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VIPER RESOURCES, INC |
(Formerly Cobra Oil and Gas Company) |
(An Exploration Stage Company) |
Unaudited Statement of Cash Flows |
| | | | | | | | |
| | | | For the Nine months ended February 29, 2012 | | For the Nine months ended February 28, 2011 | | November 18, 2005 (inception) through February 29, 2012 |
Cash flows from operating activities | | | | | | |
| | Net loss | $ | (52,674) | $ | (196,728) | $ | (6,758,413) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | |
| | Donated office space and services | | - | | - | | 13,500 |
| | Depreciation | | - | | 434 | | 1,304 |
| | Exploration costs - lease write downs | | - | | - | | 5,339,871 |
| | Compensatory stock issuances | | - | | - | | 17,000 |
| Changes operating assets and liabilities: | | | | | | |
| | Other assets | | - | | 20,000 | | - |
| | Accounts payable | | 37,891 | | - | | 37,891 |
| | Accounts payable - related parties | | - | | (2,050) | | 9,807 |
| | Accrued interest | | 333 | | - | | 333 |
Net cash provided by (used in) operating activities | | (14,450) | | (178,344) | | (1,338,707) |
| | | | | | | | |
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 | | - | | - | | 116,966 |
Net cash provided by financing activities | | - | | 100,000 | | 2,057,416 |
| | | | | | | | |
| Net change in cash and cash equivalent | | (14,450) | | (78,344) | | 25,534 |
| | | | | | | | |
| Cash and cash equivalent at the beginning of period | | 39,984 | | 202,557 | | - |
| | | | | | | | |
| Cash and cash equivalent at the end of period | $ | 25,534 | $ | 124,213 | $ | 25,534 |
| | | | | | | | |
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 |
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VIPER RESOURCES, INC.
UNAUDITED FINANCIAL STATEMENTS
For the nine months ended February 29, 2012
NOTE 1 – CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial positions, results of operations, and cash flows on February 29, 2012, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s May 31, 2011 and 2010 audited financial statements. The results of operations for the nine months ended February 29, 2012 are not necessarily indicative of the operating results for the full year.
NOTE 2 – NOTES PAYABLE
The Company has received a loan from ACI, Inc. in the amount of $20,000 on June 30, 2011. The length of the loan is two years and it carries an interest rate of 5% per annum. There is no collateral for this loan. This loan was paid off in full in October 2011.
As of February 29, 2012, the Company has accrued interest payable in the amount of $333.
NOTE 3 – SHAREHOLDERS’ EQUITY
There is no change in equity for the nine months ended February 29, 2012.
NOTE 4 – SIGNIFICANT TRANSACTIONS
The Company has no significant transactions for the nine months ended February 29, 2012.
NOTE 5 – SUBSEQUENT EVENTS
Management has reviewed material events subsequent to the nine months ended February 29, 2012 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”. No additional disclosures are required.
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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 quarterly report.
We are in the exploration stage as an oil and gas exploration company and during the quarter ended February 29, 2012 we engaged in limited oil and gas activities. We had minimal operations and generated no revenues during the quarter ended February 29, 2012. 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 acquisitions.
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 September 13, 2011, our auditors, Sam 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 $6,758,413 as of February 29, 2012. 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 the prospects that we may acquire interests in. We intend to fund any 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 $100,000 in the next 12 months on oil and gas related activities.
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 $60,000.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.
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Presently we have four full-time employees consisting of our executive officers, Dianwen Ju, Jimmy Wang, Xiao Chen and Guofeng Xu. Changes in the number of employees during the next twelve 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 a decrease in general and administrative expenses, our operating expenses during the three and nine months ended February 29, 2012 decreased to $9,338 and $52,341, respectively from $50,294 and $196,728, respectively, during the three and nine months ended February 28, 2011.
Net Loss
We incurred net losses for the three and nine months ended February 29, 2012 of $9,338 and $52,674, respectively. We incurred net losses for the three and nine months ended February 28, 2011 of $50,294 and $196,728, respectively. The decrease in net loss was directly attributable to a decrease in general and administrative expenses.
Liquidity and Capital Resources
At February 29, 2012, we had a working capital deficit of $14,200 compared to working capital of $38,474 at May 31, 2011. Current liabilities increased to $39,734 at February 29, 2012 from $1,510 at May 31, 2011. The increase in current liabilities at February 29, 2012 compared to May 31, 2011 was due to an increase in accounts payable. Current assets decreased to $25,534 at February 29, 2012 from $39,984 at May 31, 2011. The decrease in current assets at February 29, 2012 compared to May 31, 2011 was due to a decrease in cash and cash equivalents.
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.
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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 adopted the provisions of this guidance effective July 1, 2010, which did not have a material impact 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.
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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 elimination of the qualifying special-purpose entity concept in ASC 860, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provided timely and useful information about an enterprise's involvement in a variable interest entity. 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 810 to have an impact on the Company's results of operations, financial condition or cash flows.
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 did not 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.
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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, 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 29, 2012 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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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 29, 2012.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
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: April 23, 2012
By:/s/ Dianwen Ju
Dianwen Ju
President and Chief Executive Officer
By:/s/ Xiao Chen
Xiao Chen
Chief Financial Officer
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