Flows | 2007 | 2007 | 2006 | 2005 |
Cash flows from (used in) operating Activities per Canadian GAAP | $ (2,445,348) | $ (1,153,026) | $ 882,017 | $ (53,196) |
Exploration expenditures incurred during the period | - | - | (219,756) | (18,003) |
Cash flows from (used in) operating activities per US GAAP | (2,445,348) | (1,153,026) | 662,261 | (71,199) |
Cash flows used in investing activities per Canadian GAAP | (4,921,449) | (14,354,519) | (2,198,152) | (18,003) |
Mineral properties exploration expenditures | - | - | 219,756 | 18,003 |
Cash flows provided by investing activities per US GAAP | (4,921,449) | (14,354,519) | (1,978,396) | - |
Cash flows used in financing activities per Canadian and US GAAP | 4,387,281 | 16,218,516 | 3,583,402 | 469,940 |
Increase (decrease) in cash and cash equivalents per Canadian and US GAAP | $ (2,979,516) | $ 710,971 | $ 2,267,267 | $ 398,741 |
#
Unbridled Energy Corporation
(A Development Stage Company)
Notes to the Consolidated Financial Statements
for the eight month period ended December 31, 2007 and
for the years ended April 30, 2007, 2006 and 2005
(Stated in Canadian Dollars) – Page 36
Note 19
Differences Between Generally Accepted Accounting Principles in Canada and the United
States of America – (cont’d)
d)
New Accounting Standards – (cont’d)
December 31, | April 30, | ||||
Balance Sheets | 2007 | 2007 | |||
Total assets per Canadian and US GAAP | $ 20,448,655 | $ 18,455,073 | |||
Total liabilities per Canadian GAAP | $ 6,608,005 | $ 1,428,510 | |||
Future tax liability – flow-through shares | 230,435 | 202,385 | |||
Total liabilities per US GAAP | 6,838,440 | 1,630,895 | |||
Total shareholders’ equity per Canadian GAAP | 13,840,650 | 17,026,563 | |||
Adjustments for US GAAP – future taxes flow-through shares | (230,435) | (202,385) | |||
Total shareholders’ equity per US GAAP | 13,610,215 | 16,824,178 | |||
$ 20,448,655 | $ 18,455,073 |
Note 20
Supplemental Information (Unaudited)
Summarized information from the unaudited statement of operations for the eight month period ended December 31, 2006 is as follows:
Revenues | $ 46,872 |
Gross profit | $ 40,857 |
Income taxes | $ - |
Loss from continuing operations | $ (1,347,406) |
Basic and diluted loss per share | $(0.05) |
Signature Page
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Unbridled Energy Corporation
Registrant
Dated: July 3, 2008 | Signed:/s/ Joseph H. Frantz Jr. |
Joseph H. Frantz Jr. President and CEO |
#