UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2009.
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934 |
For the transition period from ___________________ to ______________________
Commission File Number : 333-137460.
NEXGEN PETROLEUM CORP.
(Exact name of registrant as specified in its charter)
| Nevada | 26-24106855 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
2808 Cowan Circle Las Vegas, NV (Address of principal executive offices) | 89102 (Zip Code) |
866-446-1869
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes �� ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
¨ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes x No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
¨ Yes ¨ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 56,413,000 shares of common stock with a par value of $0.001 as of February 15, 2010.
TABLE OF CONTENTS
| USE OF NAMES | 1 |
| CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 1 |
| PART I – FINANCIAL INFORMATION | 1 |
| Item 1. Financial Statements | 1 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 6 |
| Item 4T. Controls and Procedures. | 6 |
| PART II - OTHER INFORMATION | 6 |
| Item 1. Legal Proceedings | 6 |
| Item 1A. Risk Factors | 7 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
| Item 3. Defaults upon Senior Securities | 7 |
| Item 4. Submission of Matters to a Vote of Security Holders | 7 |
| Item 5. Other Information | 7 |
| Item 6. Exhibits | 7 |
USE OF NAMES
In this annual report, the terms “Nexgen Petroleum,” “Company,” “we,” or “our,” unless the context otherwise requires, mean Nexgen Petroleum Corp. and its subsidiaries, if any.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions. These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward looking statements. Any or all of the forward-looking statements in this quarterly report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:
| · | dependence on key personnel; |
| · | degree of success of exploration and development programs; |
| · | the operation of our business; and |
| · | general economic conditions in the United States. |
These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.
ITEM 1. FINANCIAL STATEMENTS
Our unaudited financial statements included in this Form 10-Q are as follows:
| F-1 | Balance Sheets as of December 31, 2009 (unaudited) and March 31, 2009 (audited); |
| F-2 | Statements of Operations for the three and nine months ended December 31, 2009 and 2008 and period from April 17, 2006 (inception) to December 31, 2009 (unaudited); |
| F-3 | Statement of Stockholders’ Equity for period from April 17, 2006 (inception) to December 31, 2009 (unaudited); |
| F-4 | Statements of Cash Flows for the three and nine months ended December 31, 2009 and 2008 and period from April 17, 2006 (inception) to December 31, 2009(unaudited); and |
| F-5 | Notes to Financial Statements. |
These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended December 31, 2009, are not necessarily indicative of the results that can be expected for the full year.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
As at December 31, 2009 and March 31, 2009
| | | December 31, 2009 | | | March 31, 2009 | |
| | | (unaudited) | | | (audited) | |
| | | | | | | |
| ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash | | $ | 8,096 | | | $ | 3,626 | |
| Prepaid expenses | | | - | | | | - | |
| Total current assets | | | 8,096 | | | | 3,626 | |
| | | | | | | | | |
| Oil and gas properties (successful efforts basis) | | | 2,229,800 | | | | 2,229,800 | |
| | | | | | | | | |
| Property and equipment – Note 3 | | | - | | | | 385 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 2,237,896 | | | $ | 2,233,811 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 74,408 | | | $ | 12,271 | |
| Shareholders’ loans – Note 5 | | | 1,650,793 | | | | 1,641,793 | |
| | | | | | | | | |
| Total current liabilities | | | 1,725,201 | | | | 1,654,064 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 1,725,201 | | | | 1,654,064 | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, $.001 par value, 1,350,000,000 shares authorized, 56,413,000 ( March 31, 2009 – 56,413,000) shares issued and outstanding | | | 10,413 | | | | 10,413 | |
| Additional paid in capital | | | 1,040,173 | | | | 978,211 | |
| Deficit accumulated during the exploration stage | | | (537,891 | ) | | | (408,877 | ) |
| Total stockholders’ equity | | | 512,695 | | | | 579,747 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 2,237,896 | | | $ | 2,233,811 | |
See accompanying notes to financial statements.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS (Unaudited)
Three Months and Nine Months ended December 31, 2009
Period from April 17, 2006 (Inception) to December 31, 2009
| | | Three months ended December 31, 2009 | | | Three months ended December 31, 2008 | | | Nine months ended December 31, 2009 | | | Nine months ended December 31, 2008 | | | Period from April 17, 2006 (Inception) to December 31, 2009 | |
| | | | | | | | | | | | | | | | |
| Revenues | | $ | 0- | | | $ | 0- | | | $ | 0- | | | $ | 0- | | | $ | 0- | |
| | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses: | | | | | | | | | | | | | | | | | | | | |
| Professional fees | | | 59,715 | | | | 681 | | | | 62,318 | | | | 90,646 | | | | 339,277 | |
| Amortization | | | 5 | | | | 191 | | | | 385 | | | | 571 | | | | 2,379 | |
| Bank charges and interest | | | 52 | | | | 54 | | | | 196 | | | | 335 | | | | 1,781 | |
| Foreign exchange loss (gain) | | | (85 | ) | | | 61 | | | | (85 | ) | | | 175 | | | | 92 | |
| Filing and registration | | | 2,277 | | | | 1,053 | | | | 3,570 | | | | 7,462 | | | | 10,927 | |
| Product development | | | - | | | | -0- | | | | -0- | | | | -0- | | | | 30,455 | |
| Office and miscellaneous | | | - | | | | -0- | | | | 668 | | | | 1,749 | | | | 9,835 | |
| Total general and administrative | | | 61,964 | | | | 1,980 | | | | 67,052 | | | | 100,938 | | | | 394,746 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss before other expense | | | (61,964 | ) | | | (1,980 | ) | | | (67,052 | ) | | | (100,938 | ) | | | (394,746 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Other expense | | | | | | | | | | | | | | | | | | | | |
| Interest income | | | - | | | | -0- | | | | -0- | | | | -0- | | | | 3,765 | |
| Interest expense | | | (20,805 | ) | | | (20,504 | ) | | | (61,962 | ) | | | (60,215 | ) | | | (146,586 | ) |
| Loss on sale of equipment | | | - | | | | -0- | | | | -0- | | | | -0- | | | | (324 | ) |
| Total other income (expense) | | | (20,805 | ) | | | (20,504 | ) | | | (61,962 | ) | | | (60,215 | ) | | | (143,145 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | $ | (82,769 | ) | | $ | 22,484 | ) | | $ | (129,014 | ) | | $ | (161,153 | ) | | $ | (537,891 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss per share: | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted | | $ | 0 .00 | | | $ | 0 .00 | | | $ | 0 .00 | | | $ | 0 .00 | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted ( adjusted for 15:1 forward stock split) | | | 56,413,000 | | | | 56,413,000 | | | | 56,413,000 | | | | 55,942,500 | | | | | |
See accompanying notes to financial statements.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
Period from April 17, 2006 (Inception) to December 31, 2009
| | | Common stock | | | Additional paid-in capital | | | Share subscriptions | | | Deficit accumulated during the development stage | | | Total | |
| | | Shares | | | Amount | | | | | | | | | | | | | |
| Issuance of common stock for cash @$.001 | | | 135,000,000 | | | $ | 9,000 | | | $ | 81,000 | | | $ | -0- | | | $ | - | | | $ | 90,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | (81,059 | ) | | | (81,059 | ) |
| Balance, March 31, 2007 | | | 135,000,000 | | | | 9,000 | | | | 81,000 | | | | -0- | | | | (81,059 | ) | | | 8,941 | |
| Proceeds of share subscription | | | | | | | | | | | | | | | 470,000 | | | | | | | | 470,000 | |
| Imputed interest on shareholder loan | | | | | | | | | | | 3,904 | | | | | | | | | | | | 3,904 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | (128,230 | ) | | | (128,230 | ) |
| Balance, March 31, 2008 | | | 135,000,000 | | | | 9,000 | | | | 84,904 | | | | 470,000 | | | | (209,289 | ) | | | 354,615 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Proceeds of share subscription | | | | | | | | | | | | | | | 344,000 | | | | | | | | 344,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Imputed interest on shareholder loan | | | | | | | | | | | 80,720 | | | | | | | | | | | | 80,720 | |
| Voluntary surrender and cancellation of shares | | | (80,000,000 | ) | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for $1 per share | | | 215,000 | | | | 215 | | | | 214,785 | | | | (215,000 | ) | | | | | | | -0- | |
| Issuance of common stock for $.50 per share | | | 1,198,000 | | | | 1,198 | | | | 597,802 | | | | (599,000 | ) | | | | | | | -0- | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | (199,588 | ) | | | (199,588 | ) |
| Balance, March 31, 2009 | | | 56,413,000 | | | | 10,413 | | | | 978,211 | | | | -0- | | | | (408,877 | ) | | | 579,747 | |
| Imputed interest on shareholder loan | | | | | | | | | | | 61,962 | | | | | | | | | | | | 61,962 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | (129,014 | ) | | | (129,014 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2009 | | | 56,413,000 | | | $ | 10,413 | | | $ | 1,040,173 | | | $ | -0- | | | $ | (537,891 | ) | | $ | 512,695 | |
See accompanying notes to financial statements.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended December 31, 2009 and 2008
Period from April 17, 2006 (Inception) to December 31, 2009
| | | Nine months ended December 31, 2009 | | | Nine months ended December 31, 2008 | | | Period from April 17, 2006 (Inception) to December 31, 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net loss | | $ | (129,014 | ) | | $ | (161,153 | ) | | $ | (537,891 | ) |
| Adjustments to reconcile net loss to Cash used by operating activities: | | | | | | | | | | | | |
| Depreciation | | | 385 | | | | 570 | | | | 2,379 | |
| Imputed interest | | | 61,962 | | | | 60,215 | | | | 146,586 | |
| Loss on sale of property and equipment | | | -0- | | | | -0- | | | | 324 | |
| Change in non-cash working capital items Prepaid expenses | | | -0- | | | | -0- | | | | -0- | |
| Accounts payable and accrued liabilities | | | 62,137 | | | | (40,450 | ) | | | 74,408 | |
| CASH FLOWS USED IN OPERATING ACTIVITIES | | | (4,530 | ) | | | (140,818 | ) | | | (314,194 | ) |
| CASH FLOWS USED IN INVESTING ACTIVITIES | | | | | | | | | | | | |
| Oil and gas properties | | | -0- | | | | (200,000 | ) | | | (2,229,800 | ) |
| Proceeds on disposal of property and equipment | | | -0- | | | | -0- | | | | 1,688 | |
| Purchase of property and equipment | | | -0- | | | | -0- | | | | (4,391 | ) |
| CASH FLOWS USED IN INVESTING ACTIVITIES | | | -0- | | | | (200,000 | ) | | | (2,232,503 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Loans from (repayments to) shareholders | | | 9,000 | | | | (7,160 | ) | | | 1,650,793 | |
| Share subscription received | | | -0- | | | | 344,000 | | | | 470,000 | |
| Proceeds from sales of common stock | | | -0- | | | | -0- | | | | 434,000 | |
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | | | 9,000 | | | | 336,840 | | | | 2,554,793 | |
| | | | | | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH | | | 4,470 | | | | (3,978 | ) | | | 8,096 | |
| Cash, beginning of period | | | 3,626 | | | | 8,008 | | | | -0- | |
| Cash, end of period | | $ | 8,096 | | | $ | 4,030 | | | $ | 8,096 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL CASH FLOW INFORMATION | | | | | | | | | | | | |
| Interest paid | | $ | - | | | $ | - | | | $ | - | |
| Income taxes paid | | $ | - | | | $ | - | | | $ | - | |
See accompanying notes to financial statements.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Nexgen Petroleum Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s filing with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented and for the financial statement to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2009 as reported in Form 10-K, have been omitted.
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES
Nature of Business
Nexgen Petroleum Corp. (“Nexgen”) was incorporated as DGT Corp. in Nevada on April 17, 2006. On September 20, 2007, the Company completed a merger with subsidiary Blackrock Petroleum Corp. and changed its name from DGT Corp. to Blackrock Petroleum Corp. On June 5, 2008, the Company completed a merger with subsidiary Nexgen Petroleum Corp. and changed its name from Blackrock Petroleum Corp. to Nexgen Petroleum Corp.
Nexgen is an exploration stage company which intends to acquire interests in leases for oil and gas prospects and then drill exploratory and development wells with industry participants.
On March 10, 2008, Nexgen entered into a Farmout and Participation Agreement with respect to two test wells on an oil and gas lease dated December 22, 2007. Under the Farmout Agreement, Nexgen is paying 60% of all costs associated with the test wells to earn a 30% interest in the associated production spacing units. See Note 7.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (continued)
Oil and Gas Properties
Nexgen accounts for oil and gas exploration and development costs using the successful efforts method. Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are expensed as incurred. Exploratory well costs are capitalized pending further evaluation of whether economically recoverable reserves have been found. If economically recoverable reserves are not found, explanatory well costs will be expensed as dry holes. All exploratory wells are evaluated for economic viability within one year of well completion and the related capital costs are reviewed quarterly. Exploratory well costs that discover potentially economically recoverable reserves in areas where a major capital expenditure would be required before production could begin and where the economic viability of that major capital expenditure depends upon the successful completion of further exploratory work in the area, remain capitalized as long as the additional exploratory work is underway or firmly planned.
Property and Equipment
The Company’s capital asset has been capitalized and is being depreciated over its estimated useful life on a straight line basis over a three year period.
Cash and Cash Equivalents
For the purposes of presenting cash flows, Nexgen considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and payables. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic loss per share
Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Recent Accounting Pronouncements
Nexgen does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 3 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| | | December | | | March | |
| | | 31, 2009 | | | | 31, 2009 | |
| | | | | | | | | |
| Computer equipment | | $ | 2,291 | | | $ | 2,291 | |
| Less: Accumulated depreciation | | | ( 2,291 | ) | | | ( 1,906 | ) |
| | | $ | - | | | $ | 385 | |
The capital asset is being depreciated on a straight-line basis over its estimated useful life of three years. In August 2006, certain computer equipment was disposed of for proceeds of $1,688.
NOTE 4 – INCOME TAXES
For the period ended December 31, 2009, Nexgen has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $538,000 at December 31, 2009 and will expire beginning in the year 2026.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4 – INCOME TAXES (continued)
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| | | December 31, 2009 | | | September 30, 2008 | |
| Deferred tax asset attributable to: | | | | | | |
| Net operating loss carryover | | $ | 183,000 | | | $ | 126,000 | |
| Valuation allowance | | | (183,000 | ) | | | (126,00 | ) |
| Net deferred tax asset | | $ | - | | | $ | - | |
NOTE 5 – SHAREHOLDERS’ LOANS
During the year ended March 31, 2008, the Company received loans from two shareholders in the principal amounts of $622,500, $800,000 and $225,000. During the year ended March 31, 2009, the Company repaid $100,000 of the $225,000 loan received and $40,000 of the $622,500 loan. In addition, during the year ended March 31, 2009 Nexgen received loans of $134,293 from a shareholder. All loans are non-interest bearing and are due on demand. The loans are considered to be short-term at December 31, 2009 and the Company expects that it will need to pay these back within the next twelve months. Imputed interest at 5% per annum has been recorded as an increase in additional paid in capital.
NOTE 6 – COMMON STOCK
At inception, Nexgen issued 9,000,000 shares of stock for $90,000 cash.
Effective September 20, 2007, Nexgen affected a fifteen (15) for one (1) forward stock split.
On September 18, 2007, Nexgen received stock subscription proceeds related to a private placement of 1,000,000 shares at $.50 per share. Subsequently, $455,000 of the subscription proceeds were returned. On February 20, 2008, Nexgen received stock subscriptions proceeds of $425,000 related to a private placement of shares at $ .50 per share.
During the period ended March 31, 2009, Nexgen received stock subscriptions proceeds of $129,000 related to a private placement of shares at $.50 per share and $215,000 related to a private placement of shares at $1.00 per share.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 7– COMMITMENTS
On March 10, 2008, Nexgen entered into a Farmout and Participation Agreement with respect to two test wells on an oil and gas lease dated December 22, 2007. Under the Farmout Agreement, Nexgen is paying 60% of all costs associated with the test wells to earn a 30% interest in the associated production spacing units.
On or about April 11, 2008, the Company entered into a letter agreement (the “Letter Agreement”) with Montello Resources (USA) Ltd., Park Place Energy Corp., and Austin Developments Corp., dated effective April 11, 2008, whereby the parties agreed to amend the March 10, 2008 Farmout Agreement as follows: (i) Article 8 (Area of Mutual Interest) of the Farmout & Royalty Procedure attached as Schedule “C” to the Farmout Agreement shall apply; (ii) the Mutual Interest Lands shall comprise all PNG rights 50% or more of which are located within the boundaries of that area of lands located within Morgan County, State of Tennessee, USA as outlined on the map attached to the Letter Agreement; (iii) the Area of Mutual Interest shall be in effect until 11:50 pm on April 10, 2010; and (iv) the participating interests of the parties hereto in the Area of Mutual Interest during the term thereof shall be Montello – 35%, Park Place – 5%, Austin – 30% and the Company – 30%.
In addition, on or about April 11, 2008, the Company entered into a Farmout and Participation Agreement (the “Farmout Agreement”), which is effective as of April 11, 2008, with Montello Resources (USA) Ltd., a subsidiary of Montello Resources Ltd., Park Place Energy Corp., an Alberta corporation, and Austin Developments Corp., an Alberta corporation, with respect to two test wells on the oil and gas lease dated March 25, 2008 between Robert and Kathy Lavender, as lessors, and Montello Resources (USA) Ltd., as lessee, located in Morgan County, Tennessee.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 7– COMMITMENTS (continued)
Under the Farmout Agreement the participating interests are as follows:
Montello Resources (USA) Ltd., as operator, is paying 15% of all costs associated with the test well to earn a 35% interest in the associated production spacing units; Austin Developments Corp. is paying 20% of the costs to earn a 30% interest; Park Place Energy Corp. is paying 5% of the costs to earn a 5% interest; and the Company is paying 60% of the costs to earn a 30% interest. As of June 30, 2008, the Company has incurred $132,000 in capital expenditures on this property by participating in the drilling and completion of the Morgan Highpoint #5 test well, which has been cased and shut in.
On or about August 26, 2008, the Company entered into an equalization and joint operating agreement with Montello Resources (USA) Ltd,, Park Place Energy Corp. and Austin Developments Corp. with respect to interests in various joint lands and wells. The initial working interests of the parties in the Property are (i) with respect to the Bowen Block, Park Place 5%, Montello 55% and Austin 40%, and (ii) with respect to the balance of the leases on the Property, Park Place 5%, Montello 35%, Austin 30% and the Company, 30%. Among other terms and conditions as between Montello and the Company, the Company will bear on Montello’s behalf, $ 1,250,000 with respect to Montello’s working interest share of any joint expense incurred on the Property, and when the Company has paid such amount, it shall have earned from Montello, an undivided 15% working interest in the Bowen Block. As among Montello, Austin and the Company, if warranted upon completion of certain anticipated operations on the Property, the Company shall commission at its expense, an engineering report to evaluate the 100% working interest in the proven and probably oil and gas assets in the Bowen Block. Among other terms and conditions, within 30 days of the receipt of this evaluation, the Company may acquire an undivided 5% working interest from Montello and an undivided 10% working interest from Austin in the Bowen Block for (i) pro rata percentage dollar amount as calculated from the engineering evaluation (ii) a pro rata percentage of the sum of $ 325,000.
NOTE 8 – LIQUIDITY AND GOING CONCERN
The Company has negative working capital, has incurred losses since inception, and has not yet received revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
NEXGEN PETROLEUM CORP.
(formerly Blackrock Petroleum Corp.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009
NOTE 8 – LIQUIDITY AND GOING CONCERN (continued)
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
NOTE 9 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date on which the financial statements were submitted to the Securities and Exchange Commission and has determined it does not have any material subsequent events to disclose.
You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this quarterly report. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Overview
We are a development stage company that focuses on acquiring and exploring oil and gas properties primarily in North America. The Company currently has interests in oil and gas properties in the Morgan Highpoint Project in Tennessee. We intend to acquire interests in leases for oil and gas prospects either through farmout arrangements, participation arrangements or straight acquisition of oil and gas interests, and then drill exploratory and development wells with the help of other industry participants. We do not intend to operate any properties.
Plan of Operations
We have not yet generated or realized any revenues from our business operations. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we are able to acquire oil and gas prospects, explore and develop such prospects and are able to produce oil and/or gas from our exploration and development. There is no assurance we will ever reach this point. Accordingly, we must raise cash from sources other than the sale of oil and/or gas. Our only other source for cash at this time is investments by others in us. We must raise cash to implement our plan and stay in business. If we require additional money and are unable to raise it, we may have to suspend or cease operations.
We intend to acquire interests in leases for oil and gas prospects either through farmout arrangements, participation arrangements or straight acquisition of oil and gas interests, and then drill exploratory and development wells with the help of other industry participants. We do not intend to operate any properties at this time. We intend to focus our oil and gas activities in North America as well as other regions.
On the Morgan Highpoint Project, we intend to commence discussions with the other participants under the Equalization and JO Agreement in order to determine our future activities and estimated costs associated with any future activities.
We do not intend to hire any employees at this time.
Anticipated Expenses over the Next Twelve Months
We anticipate that we will spend approximately $210,000 on our expenses in the next twelve months. Below is a table showing these expenses.
| Expense Item | | Estimated Annual Amount | |
| Legal | | | 50,000 | |
| Accounting | | | 25,000 | |
| Travel Expenses | | | 10,000 | |
| Web Design & Technical Consultant | | | 2,500 | |
| Printing | | | 2,500 | |
| Office Expenses | | | 10,000 | |
| Filing Fees & Transfer Agent | | | 10,000 | |
| Working Capital | | | 100,000 | |
| TOTAL | | | 210,000 | |
As of December 31, 2009, we had total current assets of $8,096 and total assets of $2,237,896 compared to total current assets of $3,626 and total assets of $2,233,811 as of March 31, 2009. Our total current assets as of December 31, 2009 comprise of cash in the amount of $8,096 compared to cash in the amount of $3,626 as of March 31, 2009. Our total current liabilities as of December 31, 2009 were $1,725,201 represented by accounts payable and accrued liabilities of $74,408 and shareholders’ loans of $1,650,793 compared to total current liabilities of $1,654,064 represented by accounts payable and accrued liabilities of $12,271 and shareholder loans of $1,641,793 as of March 31, 2009. As a result, on December 31, 2009, we had a working capital deficiency of $1,717,105 compared to a working capital deficiency of $1,650,438 on March 31, 2009.
We are a development stage corporation and have not generated any revenue to date from our activities. Despite our hope for revenues in the foreseeable future, we believe that revenues will be sparse and irregular and, if we receive any at all, will be far less than necessary to carry out our business forward without additional financing. We have cash in the amount of $8,096 as of December 31, 2009, which is not enough to meet our projected expenditures in the next twelve months. Thus, in order to meet our capital needs, we will most likely need to raise funds from other sources to remain in business. We intend to raise additional money through private placements, however, there can be no assurance that we will be able to raise additional money in the future. If we need additional capital and cannot raise the necessary amount, we will either be required to suspend activities until we do raise the cash or cease activity entirely.
Results of Operations
Operating activities used $314,914 in cash for the period from inception (April 17, 2006) to December 31, 2009. Our net loss of $537,891 was the primary component of our negative operating cash flow. Investing activities for the period from inception (April 17, 2006) to December 31, 2009, used $4,391 for the purchase of equipment and $2,229,800 for the acquisition of oil and gas property interests, offset by proceeds received on the sale of equipment of $1,688 for a total of $2,232,503. Net cash flows provided by financing activities for the period from inception (April 17, 2006) to December 31, 2009 was $2,554,793 represented as loans from shareholders of $1,650,793 and proceeds from the sale of our stock and proceeds from share subscriptions of $904,000.
Three Month Period Ended December 31, 2009
Revenues: We did not generate any revenues during the three month period ended December 31, 2009.
Professional fees: Professional fees were $59,715 and $681 for the three months ended December 31, 2009 and 2008, respectively.
Amortization: Amortization expenses were $5 and $191 for the three months ended December 31, 2009 and 2008, respectively.
Bank charges: Bank charges and interest expenses were $52 and $54 for the three months ended December 31, 2009 and 2008, respectively.
Foreign exchange loss (gain): Foreign exchange gain was $85 compared to a foreign exchange loss of $61 for the three months ended December 31, 2009 and 2008, respectively.
Filing and registration: Filing and registration expenses were $2,277 and $1,053 for the three months ended December 31, 2009 and 2008, respectively. This increase was due to the increased activity during the three month period ended December 31, 2009.
Interest expense: Interest expenses were $20,805 and $20,504 for the three months ended December 31, 2009 and 2008, respectively.
Net Loss: Net loss was $82,769 and $22,484 for the three months ended December 31, 2009 and 2008, respectively. This increase in net loss of $60,285 resulted primarily from an increase in professional expenses and filing and registration expenses during the three months ended December 31, 2009.
Nine Month Period Ended December 31, 2009
Revenues: We did not generate any revenues during the nine month period ended December 31, 2009.
Professional fees: Professional fees were $62,318 and $90,646 for the nine months ended December 31, 2009 and 2008, respectively. This decrease was due to decreased activity in the Company during the nine months ended December 31, 2009.
Amortization: Amortization expenses were $385 and $571 for the nine months ended December 31, 2009 and 2008, respectively.
Bank charges: Bank charges and interest expenses were $196 and $335 for the nine months ended December 31, 2009 and 2008, respectively.
Foreign exchange loss: Foreign exchange loss (gain) was a gain of $85 and a loss of $175 for the nine months ended December 31, 2009 and 2008, respectively.
Filing and registration: Filing and registration expenses were $3,570 and $7,462 for the nine months ended December 31, 2009 and 2008, respectively. This decrease was due to decreased activity in the Company during the nine months ended December 31, 2009.
Office and miscellaneous: Office and miscellaneous expenses were $668 and $1,749 for the nine months ended December 31, 2009 and 2008, respectively.
Interest expense: Interest expenses were $61,962 and $60,215 for the nine months ended December 31, 2009 and 2008, respectively.
Net Loss: Net loss was $129,014 and $161,153 for the nine months ended December 31, 2009 and 2008, respectively. This decrease in net loss of $32,139 resulted primarily from a decrease in professional expenses, filing and registration expenses and office and miscellaneous expenses during the nine months ended December 31, 2009.
Shareholders Loans
During the year ended March 31, 2008, we received loans from two shareholders in the principal amounts of $622,500, $800,000 and $225,000. During the year ended March 31, 2009, we repaid $100,000 of the $225,000 loan received and $40,000 of the $622,500 loan. In addition, during the year ended March 31, 2009 we received loans of $134,293 from a shareholder. All loans are non-interest bearing and are due on demand. The loans are considered to be short-term at December 31, 2009 and we expect that we will need to pay these back within the next twelve months. Imputed interest at 5% per annum has been recorded as an increase in additional paid in capital.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Going Concern Statement
We have negative working capital, have not yet received revenues from sales of products or services, and have recurring losses from operations. The continuation of our company as a going concern is dependent upon our Company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations.
Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended March 31, 2009, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company” (as defined by §229.10(f)(1)), we are not required to provide the information required by this Item.
ITEM 4T. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. Under the direction of our Chief Executive Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (i) there continue to be material weaknesses in the Company’s internal controls over financial reporting, that the weaknesses constitute a “deficiency” and that this deficiency could result in misstatements of the foregoing accounts and disclosures that could result in a material misstatement to the financial statements for the current period that would not be detected, and (ii) accordingly, our disclosure controls and procedures were not effective as of December 31, 2009.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during our fiscal quarter of the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
As a “smaller reporting company” (as defined by §229.10(f)(1)), we are not required to provide the information required by this Item.
None.
None.
No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended December 31, 2009.
None.
ITEM 6. EXHIBITS
(a) Exhibit List
31.1 Certificate pursuant to Rule 13a-14(a)
31.2 Certificate pursuant to Rule 13a-14(a)
32.1 Certificate pursuant to 18 U.S.C. §1350
32.2 Certificate pursuant to 18 U.S.C. §1350 SIGNATURE
Pursuant to the requirements 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.
| | NEXGEN PETROLEUM CORP. (Registrant) | |
| Date: February 22, 2010 | By: /s/ Hsien Loong Wong | |
| | Hsien Loong Wong | |
| | President, CEO, CFO, Secretary, Treasurer and Director (Principal Executive Officer and Principal Financial Officer) | |
