UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): March 16,
2010
Evolution
Resources, Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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333-140306
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20-2356853
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(State or other jurisdiction
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(Commission File Number)
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(IRS Employer Identification
No.)
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of incorporation)
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| 143 Yazoo Ave, Clarksdale, MS | 662-655-1077 | 38614 | ||
| (Address of principal executive offices) | Registrant’s telephone number, including area code: |
(Zip
Code)
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Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item
4.02(a). Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On March
4, 2010, senior management of Evolution Resources, Inc. (“we” or the “Company”)
concluded that the Company’s consolidated financial statements for the period
ended October 31, 2009 contained in the Company’s Annual Report on Form 10-K as
filed with the Securities and Exchange Commission (“SEC”) on November 27, 2009,
should be restated to correct errors related to the issues set forth
below.
Accounting
for derivative transactions where stock warrants were canceled in exchange for
issuance of common stock. Initially we recorded the cancellation of
warrants and issuance of stock as a “gain on cancellation of stock warrants”,
however after receipt of a SEC staff comment letter and our own review of the
accounting treatment surrounding this cancellation, we concluded that our
initial accounting treatment was incorrect. We have subsequently
modified the accounting treatment surrounding the cancellation of stock warrants
as an addition to APIC for the period ending October 31, 2009 in the amount of
$1,403,273 in accordance with EITF 06-07 which outlines the treatment of a
previously bifurcated conversion option when the conversion option no longer
meets the bifurcation criteria.
An
incorrect initial income tax provision calculation coupled with the change in
accounting treatment for the cancellation of stock warrants in connection with
the Liquafaction acquisition. The income tax provision was originally
calculated at $1,335,322, but in accordance with ASC 740-10, we re-calculated an
income tax provision of $1,792,934.
Expected
impact of the Restatement
Set forth
below is the anticipated impact of the restatement on our previously issued
consolidated financial statements for the period ended October 31,
2009:
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·
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Total
expenses for the period ended October 31, 2009 is expected to increase
approximately $1,403,273, or 50% from $2,776,630 to $4,179,903 from the
previously reported total expenses for the
period.
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·
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Loss
from continuing operations for the period ended October 31, 2009 is
expected to increase approximately $1,403,273 or 38% from $3,670,249 to
$5,073,522 from the previously reported loss from continuing operations
for the period.
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·
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Income
tax provision for the period ended October 31, 2009 is expected to
increase approximately $457,612, or 34% from $1,335,322 to $1,792,934 from
the previously reported income tax provision for the
period.
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·
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Net
income for the period ended October 31, 2009 is expected to decrease
approximately $1,860,885, or 35% from $5,341,286 to $3,480,401 from the
previously reported net income for the
period.
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·
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Net
income per common share for the period ended October 31, 2009 is expected
to decrease approximately $.10, or 33% from $.30 to $.20 from the
previously reported net income per common share for the
period.
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·
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Deferred
income tax liability for the period ended October 31, 2009 is expected to
decrease approximately $457,612, or 34% from $1,335,322 to $1,792,934 from
the previously reported deferred income tax liability for the
period.
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Total
liabilities for the period ended October 31, 2009 is expected to increase
$457,612, or 5% from $9,910,049 to $10,367,661 from the previously
reported total liabilities for the
period.
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·
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Additional
paid in capital for the period ended October 31, 2009 is expected to
increase approximately $1,403,273, or 71% from $1,982,750 to $3,386,023
from the previously reported additional paid in capital for the
period.
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·
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Total
shareholders’ equity for the period ended October 31, 2009 is expected to
decrease $457,612, or 6% from $7,395,590 to $6,937,978 from the previously
reported total shareholders’ equity for the
period.
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Net
cash flows used in operating activities for the period ended October 31,
2009 is expected to decrease approximately $10,934,825 or 97% from
$11,311,470 to $376,645 from the previously reported net cash flows used
in operating activities for the period. This decrease is mostly the result
of a re-classification of the gain, net of any cash expended on
acquisition of Liquafaction to reconcile net cash flows from operating
activities.
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Net
cash flows used in investing activities for the period ended October 31,
2009 is expected to decrease approximately $10,482,842, or 89% from
$11,750,130 to $62,015 from the previously reported net cash flows used in
investing activities for the period. This decrease is the
result of a re-classification of the gain, net of any cash expended on
acquisition of Liquafaction to reconcile net cash flows from operating
activities.
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These
restatements are expected to address all outstanding issues raised in the
comment letter dated January 7, 2010 that the Company received from the Division
of Corporation Finance of the SEC.
Neither
we nor our Board of Directors have discussed the non-reliance on the previously
issued financial statements for the period ended October 31, 2009 with our
independent accountant.
Certain
statements contained in this Form 8-K include statements that are
“forward-looking statements,” including statements regarding the anticipated
adjustments to the Company’s prior period financial statements. There are risks
that the Company faces that could cause actual results to be materially
different from those that may be set forth in forward-looking statements made by
the Company. There also may be additional risks that the Company does not
presently know or that it currently believes are immaterial which could also
impair its business and results of operations. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Additional information regarding factors that could
materially affect results and the accuracy of the forward-looking statements
contained herein may be found in the Company’s Annual Report on Form 10-K for
the period ended October 31, 2009.
SIGNATURES
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 hereunto
duly authorized.
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Evolution
Resources, Inc.
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(Registrant)
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March 17,
2010
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/s/ Christopher P.
Chambers
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Christopher
P. Chambers
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Executive
Vice President &
Chief
Accounting Officer
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