U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No 1)
x Annual Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year endedFebruary 29, 2008
OR
¨ Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File#000-52794
SENTRY PETROLEUM LTD.
(Exact name of registrant as specified in its charter)
NEVADA | 20-4475552 |
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
organization) |
|
999 18th Street, Suite 3000, Denver CO, 80202
(Address of Principal Executive Offices including Zip Code)
(866) 680 7649
(Issuer’s telephone number, including area code)
Securities registered under Section 12(b) of the Act:NONE
Securities registered under Section 12(g) of the Act:
COMMON STOCK
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. :¨ YESx NO
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. :¨ YESx NO
The issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to filed such reports), and (2) has been subject to such filing requirements for the past 90 days:x YES¨ NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer¨ | Accelerated filer¨ |
Non-accelerated filer¨ | Smaller reporting companyx |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). x Yes¨ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was sold, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter is: $2,372,100
The number of shares outstanding of each of the issuer’s classes of common equity, as of February 29, 2008 and May 14, 2008: 46,325,600 Shares Common Stock. $0.0001 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A amends the Company's Annual Report on Form 10-K for the year ended February 29, 2008, filed with the Securities and Exchange Commission on June 2, 2008.
In Item 8 our auditors have amended the Report of Independent Registered Public Accounting Firm to clarify which periods were audited by the current auditors and for which periods they relied on work performed by our former auditor. Additionally the auditors amended their report to make reference to the cumulative period from date of inception to February 29, 2008. We have further amended Note 2 e to the financial statements to discuss in more detail the nature of costs to be amortized and the limitation on capitalized costs.
In Item 9A we have amended our disclosure to disclose any change in our internal control over financial reporting that occurred during the last fiscal quarter of our report that has materially affected, or is reasonable likely to materially affect our internal control over financial reporting.
For purposes of this Form 10-K/A, and in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, Item 8 and Item 9A of the Original Form 10-K have been amended and restated in their entirety. Other than the revisions to Item 8 and Item 9A noted above, there are no other changes to the Original Form 10-K. No amendments have been made to this Form 10-K/A to reflect events occurring after the filing of the Original Form 10-K or to modify or update those disclosures affected by subsequent events. Accordingly, this Form 10-K/A should be read in conjunction with the Company’s SEC filings made subsequent to the filing of the Original Form 10-K, including any amendments of those filings. In addition, this Form 10-K/A includes updated certifications from the Company’s CEO and CFO as Exhibits&nbs p;31.1, 31.2, 32.1 and 32.2.
Page 1
ITEM 8. FINANCIAL STATEMENTS
Sentry Petroleum Ltd.
(formerly Summit Explorations Inc.)
(An Exploration Stage Company)
February 29, 2008
Index
Balance Sheets
F-2
Statements of Operations
F-3
Statements of Cash Flows
F-4
Statements of Stockholders’ Equity
F-5
Notes to the Financial Statements
F-6
Page 2
| K. R. MARGETSON LTD. |
| CHARTERED ACCOUNTANT |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
Sentry Petroleum Ltd
(formerly Summit Exploration Inc.
We have audited the accompanying balance sheet of Sentry Petroleum Ltd. (An Exploration Stage Company) as of February 29, 2008, and the related statements of operations, stockholders' equity and cash flows for the year ended February 29, 2008 and for the period from date of inception, (February 23, 2006) to February 29, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the period from date of inception (February 23, 2006) to February 29, 2007. That period was audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to that period, is based solely on the report of other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). 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. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, these financial statements present fairly, in all material respects, the financial position of the Company as of February 29, 2008 and the results of its operations and its cash flows for the year ended February 29, 2008 and period from date of inception (February 23, 2006) to February 29, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared using accounting principles generally accepted in the United States of America assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is an exploration stage company and has incurred operating losses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to their planned financing and other matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Sechelt, Canada | “K R. MARGETSON LTD.” |
May 27, 2008 | Chartered Accountant |
PO BOX 45, 5588 INLET AVENUE | TELEPHONE: 604-885-2810 |
SECHELT, BC V0N 3A0 | FACSIMILE: 604-885-2834 |
CANADA | E-MAIL: keith@krmargetson.com |
Page 3
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholder of
Summit Exploration Inc. (An Exploration Stage Company)
We have audited the accompanying balance sheet of Summit Exploration Inc. (An Exploration Stage Company) as of February 28, 2007 and the related statements of operations, cash flows and stockholders’ equity (deficit) for the year ended February 28, 2007 and for the period accumulated from February 23, 2006 (Date of Inception) to February 28, 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Summit Exploration Inc. (An Exploration Stage Company) as of February 28, 2007, and the results of its operations and its cash flows for the year ended February 28, 2007 and accumulated from February 23, 2006 (Date of Inception) to February 28, 2007, in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated any revenues and has incurred a loss from operations since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MANNING ELLIOTT LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
April 30, 2007
Page 4
Sentry Petroleum Ltd.
(formerly Summit Explorations Inc.)
(An Exploration Stage Company)
Balance Sheet
(Expressed in US dollars)
|
|
|
| February 29, |
| February 28, |
|
|
|
| 2008 |
| 2007 |
|
|
|
| $ |
| $ |
|
|
|
|
|
|
|
ASSETS |
|
|
|
| ||
|
|
|
|
|
|
|
Current Assets |
|
|
|
| ||
| Cash |
| 972,886 |
| 385,266 | |
|
|
|
|
|
|
|
Total Current Assets | 972,886 |
| 385,266 | |||
|
|
|
|
|
|
|
Equipment (Note 3) | 3,972 |
| - | |||
|
|
|
|
|
|
|
Total Assets |
| 976,858 |
| 385,266 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| |||
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
| ||
|
|
|
|
|
|
|
| Accounts payable | 4,576 |
| 2,864 | ||
| Accrued liabilities (Note 5) | 1,409 |
| 1,409 | ||
| Due to related party (Note 4) | 1,521 |
| 30,000 | ||
|
|
|
|
|
|
|
Total Liabilities |
| 7,506 |
| 34,273 | ||
|
|
|
|
|
|
|
Going Concern (Note 1) |
|
|
| |||
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
| ||
|
|
|
|
|
|
|
Common stock: (Note 7) |
|
|
| |||
100,000,000 shares authorized, $0.0001 par value, |
|
|
| |||
46,325,600 (16,325,600 in 2007) shares issued and outstanding | 4,633 |
| 1,633 | |||
|
|
|
|
|
|
|
Additional Paid-in Capital | 1,161,648 |
| 414,648 | |||
|
|
|
| |||
Donated Capital (Note 4) | 50,000 |
| - | |||
|
|
|
|
|
|
|
Deficit Accumulated During the Exploration Stage | (246,929) |
| (65,288) | |||
|
|
|
|
|
|
|
Total Stockholders' Equity | 969,352 |
| 350,993 | |||
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity | 976,858 |
| 385,266 | |||
(The Accompanying Notes are an Integral Party of These Financial Statements)
F-2
Sentry Petroleum Ltd.
(formerly Summit Exploration Inc.)
(An Exploration Stage Company)
Statements of Operations
(Expressed in US dollars)
|
|
|
|
|
|
| For the period |
|
|
|
|
|
|
| from February |
|
|
| Year |
| Year |
| 23, 2006 (Date |
|
|
| Ended |
| ended |
| of Inception) to |
|
|
| February 29 |
| February 28 |
| February 29, |
|
|
| 2008 |
| 2007 |
| 2008 |
|
|
| $ |
| $ |
| $ |
Revenue |
| - |
| - |
| - | |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Foreign exchange loss |
| 44,289 |
| 11,245 |
| 55,534 |
| General and administrative |
| 132,543 |
| 41,486 |
| 174,384 |
| Professional fees |
| 13,815 |
| 8,719 |
| 26,534 |
|
|
|
|
|
|
| |
Total Expenses |
| 190,947 |
| 61,450 |
| 256,452 | |
|
|
|
|
|
|
| |
Other Income |
|
|
|
|
|
| |
Interest income |
| 9,006 |
| 517 |
| 9,523 | |
|
|
|
|
|
|
| |
Net Loss for the Year |
| (181,641) |
| (60,933) |
| (246,929) | |
|
|
|
|
|
|
|
|
Net Loss Per Share - Basic and Diluted |
| ($0.01) |
| ($0.01) |
|
| |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
| 26,243,633 |
| 11,531,000 |
|
| |
(The Accompanying Notes are an Integral Party of These Financial Statements)
F-3
Sentry Petroleum Ltd.
(formerly Summit Explorations Inc.)
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
|
|
|
|
|
|
| For the period | |
|
|
|
|
|
|
| from February | |
|
|
| Period |
| Period |
| 23, 2006 (Date | |
|
|
| ended |
| ended |
| of Inception) to | |
|
|
| February 29 |
| February 28 |
| February 29 | |
|
|
| 2008 |
| 2007 |
| 2008 | |
|
|
| $ |
| $ |
| $ | |
Cash Flows Used in Operating Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| |
| Net Loss for the period |
| (181,641) |
| (60,933) |
| (246,929) | |
|
|
|
|
|
|
|
| |
| Adjustments to reconcile net cash to operating activities: |
|
|
|
|
|
| |
|
| Depreciation |
| 386 |
| - |
| 386 |
|
| Donated services |
| 50,000 |
| - |
| 50,000 |
|
|
|
|
|
|
|
| |
| Change in operating assets and liabilities: |
|
|
|
|
|
| |
|
| Accounts payable and accrued liabilities |
| 1,712 |
| (82) |
| 5,985 |
|
| Due to related party |
| (28,479) |
| 30,000 |
| 1,521 |
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities |
| (158,022) |
| (31,015) |
| (189,037) | ||
|
|
|
|
|
|
| ||
Cash Flows From Investing Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| |
| Purchase of property and equipment |
| (4,358) |
| - |
| (4,358) | |
|
|
|
|
|
|
| ||
Net Cash Flows From Investing Activities |
| (4,358) |
| - |
| (4,358) | ||
|
|
|
|
|
|
| ||
Cash Flows From Financing Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| |
| Proceeds from issuance of common shares |
| 750,000 |
| 416,280 |
| 1,166,281 | |
|
|
|
|
|
|
| ||
Net Cash Flows Provided by Financing Activities |
| 750,000 |
| 416,280 |
| 1,166,281 | ||
|
|
|
|
|
|
| ||
Increase in Cash |
| 587,620 |
| 385,265 |
| 972,886 | ||
|
|
|
|
|
|
| ||
Cash - Beginning of Period |
| 385,266 |
| 1 |
| - | ||
|
|
|
|
|
|
| ||
Cash - End of the Period |
| 972,886 |
| 385,266 |
| 972,886 | ||
|
|
|
|
|
|
| ||
Supplemental Disclosure |
|
|
|
|
|
| ||
| Interest paid |
| - |
| - |
| - | |
| Income taxes paid |
| - |
| - |
| - | |
(The Accompanying Notes are an Integral Part of These Financial Statements)
F-4
Sentry Petroleum Ltd.
(formerly Summit Exploration Inc.)
(An Exploration Stage Company)
Statements of Stockholders'
(Expressed in US dollars)
|
|
|
|
|
| Deficit |
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| Additional |
| During the |
|
|
| Common Stock | Paid-In | Donated | Development |
| |
|
| Shares | Par Value | Capital | Capital | Stage | Total |
|
| # | $ | $ | $ | $ | $ |
|
|
|
|
|
|
|
|
Balance - February 23, 2006 (Date of Inception) | - | - | - | - | - | - | |
|
|
|
|
|
|
|
|
Common stock issued for cash at $0.0001 per share | 2 | 1 | - | - | - | 1 | |
|
|
|
|
|
|
|
|
Net loss | - | - | - | - | (4,355) | (4,355) | |
|
|
|
|
|
|
|
|
Balance - February 28, 2006 | 2 | 1 | - | - | (4,355) | (4,354) | |
|
|
|
|
|
|
|
|
Common stock issued for cash at $0.01 per share | 10,000,000 | 1,000 | 99,000 | - | - | 100,000 | |
|
|
|
|
|
|
|
|
Cancel common stock | (2) | - | - | - | - | - | |
|
|
|
|
|
|
|
|
Common stock issued for cash at $0.05 per share | 6,325,600 | 632 | 315,648 | - | - | 316,280 | |
|
|
|
|
|
|
|
|
Net loss | - | - | - | - | (60,933) | (60,933) | |
|
|
|
|
|
|
|
|
Balance - February 28, 2007 | 16,325,600 | 1,633 | 414,648 | - | (65,288) | 350,993 | |
|
|
|
|
|
|
| |
Common stock issued for cash at $0.025 per share | 30,000,000 | 3,000 | 747,000 | - | - | 750,000 | |
|
|
|
|
|
|
| |
Donated Capital/Forgiveness of Debt | - | - | - | 50,000 | - | 50,000 | |
|
|
|
|
|
|
| |
Net loss | - | - | - | - | (181,641) | (181,641) | |
|
|
|
|
|
|
|
|
Balance – February 29, 2008 | 46,325,600 | 4,633 | 1,161,648 | 50,000 | (246,929) | 969,352 | |
This statement gives retroactive effect to a 2 for 1 stock split effected November 26, 2007
(The Accompanying Notes are an Integral Party of These Financial Statements)
F-5
Sentry Petroleum Ltd.
(formerly Summit Explorations Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
1.
Nature of Operations and Continuance of Business
Sentry Petroleum Ltd. (the “Company”) is an Exploration Stage Company as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7“Accounting and Reporting By Development Stage Enterprises”incorporated under the laws of the State of Nevada on February 23, 2006 as Summit Exploration Inc. On December 3rd, 2007 the Company changed its name from Summit Exploration Inc. to Sentry Petroleum Ltd. The Company is engaged in the acquisition, exploration, and development of oil and gas properties. As at February 29, 2008, the Company does not own an oil and gas property interest and is searching for new oil and gas properties which meet its investment criteria.
The Company currently has no business operations, no oil and gas properties and as a result has no revenues and has not generated any cash flows from operations to fund its acquisition, exploration and development activities. The Company intends to rely upon the issuance of equity securities to finance its oil and gas property acquisitions and commence exploration and development on acquired properties, however there can be no assurance it will be successful in raising the funds necessary, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. As at February 29, 2008, the Company has accumulated losses since inception of $246,929. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustment to reflect the possible fu ture effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
On April 7, 2006, the Company filed an SB-2 Registration Statement (“SB-2”) with the United States Securities and Exchange Commission to offer a minimum of 2,500,000 pre split common shares to a maximum of 5,000,000 pre split common shares of the Company at $0.10 per pre split common share for minimum proceeds of $250,000 and maximum proceeds of $500,000. The SB-2 was declared effective on June 19, 2006, and on November 17, 2006, the Company issued 3,162,800 pre split common shares for cash proceeds of $316,280.
On June 26, 2007, the Company filed an SB-2 Registration Statement (“SB-2”) with the United States Securities and Exchange Commission to offer up to a maximum of 15,000,000 pre split common shares of the Company at $0.05 per pre split common share for maximum proceeds of $750,000. The SB-2 was declared effective on July 11, 2007, and on November 1, 2007, the Company issued 15,000,000 pre split common shares for cash proceeds of $750,000.
Effective November 26, 2007, the Company authorized a 2 to 1 share split.
2.
Summary of Significant Accounting Policies
a.
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is February 29.
b.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to donated services and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-6
Sentry Petroleum Ltd,
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
2.
Summary of Significant Accounting Policies (continued)
c.
Comprehensive Loss
In accordance with SFAS 130, "Reporting Comprehensive Income" ("SFAS 130"), comprehensive income consists of net income and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses and minimum pension liability. For the 2007 year, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
d.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at February 29, 2008, the Company has $771,145 ($nil in 2007) in cash equivalents.
e
Oil and Gas Property
The Company follows the full cost method of accounting for oil and gas operations whereby all costs associated with the acquisition, exploration and development of oil and gas properties will be capitalized in cost centers on a country-by-country basis. These costs include, geological and geophysical studies, and costs of drilling both productive and non-productive wells.
Amortization will be calculated for producing properties by using the unit-of-production method based on proved reserves before royalties, as determined by management of the Company or independent consultants. Sales of oil and gas properties will be accounted for as adjustments of capitalized costs, without any gain or loss recognized, unless such adjustments significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. Costs of abandoned oil and gas properties will be accounted for as adjustments of capitalized cost and written off to expense.
A ceiling test will be applied to each cost center by comparing the net capitalized costs to the present value of the estimated future net revenue from production of proved reserves, based on commodity prices in effect as at the Company’s year-end and based on current operating costs, discounted by 10%, less the effects of future costs to develop and produce the proved reserves, plus the cost of unproved properties not amortized, plus the lower of costs or estimated fair value of unproved properties that are subject to amortization, and less the effects of income taxes. Any excess capitalized costs are written off to operations.
Unproved properties are exempt from amortization and are subject to annual assessment. All costs directly associated with the acquisition and evaluation of unproved properties are deferred as assets. These amounts represent actual amounts incurred and are not intended to reflect the current or future fair values of these exploration permits. There can be no assurance at this time that these amounts are recoverable from either production revenue or the disposition of all or some of these interests. In general, the Company may designate as impaired any unproved property under one or more of the following conditions:
i)
there are no firm plans for further drilling on the unproved property;
ii)
negative results were obtained from studies of unproved property;
ii)
negative results were obtained from studies conducted in the vicinity of the unproved property; or
iv)
the remaining term of the unproved property does not allow sufficient time for further studies or drilling.
This policy is prospective in nature as the Company does not currently have any oil and gas property interest.
f)
Asset Retirement Obligations
The Company will recognize a liability for future asset retirement obligations associated with oil and gas properties. The estimated fair value of the asset retirement obligation will be based on current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability will be capitalized as part of the cost of the related asset and amortized over its useful life. The liability will accrete until the Company settles the obligation. As of February 29, 2008, the Company did not have any asset retirement obligations
F-7
Sentry Petroleum Ltd,
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
2.
Summary of Significant Accounting Policies (continued)
h)
Financial Instruments and Risk
Financial instruments, which include cash, accounts payable, accrued liabilities and amounts due to a related party were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s operations are in Canada, which may result in exposure to market risks from changes in currency rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.
i)
Foreign Currency Translation
The Company's functional currency is US dollars. Accordingly, foreign currency balances are translated into US dollars as follows:
Monetary assets and liabilities are translated at the period-end exchange rate. Non-monetary assets are translated at the rate of exchange in effect at their acquisition, unless such assets are carried at market or nominal value, in which case they are translated at the period-end exchange rate. Revenue and expense items are translated at the average exchange rate for the period. Foreign exchange gains and losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
j)
Basic and Diluted Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where anti-dilutive.
k)
Income Taxes
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, all expected future events other than enactment of changes in the tax laws or rates are considered.
Due to the uncertainty regarding the Company's future profitability, the future tax benefits of its losses have been fully reserved for and no net tax benefit has been recorded in the financial statements during the period presented.
l)
Stock-based Compensation
On the Company’s inception of February 23, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R “Share Based Payments
m)
Equipment
Equipment is initially recorded at cost and amortized to operations over its estimated useful life at the following amortization rates and methods:
Computer equipment | 55% straight line per annum |
Furniture and fixtures | 20% straight line per annum |
|
|
Equipment is written down to its net realizable value if it is determined that its carrying value exceeds the estimated future benefits to the Company.
F-8
Sentry Petroleum Ltd,
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
2.
Summary of Significant Accounting Policies (continued)
n)
Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations
In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elec ts to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”. SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, an any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but does not expect it to have a material effect.
In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect.
3.
Equipment
| 2008 |
| 2007 | ||||
|
| Accumulated | Net Book |
|
| Accumulated | Net Book |
| Cost | Amortization | Value |
| Cost | Amortization | Value |
| $ | $ | $ |
| $ | $ | $ |
|
|
|
|
|
|
|
|
Computer equipment | 3,112 | (193) | 2,919 |
| - | - | - |
Furniture and fixtures | 1,246 | (193) | 1,053 |
| - | - | - |
|
|
|
|
|
|
|
|
Total | 4,358 | (386) | 3,972 |
| - | - | - |
F-9
Sentry Petroleum Ltd,
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
4.
Related Party Transactions and Balances
During the year ended February 29, 2008 the Company paid $10,000 to the president of the Company for consulting services and $4,168 as re-imbursement for expenses. The Company owed $50,000 for consulting services provided by the President of the Company which was forgiven and recorded as donated capital. These transactions represent $30,000 in consulting expenses during both 2008 and 2007.
As of February 29, 2008 the Company owes $1,521 to Aide-de-Camp Services, a company wholly owned by the Secretary of the Company for accounting and secretarial services. Included in operating expenses for these costs are accounting expenses of $6,030 in 2008 and $761 in 2007.
5.
Accrued Liabilities
As at February 29, 2008, accrued liabilities consist of $1,409 (February 28, 2007: $1,409) for professional fees.
6.
Income Tax
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has net operating losses of $246,929, which commence expiring in 2026. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. For the years ended February 29, 2008 and 2007, the valuation allowance established against the deferred tax assets increased by $63,570 and $21,332, respectively.
The components of the net deferred tax asset at February 29, 2008 and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are listed below:
| February 29, | February 28, |
| 2008 | 2007 |
| $ | $ |
Net Operating Losses | 246,929 | 65,300 |
Statutory Tax Rate | 35% | 35% |
Effective Tax Rate | – | – |
Deferred Tax Asset | 86,425 | 22,855 |
Valuation Allowance | (86,425) | (22,855) |
Net Deferred Tax Asset | – | – |
7.
Common Shares
On February 23, 2006, the Company issued 2 common share to the President of the Company of cash proceeds of $1.
On March 8, 2006, the Company issued 10,000,000 common shares at $.01 per common share to the President of the Company for cash proceeds of $100,000. In addition, the Company cancelled the 1 common share issued to the President of the Company
On November 17, 2006, the Company issued 6,325,600 common shares at $.05 per common share for cash proceeds of $316,280.
F-10
Sentry Petroleum Ltd,
(An Exploration Stage Company)
Notes to the Financial Statements
February 29, 2008
7.
Common Shares – (continued)
On November 2, 2007, the Company issued 30,000,000 common shares at $.025 per common share for cash proceeds of $750,000.
Effective November 26, 2007, the Company authorized a 2 for 1 share split. These financial statements give retroactive application to this event.
On December 3, 2007, the Company increased its authorized share capital to 100,000,000, common shares of $.0001 par value.
There are no shares subject to warrants, options or other agreements as at February 29, 2008.
F-11
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were effective as of the end of the period covered by this report.
Changes in Internal Controls
We have also evaluated our internal controls for financial reporting, and there were no changes in our internal control over financial reporting during the quarter ended February 29, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Page 16
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of February 29, 2008. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework. Based on our assessment, we believe that, as of February 29, 2008, the Company’s internal control over financial reporting was effective based on those criteria.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
PART III
ITEM 15. EXHIBITS.
Exhibit Number | Description |
3.1 | Articles of Incorporation (1) |
3.3 | By-Laws (1) |
4.1 | Specimen Stock Certificate (1) |
5.1 | Opinion on legality (1) |
10.1 | Purchase agreement for ATP865 |
14.1 | Code of ethics (2) |
16.1 | Letter re change of certifying accountant (3) |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
99.1 | Audit committee charter (2) |
(1)
These documents have been filed with previous SB-2 on April 7, 2006 and have been included by reference.
(2)
These documents have been filed with Form 10KSB for the year ending February 28, 2007 and have been included by reference.
(3)
This document has been filed with Form 8-K/A on November 20, 2007 and have been included by reference.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Sentry Petroleum Ltd.
(Registrant)
Date: March 3, 2009 | By | RAJ RAJESWARAN |
|
| President and Chief Executive Officer |
|
|
|
Date: March 3, 2009 | By | ARNE RAABE |
|
| Chief Financial Officer |
Page 17