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EX-23.3 - Offshore Petroleum Corp. | v180636_ex23-3.htm |
AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
April
13, 2010
REGISTRATION
NO. 33-164513
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
AMENDMENT
NO. 1
TO
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES
ACT OF 1933
OFFSHORE
PETROLEUM CORP.
(Name of
Registrant as specified in its charter)
DELAWARE
(State
or other jurisdiction
of
incorporation or
organization)
|
1311
(Primary
Standard Industrial
Classification
Code Number)
|
65-0947544
(I.R.S.
Employer
Identification
No.)
|
OFFSHORE
PETROLEUM CORP.
110 East
Broward Boulevard, Suite 1700
Ft.
Lauderdale, FL 33301
Telephone:
877-655-0501
FAX:
866-786-6415
(Name,
address, including zip code, and
telephone
number, including
area
code, of registrant’s principal executive offices)
Jonathan
H. Gardner
Kavinoky
Cook LLP
726
Exchange Street; Suite 800
Buffalo,
New York 14210
(Name,
address, including zip code, and
telephone
number, including
area
code, of agent for service)
Approximate
date of proposed sale to the public: As soon as practicable after the effective
date of this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. ¨
If this
Form is filed to register additional securities pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. ¨
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”, and
“smaller reporting company” in Ruler 12B-2 of the Exchange Act.
Large
accelerated filer
|
¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer
|
¨
|
(do
not check if a smaller
|
Smaller
reporting company x
|
reporting
company)
|
CALCULATION
OF REGISTRATION FEE:
Title Of Each Class Of
Securities To Be Registered
|
Amount to be
Registered
|
Proposed
Maximum
offering price per
Share
|
Proposed
Maximum
Aggregate
Offering Price
|
Amount of
Registration Fee
|
||||||||||||
Common
Stock, par value $0.0001 per Share (1)
|
17,502,500 | $ | 0.10 | $ | 1,750,250 | $ | 124.79 | |||||||||
Total
|
17,502,500 | $ | 0.10 | $ | 1,750,250 | $ | 124.79 |
(1) Represents
shares of common stock which may be sold by the selling shareholders listed in
this Registration Statement.
The
offering price with respect to Shares has been estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457(C). This
price is not an indication of value nor has it been established by any
recognized methodology for deriving the value of the Shares.
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
PROSPECTUS
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION
The
information in this prospectus is not complete and may be
changed. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
OFFSHORE
PETROLEUM CORP.
SHARES OF
COMMON STOCK TO BE SOLD BY THE SELLING STOCKHOLDERS
The
selling shareholders named in this prospectus (the “Selling Shareholders”) are
offering up to 17,502,500 shares of the common stock of Offshore Petroleum
Corp., a Delaware corporation (“Offshore” or the “Company”), par value $0.0001
per share (“Shares”).
No
public market exists for the Shares or any other security issued by
Offshore. Offshore will undertake to include its Shares for trading
on the Over-The-Counter Bulletin Board, however, no assurance can be given that
such market will be established. The Selling Shareholders may
arbitrarily set an offering price for the Shares of $0.10 per Share until a
market for the Shares develops, if at all. Such offering price is not
based upon our net worth, total asset value or any other objective measure of
value based on accounting measurements. If a market for the Shares
develops, the Selling Shareholders may offer to sell their shares at prevailing
market prices or at negotiated prices. We will not receive any of the
proceeds of the sale of Shares by the Selling Shareholders. We will
pay all of the costs associated with this registration statement and prospectus,
but we will not pay any commissions or expenses of the actual sale of the
Shares. We have limited working capital and will require additional
capital to fund exploration activities. We will use our working
capital and any additional financing we obtain in the future for operating and
administrative expenses, maintenance of our exploration rights and exploration
for oil and gas in the areas subject to our Licenses, when
granted.
WE
ARE IN AN EXPLORATION STAGE ONLY AND HAVE NO RESERVES. READERS ARE
STRONGLY URGED TO READ THE “RISK FACTORS” SECTION OF THIS
PROSPECTUS.
BEFORE
BUYING THE SHARES OF COMMON STOCK, CAREFULLY READ THIS
PROSPECTUS. THE PURCHASE OF OUR SECURITIES INVOLVES A HIGH DEGREE OF
RISK.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
information in this prospectus is not complete and may be
changed. The Selling Shareholders may not sell the Shares until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell the Shares and it
is not soliciting an offer to buy the Shares in any state where the offer or
sale is not permitted.
The date
of this prospectus is _________________, 2010.
2
TABLE
OF CONTENTS
|
Page
|
Prospectus
Summary
|
4
|
Summary
Financial Data
|
6
|
Risk
Factors
|
7
|
Determination
of Offering Price
|
11
|
Dilution
|
11
|
Description
of Business
|
11
|
Properties
|
12
|
Fiscal
Year
|
20
|
Transfer
Agent
|
20
|
Employees
|
20
|
Stock
Option Plan
|
20
|
Competition
|
21
|
History
|
21
|
Management's
Discussion and Analysis or Plan of Operation
|
22
|
Disclosure
Controls and Procedures
|
30
|
Market
for Common Equity and Related Stockholder Matters
|
31
|
Directors,
Executive Officers, Promoters, Control Persons
|
32
|
Executive
Compensation
|
35
|
Security
Ownership of Certain Beneficial Owners and Management
|
36
|
Certain
Relationships and Related Transactions
|
36
|
Organization
Within the Last Five Years
|
37
|
Description
of Securities
|
37
|
Use
of Proceeds
|
37
|
Determination
of Offering Price
|
37
|
Selling
Shareholders and Plan of Distribution
|
37
|
Legal
Proceedings
|
41
|
Legal
Matters
|
41
|
Experts
|
41
|
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
|
41
|
How
To Get More Information
|
42
|
Glossary
|
42
|
|
|
Index to Financial
Statements
|
43
|
|
|
Financial
Statements for the years ended December 31, 2009 and
2008 (audited)
|
F-1
|
Until
______________, 2010, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer’s obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
3
PROSPECTUS
SUMMARY
History and
Business. Our name is Offshore Petroleum Corp.
and we sometimes refer to ourselves in this prospectus as “Offshore Petroleum”
or “Offshore”, the “Company” or as “we,” “our,” or “us.” We are an
oil and gas exploration company. Our objective is to explore and, if
warranted, develop the area covered by eight licenses for which we have applied
to the Government of the Commonwealth of the Bahamas (the
“Licenses”). The area is located in the offshore waters controlled by
the Commonwealth of the Bahamas; as more fully described
herein.
We
have two wholly-owned subsidiaries: Atlantic Petroleum Ltd. (“Atlantic”), a
Cayman Islands company, and Bahamas Exploration Limited (“Bahamas”), also a
Cayman Islands company. Atlantic and Bahamas together are sometimes
referred to herein as our “Subsidiaries.” The Subsidiaries each have
applied to the Government of the Commonwealth of the Bahamas for certain rights
to explore for oil and gas in territorial waters controlled by the Commonwealth
of the Bahamas. We refer to such exploration rights as the
“Licenses.” The Subsidiaries are seeking eight Licenses that are more
fully described herein in the section herein entitled, “PROPERTIES – Licenses
for Exploration.” The geographic location and area covered by the
Licenses (the “Licensed Areas”) and a description of the work that has been
performed on the Licensed Areas is described herein in the section entitled,
“PROPERTIES – Description of Licensed Areas”. There is no assurance
that the Licenses will be granted. We will not list our shares on any
exchange, or further pursue the effectiveness of the registration statement of
which this prospectus forms a part, unless the Licenses are
granted.
If the
Licenses are granted, Offshore will endeavor to secure the financing to
undertake exploration of the area covered by the Licenses. Offshore
may seek a joint venture partner with exploration experience and operational
capability to undertake our exploration activities and assist with
financing. Our activities are subject to risks and uncertainties
described herein under “RISK FACTORS.” Potential investors in the
Company’s shares are strongly urged to review carefully such RISK
FACTORS.
Our
head office is at 110 East Broward Boulevard, Suite 1700, Ft. Lauderdale, FL
33301 and our administration office is at 1226 White Oaks Blvd., Oakville,
Ontario Canada L6H 2B9. Our telephone number is 877-655-0501 and our
fax number is 866-786-6415.
WE
HAVE NO RESERVES. WE ARE IN AN EXPLORATION STAGE
ONLY. READERS ARE STRONGLY URGED TO READ THE “RISK FACTORS” SECTION
OF THIS PROSPECTUS.
Neither
the Prime Minister, the Minister of Energy or any Governmental Department of the
Government of the Bahamas, or any person or body acting on their behalf, has
formed or expressed an opinion that the Licensed Areas are, from their
geological formation or otherwise, likely to contain petroleum.
Securities Being
Offered. We have 45,450,000 shares of common stock, par value
$0.0001 per share (“Shares”) issued and outstanding as of March 31,
2010. The Selling Shareholders are offering up to 17,502,500
Shares. No public market exists for the Shares or any other security
issued by Offshore. Offshore will undertake to include its Shares for
trading on the OTC Bulletin Board, however, no assurance can be given that such
market will be established. Offshore will not undertake to list, or
include for quotation, any other security of the Company on any exchange or
quotation system. The Selling Shareholders arbitrarily set an
offering price for the Shares of $0.10 per Share until a market for the Shares
develops, if at all. Such offering price is not based upon our net
worth, total asset value or any other objective measure of value based on
accounting measurements. If a market for the Shares develops, the
Selling Shareholders may offer to sell their Shares at prevailing market prices
or at negotiated prices. There is no minimum number of shares that
must be sold in this offering.
4
Risk Factors. You
should read the “RISK FACTORS” section as well as the other cautionary
statements throughout this prospectus so that you understand the risks
associated with an investment in our securities. Any investment in
our common stock should be considered a high-risk investment because of the
nature of oil and gas exploration. Only investors who can afford to
lose their entire investment should invest in these securities.
Use of
Proceeds. The Selling Shareholders are selling shares of
common stock covered by this prospectus for their own account. We
will not receive any of the proceeds from the sale of these shares by the
Selling Shareholders. Our working capital and any additional
financing we obtain in the future will be used to fund our operations and
administrative expenses, maintain our Licenses and fund exploration for oil and
gas in the areas subject to our Licenses, when granted. See
PROPERTIES – Licenses for Exploration. We are paying all of the
expenses relating to the registration of the Selling Shareholders’ Shares, but
we will not pay any commissions or expenses of the actual sale of the
Shares.
5
SUMMARY
FINANCIAL DATA
The
following summary financial data should be read in conjunction with MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and the
audited FINANCIAL STATEMENTS OF OFFSHORE for the twelve-month periods ended
December 31, 2009 and 2008, including the notes thereto, contained elsewhere in
this Prospectus.
Balance
|
As at
|
As at
|
||||||
Sheet Data
|
Dec. 31, 2009
|
Dec. 31, 2008
|
||||||
(Audited)
|
(Audited)
|
|||||||
Cash
|
$ | 796,930 | $ | Nil | ||||
Deposits
|
$ | 720,000 | $ | Nil | ||||
Oil
and Gas Properties
|
$ | 2,279,644 | $ | Nil | ||||
Total
Assets
|
$ | 3,796,574 | $ | Nil | ||||
Liabilities
|
$ | 1,544,284 | $ | 10,758 | ||||
Total
Stockholders’ Equity (Deficiency)
|
$ | 2,252,290 | $ | (10,758 | ) |
Statement of
|
For the
|
For the
|
||||||
Operations Data
|
year ended
|
year ended
|
||||||
Dec. 31, 2009
|
Dec. 31, 2008
|
|||||||
(Audited)
|
(Audited)
|
|||||||
Revenue
from Operations
|
$ | Nil | $ | Nil | ||||
Other
Income-Interest
|
$ | 913 | $ | Nil | ||||
Net
Loss
|
$ | 201,230 | $ | 10,862 |
6
RISK
FACTORS
1.
|
THE
COMPANY HAS NO SOURCE OF OPERATING REVENUE AND EXPECTS TO INCUR
SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING COMPANY, IF IT IS
ABLE TO ESTABLISH AN OPERATING COMPANY AT
ALL.
|
Currently,
the Company has no source of revenue, limited working capital and no commitments
to obtain additional financing. The Company will require significant
additional working capital to maintain its Licenses, when granted, and to carry
out its exploration programs in the Licensed Areas. Failure to raise
the necessary capital to maintain our Licenses and commence exploration could
cause the Company to go out of business.
2.
|
BECAUSE
OF OUR LIMITED RESOURCES AND THE SPECULATIVE NATURE OF OUR BUSINESS, THERE
IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
|
The
report of our independent auditors on our audited financial statements for the
twelve-month periods ended December 31, 2009 and 2008, indicates that there are
a number of factors that raise substantial doubt about our ability to continue
as a going concern. Our continued operations are dependent on our
ability to obtain financing and upon our ability to achieve future profitable
operations from the development of our oil exploration properties. If
we are not able to continue as a going concern, it is likely that our investors
will lose their investment.
3.
|
WE
HAVE NO TRACK RECORD
|
The
Company has no exploration track record or operating history upon which an
evaluation of its future success or failure can be made.
4.
|
OUR
DEVELOPMENT AND EXPLORATION OPERATIONS REQUIRE SUBSTANTIAL CAPITAL AND WE
MAY BE UNABLE TO OBTAIN NEEDED CAPITAL OR FINANCING ON SATISFACTORY TERMS,
WHICH COULD LEAD TO A LOSS OF OUR
LICENSES.
|
Our
Licenses with the Bahamian Government, if we are successful in obtaining them,
will require us to pay rent and meet minimum annual investment thresholds for
the exploration and, if warranted, development of the Licensed Areas, as more
fully described in the section entitled, “PROPERTIES – Licenses for
Exploration.” Rent has been prepaid for the first year. In
the second and third years of the initial term of the Licenses, our Subsidiaries
will pay an aggregate of $600,000 and $800,000 in rent respectively. In addition
to the payment of rent, with respect to each of the eight Licenses, Atlantic and
Bahamas must invest specified amounts in the exploration and development of the
Licensed Areas. Such investments must be for qualifying activities
and expenses as specified in the License. In the first year of each
License, each Subsidiary must invest an aggregate of $250,000 in its Licensed
Areas. Each Subsidiary must then invest an aggregate of $375,000 in
its Licensed Areas in the second and third years in order to maintain their
respective Licenses. Consequently, the Subsidiaries will invest in
qualifying expenditures an aggregate of $500,000 in the first year of the
Licenses and $750,000 in each of the second and third years of the
Licenses. The Company believes it has sufficient capital and
exploration credits to ensure it meets its operating requirements over the next
year. Overall, the Company believes it must raise $4 million to meet
the conditions of the initial three-year term of all eight
Licenses. If we are unable to meet such conditions, we will lose some
or all of our Licenses and cease doing business, in which case our shareholders
will lose their investment in the Company.
7
5.
|
IF
THE COMPANY DEVELOPS HYDROCARBON RESOURCES, THERE IS NO ASSURANCE THAT
PRODUCTION WILL BE PROFITABLE.
|
Even if
the Company finds hydrocarbon resources, there is no assurance that it will be
able to produce them or that a production operation would be profitable on any
of its Licenses.
6.
|
OIL
AND NATURAL GAS PRICES ARE VOLATILE AND SUBSTANTIAL DECLINES WILL
ADVERSELY AFFECT OUR FINANCIAL RESULTS AND IMPEDE OUR
GROWTH.
|
Profitability
and liquidity are substantially dependent upon prevailing prices for oil and
natural gas, which can be extremely volatile. Even relatively modest drops in
prices can significantly affect financial results. Prices for oil and natural
gas may fluctuate widely in response to relatively minor changes in the supply
of, and demand for, oil and natural gas, market uncertainty and a wide variety
of additional factors that are beyond our control, such as the domestic and
foreign supply of oil and natural gas; the price of foreign imports; the ability
of members of the Organization of Petroleum Exporting Countries to agree to and
maintain oil price and production controls; technological advances affecting
energy consumption, domestic and foreign governmental regulations, and
variations between product prices at sales points and applicable index
prices. In addition, regional oil and gas prices may vary from
national prices due to regional factors such as regional gas production being
constrained by regional gas pipeline capacity.
7.
|
OIL
AND GAS OPERATIONS ARE INHERENTLY
RISKY.
|
The
nature of the oil and gas business involves a variety of risks, particularly the
risk of drilling wells that are found to be unable to produce any oil and/or gas
or unable to produce and sell oil and/or gas at prices sufficient to repay the
costs of the wells. It is possible that we may in the future
recognize substantial impairment expenses when uneconomic wells and declines in
oil and gas prices result in impairments of the capitalized costs of our oil and
gas Licenses.
The oil
and gas business also includes operating hazards such as fires, explosions,
cratering, blow-outs and encountering formations with abnormal pressures. The
occurrence of any of these events could result in losses and, if not fully
insured against, could have a material adverse effect on our financial position
and results of operations.
We expect
to carry stated levels and types of casualty and liability insurance and
additional insurance against well blow-outs and other unusual risks in the
drilling, completion and operation of oil and gas wells at such time as we reach
this stage of development. However, there may still be fires, blow-outs and
other events that result in losses not fully covered by our
insurance.
8.
|
THE
COMPANY IS HIGHLY DEPENDENT UPON ITS OFFICERS AND
DIRECTORS. BECAUSE OF THEIR INVOLVEMENT IN OTHER SIMILAR
BUSINESSES WHICH MAY BE COMPETITORS, THEY MAY HAVE A CONFLICT OF
INTEREST.
|
None of
the Company’s officers or directors works for the Company on a full-time
basis. There are no proposals or definitive arrangements to engage
them on a full-time basis. None of the officers or directors have
employment agreements with the Company or its Subsidiaries. All of
the directors are officers or directors of other companies in similar
exploration businesses. Such business activities may be considered a
conflict of interest because these individuals must continually make decisions
on how much of their time they will allocate to the Company as against their
other business projects, which may be competitive. Also, the Company
has no key man life insurance policy on any of its senior management or
directors. The loss of one or more of these officers or directors
could adversely affect the ability of the Company to carry on
business.
8
9.
|
OUR
STOCK IS SUBSTANTIALLY CONTROLLED BY FOUR OF OUR DIRECTORS AND AS A
RESULT, FOR THE FORSEEABLE FUTURE OUR DIRECTORS WILL BE ABLE TO CONTROL
OUR OVERALL DIRECTION.
|
Ryan
Bateman, John Rainwater, Mickey Wiesinger and Gary Adams are members of our
Board of Directors and, together, own or control 29.6% of our outstanding
shares. As a result, they will be able substantially to control the
outcome of all matters requiring stockholder approval and will be able to elect
all of our directors. Such control, which may have the effect of
delaying, deferring or preventing a change of control, is likely to continue for
the foreseeable future and significantly diminishes control and influence that
other stockholders may have in the Company.
10.
|
FUTURE
FINANCINGS INVOLVNG THE SALE OF OUR COMMON STOCK COULD DILUTE CURRENT
SHAREHOLDERS.
|
Because
the Company will require additional capital to explore the area covered by the
Licenses, if they are granted, the Company expects to issue Shares in the
future. As a result of any financing involving the issuance of the
Company’s equity securities, existing shareholders will own a smaller
proportional interest in the Company.
11.
|
THE
COMPANY COULD ENCOUNTER REGULATORY AND PERMITTING
DELAYS.
|
Even if
the Company is successful in obtaining the Licenses, the Company could face
delays in obtaining production leases to proceed with production on the Licensed
Areas. Such delays could jeopardize financing, if any is available,
which could result in having to delay or abandon work on some or all of the
Licensed Areas.
12.
|
WE
ARE SUBJECT TO EXTENSIVE GOVERNMENT
REGULATIONS
|
Our
business is affected by Bahamian Government laws and regulations, including
energy, environmental, conservation, tax and other laws and regulations relating
to the oil and gas development and production.
The areas
outlined in the Bahamian Petroleum Act of 1971 and the regulations promulgated
thereunder include: (a) the prevention of waste, (b) the discharge of materials
into the environment, (c) the conservation of oil and natural gas, (d)
pollution, (e) permits for drilling operations, (f) drilling bonds and (g)
reports concerning operations, spacing of wells, and the unitization and pooling
of properties. Failure to comply with any laws and regulations may result
in the loss of one or more Licenses, and/or assessment of administrative, civil
and criminal penalties. Moreover, changes in any of the above outlined
laws or regulations could have a material adverse effect on our business.
Concerns of global warming may result in changes to laws and regulations
that increase the cost of oil and gas operations and decrease the use and demand
for crude oil and natural gas. In view of the many uncertainties with
respect to current and future laws and regulations, including their
applicability to us, we cannot predict the overall effect of such laws and
regulations on our future operations.
13.
|
THERE
ARE PENNY STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR
ABILITY TO SELL YOUR SHARES.
|
Our
common stock is considered a "penny stock" and the sale of our stock by you will
be subject to the "penny stock rules" of the Securities and Exchange
Commission. The penny stock rules require broker-dealers to take
steps before making any penny stock trades in customer accounts. As a
result, the market for our shares could be illiquid and there could be delays in
the trading of our stock which would negatively affect your ability to sell your
shares and could negatively affect the trading price of your
shares.
9
14.
|
STATE
BLUE SKY LAWS MAY LIMIT RESALE OF THE SHARES OF COMMON
STOCK.
|
The
holders of our Shares and persons who desire to purchase them in any trading
market that might develop in the future should be aware that there may be
significant state law restrictions upon the ability of investors to resell our
shares. Accordingly, investors should consider any secondary market for our
securities to be a limited one including a trading market on the
OTC Bulletin Board. If our Shares are traded on the OTC Bulletin
Board we intend to seek coverage and publication of information regarding the
company in an accepted publication which permits a “manual exemption.”
This manual exemption permits a security to be distributed in a particular
state without being registered if the company issuing the security has a listing
for that security in a securities manual recognized by the state. However, it is
not enough for the security to be listed in a recognized manual. The
listing entry must contain (i) the names of issuers, officers, and
directors, (ii) an issuer’s balance sheet, and (iii) a profit and loss
statement for either the fiscal year preceding the balance sheet or for the most
recent fiscal year of operations. Furthermore, the manual exemption is a
non-issuer exemption restricted to secondary trading transactions, making it
unavailable for issuers selling newly-issued securities. Most of the accepted
manuals are those published in Standard and Poor’s, Moody’s Investor Service,
Fitch’s Investment Service, and Best’s Insurance Reports, and many states
expressly recognize these manuals. A smaller number of states declare that they
‘recognize securities manuals’ but do not specify the recognized
manuals.
15.
|
THE
LARGE NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE
MARKET PRICE OF OUR COMMON
STOCK.
|
The
sale, or availability for sale, of a substantial number of Shares in the public
market could materially adversely affect the market price of our Shares and
could impair our ability to raise additional capital through the sale of our
equity securities. At the completion of this offering by the Selling
Shareholders, assuming the sale of all 17,502,500 Shares covered by this
prospectus, there will be approximately 45,450,000 Shares issued and
outstanding. Of these shares, 12,947,500 are freely transferable and eligible
for resale under Rule 144 as of the date hereof and 15 million will be
freely transferable and eligible for resale under Rule 144 after May 31,
2010.
16.
|
SHORTAGES
OF RIGS, EQUIPMENT, SUPPLIES AND PERSONNEL COULD DELAY OR OTHERWISE
ADVERSELY AFFECT OUR COST OF
EXPLORATION.
|
We, or
our joint venture operators, may experience shortages of drilling and completion
rigs, field equipment and qualified personnel which may cause delays in our
ability to continue to drill, complete, test and connect wells to processing
facilities. Shortages of drilling and completion rigs, field equipment or
qualified personnel could delay, restrict or curtail our exploration operations,
which may materially adversely affect our business.
17.
|
WE
HAVE PROVISIONS IN OUR CERTIFICATE OF INCORPORATION THAT SUBSTANTIALLY
LIMIT THE PERSONAL LIABILITY OF MEMBERS OF OUR BOARD OF DIRECTORS AND THAT
ALLOW US TO INDEMNIFY OUR OFFICERS AND
DIRECTORS.
|
Certain
provisions in our certificate of incorporation could make it very difficult for
you to bring any legal actions against our directors for violations of their
duties as directors or could require us to pay any amounts incurred by our
directors in any such actions. In addition, two of our directors are
not United States Citizens and shareholders could have difficulty pursuing legal
remedies in foreign jurisdictions.
10
DETERMINATION
OF OFFERING PRICE
The
offering price has been estimated solely for the purpose of calculating the
registration fee payable to the Securities and Exchange Commission in connection
with this prospectus. The offering price is not an indication of
value nor has it been established by any recognized methodology for deriving the
value of the Shares.
DILUTION
We will
likely be required to issue more common stock from treasury in order to raise
additional capital. If common stock is issued to raise additional
capital, it will result in the dilution of the existing
shareholders.
The
Shares to be sold by the Selling Shareholders are common stock that is currently
issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders as a result of the sale of the Shares covered by this
prospectus.
Pursuant
to the Share Purchase Agreement, the principals of NPT acquired 15 million
Shares of the Company. Based upon the amounts expended by NPT to
apply for the Licenses and obtain technical data about the area covered by the
License applications (and after netting out cash to be received by NPT pursuant
to the Share Purchase Agreement), the Company has estimated the cost per share
of the Shares acquired by NPT’s principals to be $0.10 per share. The
officers and directors of the Company who are also principals of NPT and who
acquired Shares in the transaction are as follows:
Ryan
Bateman
|
6,940,000
shares
|
John
Rainwater
|
3,806,000
shares
|
Mickey
Wiesinger
|
672,000
shares.
|
Mr.
Bateman is a director of the Company. Of the 6,940,000 Shares
controlled by Mr. Bateman, 4,477,000 Shares are owned by Milo Holdings Ltd., a
company that he controls. Mr. Rainwater is a director and the
Company’s Chairman of the Board, President and Chief Executive
Officer. Mr. Wiesinger is a director and the Company’s Chief
Financial Officer.
The
Company has no current plans to seek additional financing. If the
Licenses are granted by the Government of the Bahamas, the Company intends to
seek additional financing which would probably include the issuance of
additional shares of common stock. Any such financing will be
dilutive to the existing shareholders.
DESCRIPTION
OF BUSINESS
We are an
oil and gas exploration company. Our objective is to explore and, if
warranted and feasible, to develop oil and/or gas production on sites covered by
our Licenses which are located in waters off the shore of the Commonwealth of
the Bahamas.
The
Share Purchase Agreement
As of
November 30, 2009, the Company closed a Share Purchase Agreement with NPT Oil
Corporation Ltd, a Cayman Islands company (“NPT”) to purchase from NPT all of
the equity stock of Atlantic Petroleum Ltd., a Cayman Islands
company (“Atlantic”) and Bahamas Exploration Limited, a Cayman
Islands company (“Bahamas”). Atlantic and Bahamas together are
sometimes referred to herein as our “Subsidiaries.” Pursuant to the
Share Purchase Agreement, Offshore paid consideration to NPT consisting of: (a)
15 million Shares of Offshore and (b) a promissory note with a face amount of
$1.5 million payable over a two-year term and bearing interest at
5%. NPT assigned to its own shareholders all of the Shares of
Offshore issued upon closing of the Share Purchase
Agreement.
11
NPT,
the selling party in the Share Purchase Agreement, was incorporated in October
of 2006 for the purpose of investing in oil and gas exploration assets. In
June of 2007, it entered into preliminary negotiations with a company that
previously held the exploration rights for the area covered by our License
applications, known as the Blake Plateau project and more fully described below
in “PROPERTIES” (the “Licensed Area”). In October of 2007, NPT
purchased all of the data relating to the project and engaged the prior operator
to act as a consultant to assist NPT in obtaining from the Bahamian Government
the legal right to explore the Licenses Area. The applicants for such
exploration rights were NPT’s then wholly-owned subsidiaries, Atlantic and
Bahamas. In September of 2009 NPT and the Company began negotiations
with the objective of moving the Subsidiaries and their respective exploration
rights into the Company in order to facilitate the process of raising investment
capital for further exploration of the Licensed Area. Ryan Bateman, then
both a director of the Company and a principal of NPT, negotiated on behalf of
NPT. John Rainwater, the Chairman of the Board of the Company and its
President and Chief Executive Officer and also a principal of NPT, negotiated on
behalf of the Company. Mickey Wiesinger, who became the Company’s Chief
Financial Officer, was also a principal of NPT. As a result of the Share
Purchase Agreement between NPT and the Company, the following persons who are
officers and directors of the Company and principals of NPT received the
following shares of Offshore Petroleum.
Ryan
Bateman
|
6,940,000
shares
|
John
Rainwater
|
3,806,000
shares
|
Mickey
Wiesinger
|
672,000
shares
|
The
following is the implied percentage ownership of the $1.5 million promissory
note that was issued upon closing of the Share Purchase Agreement from the
Company to NPT.
Ryan
Bateman
|
46 | % | ||
John
Rainwater
|
25 | % | ||
Mickey
Wiesinger
|
5 | % |
The
License Applications
The
Subsidiaries each have applied to the Government of the Commonwealth of the
Bahamas for certain rights to explore for oil and gas in territorial waters
controlled by the Commonwealth of the Bahamas. We refer to such
exploration rights as the “Licenses.” The Subsidiaries are seeking
eight Licenses that are more fully described below in “PROPERTIES – Licenses for
Exploration.” The geographic location and area covered by the
Licenses (the “Licensed Areas”) and a description of the work that has been
performed on the Licensed Areas is described below in “PROPERTIES – Description
of Licensed Areas” There is no assurance that the Licenses will be
granted or that the closing will be completed. We will not list our
shares on any exchange, or further pursue the effectiveness of the registration
statement of which this prospectus forms a part, unless the closing is
completed.
In the
event that the Licenses are granted, Offshore will endeavor to secure the
financing to undertake exploration of the area covered by the
Licenses. Our activities are subject to risks and uncertainties
described herein under “RISK FACTORS.” Potential investors in the
Company’s Shares are strongly urged to review carefully such RISK
FACTORS. As of the date of this prospectus, our applications for the
Licenses are pending and, we believe, close to receiving approval from the
Bahamian Government.
PROPERTIES
As
further described below under “Licenses for Exploration,” the Subsidiaries each
have applied to the Government of the Commonwealth of the Bahamas for certain
rights to explore for oil and gas in territorial waters controlled by the
Commonwealth of the Bahamas. We refer to such exploration rights and
the written agreements with the Bahamian Government that specify such rights as
the “Licenses.” The Subsidiaries are seeking eight such
Licenses. The Licenses application process began on December 12,
2008. The Company and the Subsidiaries believe they are in the final
stages of completing this process and obtaining the Licenses. There
is no assurance, however, that the Licenses will be granted. Offshore
will not list its shares on any exchange, or further pursue the effectiveness of
the registration statement of which this prospectus forms a part, unless the
Licenses are granted.
12
A
portion of the purchase price paid by the Company to acquire the Subsidiaries
was to obtain the following information. This information forms the
basis of our knowledge of the Licensed Areas.
|
·
|
A
1977 2D seismic data shoot by Tenneco
Inc.
|
|
·
|
Geophysical
analysis of a qualified engineer performed in1977 including 2D seismic
data
|
|
·
|
Geophysical
analysis of a qualified engineer regarding the 1977 seismic
data
|
|
·
|
Gravity
and magnetic data relating to the Blake Plateau,
Bahamas
|
|
·
|
An
Oil migration model relating to the Licensed
Areas
|
|
·
|
Ocean
floor seep satellite data - Bahamas
|
|
·
|
Core
pressure analysis studies relating to the Licensed
Areas
|
|
·
|
Source
rock study and analysis of the Licensed
Areas
|
|
·
|
Analog
field analysis with volumetric
calculations
|
|
·
|
A
Logistical and marketing study –
Bahamas
|
|
·
|
Misc.
geological maps of the Bahamas including the Licensed
Areas
|
The
amount invested by the Subsidiaries to obtain the above information is eligible
to be applied against work commitments required by the
Licenses.
Licenses for
Exploration
The
Subsidiaries’ applications for the Licenses are pending and, we believe, close
to receiving approval from the Bahamian Government. Final approval of
the Licenses has not been granted by
the Bahamian Government as of the date of this prospectus. While the
terms and conditions of the Licenses cannot be stated with certainty until the
Licenses are issued, based upon drafts of the Licenses and discussions with the
Bahamian Government, the Company anticipates that the rights to be granted to
the Subsidiaries will consist of eight separate Licenses covering geographic
areas specified in each License and described below in “Description of Licensed
Areas.” They are designated as follows.
Subsidiary Holding License
|
Name Assigned to Specific Licensed Area
|
Atlantic
Petroleum Ltd
|
License
No.
1 Aphrodite
|
License
No. 2 Mercury
|
|
License
No. 3 Neptune
|
|
License
No. 4 Venus
|
|
Bahamas
Exploration Limited
|
License
No. 5 Apollo
|
License
No. 6 Poseidon
|
|
License
No. 7 Hermes
|
|
License
No.
8 Zeus
|
Term
In each
case, the License will have an initial term of three (3) years with one option
to renew for another three-year term. After the second renewal term,
the Licenses can be renewed for two more three-year terms at the discretion of
the Bahamian Government as to all or a portion of the Licensed Area. At any time
during the term of the Licenses, or any renewal terms, if we drill a well that
can be developed into a producing well, the Subsidiary holding the License has a
right to convert the License into a Lease. The terms and conditions
of such a Lease are described below in “Development and Conversion Into
Lease.”
13
Rent
Each
License requires annual rent of $50,000 in the first year (already paid in each
case with the application for the License) and $75,000 in the second year. The
annual rent in the third year and any subsequent renewal years would be
$100,000.
Investment in
Development
In
addition to the payment of rent, Atlantic and Bahamas must invest specified
amounts in the exploration and development of the Licensed Areas. In
the first year of each License, each of the Subsidiaries must invest an
aggregate of $250,000 in qualifying expenditures for its four Licensed
Areas. The Subsidiaries each must then invest an aggregate of
$375,000 in qualifying expenditures for its four Licensed Areas in the second
and third years in order to maintain their respective
Licenses. Consequently, the Subsidiaries will invest an aggregate of
$500,000 in the first year of the Licenses and $750,000 for each of the second
and third years of the Licenses. Of the amount due, Atlantic and
Bahamas will receive credit for work performed and expense incurred to
obtain information about the Licensed Areas prior to the date
hereof. In the event a Subsidiary has qualifying expenditures for a
given Licensed Area greater than the amount required by the License, the surplus
can be used to offset annual expenditure obligations in subsequent
years. If, at the end of the License term or any renewal period
thereafter, a Subsidiary has not met the aggregate expenditure obligations for
such term, such Subsidiary would owe a penalty to the Bahamian Government equal
to one-half of the amount deficient.
Development and Conversion
Into Lease
Each
License entitles its holder to explore and operate oil and gas rigs in the
Licensed Area, subject to certain approvals of the Bahamian Government,
including approval of any and all third party operators or joint
venturers. In the event that we drill a well that can be developed
into a producing well, the Subsidiary holding the License has a right to convert
the License into a Lease which would contain substantially identical terms and
conditions. The Lease would have an initial term of ten years with
one option to renew for an additional ten-year renewal term. We would
pay royalties to the Bahamian Government as follows.
Production Levels
|
Percentage Royalty based upon fair
market value of the oil produced1
|
First
75,000 barrels/day
|
12½%
of FMV
|
75,000
– 150,000 barrels/day
|
15%
of FMV
|
150,000
– 250,000 barrels/day
|
17½
of FMV
|
All
amounts in excess of 250,000 barrels
|
20%
of FMV
|
Natural
Gas
|
12
½ % FMV
|
1 All
royalty amounts are to be paid in U.S. dollars, unless an arrangement for
payment in kind has been made. The fair market value of the petroleum
shall be determined by the mutual agreement of the parties. Rent paid
under the Lease shall be credited against royalty payments.
14
In the
event a producing well is drilled and commences operation during the term of a
License and such License has not been converted into a lease, the Subsidiary
would be required to pay to the Bahamian Government royalties in an amount
identical to the royalty that would be owned pursuant to a lease.
Additional
Agreements
Each
Subsidiary is required to maintain insurance issued by carriers approved by the
Bahamian Government. In addition, each of the Subsidiaries is
required to post a bond of $1 million backing funding and performance of the
investment in development to be undertaken pursuant to the Licenses, as
described above in “Investment in Development” above. Such bond must
be backed by cash or cash equivalents and issued by an approved financial
institution, and the amount of the bond is to be reduced at the end of each year
by an amount equal to the actual amount expended on
exploration.
The
Subsidiaries are required to have a manager that is a Bahamian resident, and a
qualified engineer must supervise any and all exploration and operation
undertaken on the Licensed Areas. The terms of the Licenses do not
clearly state when a Bahamian manager is required to be on-site. The
Company expects to engage a local manager within six months of the Licenses
being granted, such engagement to be on a consulting basis until such time as
activity on the project requires a full-time manager. The Company
expects to contract for its offshore exploration drilling and will employ
contractors with professional engineers on staff. The Company will
engage an engineer to oversee drilling operations. Compensation for
this engineer will be set at industry standard rates, based upon the experience
of the engineer.
The
Licenses may not be assigned without the written consent of the Bahamian
Government.
We are
generally obligated to conduct our operations in a manner that prevents
contamination of the environment. The Bahamian Government is
authorized to oversee our operations and enforce these requirements pursuant to
the Bahamian Petroleum Act.
Additional Agreements under
Lease
In the
event any License is converted into a lease, as described above, the
Subsidiaries-lessee would be required to sell to refineries in the Bahamas up to
25% of the oil produced from such well. During the term of any lease
the Subsidiary-lessee would be required to indemnify the Bahamian Government
from any third party claims. In addition, the Bahamian Government
would have the right to appoint a Bahamian Governmental official to such
Subsidiary’s Board of Directors and the right to pre-empt the purchase of the
output of a producing well in the event of war.
Neither
the Prime Minister, the Minister of Energy or any Governmental Department of the
Government of the Bahamas, or any person or body acting on their behalf, has
formed or expressed an opinion that the Licensed Areas are, from their
geological formation or otherwise, likely to contain
petroleum.
15
Description
of Licensed Areas
The
following map shows the location of the Licensed Area.
The
following are legal descriptions of the area covered by the
Licenses.
LICENSED
AREAS HELD BY ATLANTIC PETROLEUM LTD.
Limits of
Area Aphrodite
All those
lands or submarine areas or both situate in the Commonwealth of the Bahamas and
having an approximate area of 848,630 acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 1 (Area Aphrodite).
Block
No.
|
Longitude
|
Latitude
|
||
16
|
79°
|
00'
W
|
26°
|
50'
N
|
17
|
78°
|
50'
W
|
26°
|
50'
N
|
18
|
78°
|
20'
W
|
26°
|
40'
N
|
19
|
78°
|
30'
W
|
26°
|
50'
N
|
20
|
78°
|
20'
W
|
26°
|
50'
N
|
9
|
79°
|
00'
W
|
27°
|
00'
N
|
46
|
79°
|
00'
W
|
26°
|
40'
N
|
3
|
78°
|
50'
W
|
26°
|
40'
N
|
5
|
78°
|
30'
W
|
26°
|
40'
N
|
4
|
78°
|
40'
W
|
26°
|
40'
N
|
16
Limits of
Area Mercury
All those
lands or submarine areas or both situate in the Commonwealth of the Bahamas and
having an approximate area of 848,630 acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 2 (Area Mercury).
Block
No.
|
Longitude
|
Latitude
|
||
47
|
78°
|
20'W
|
27°
|
20'
N
|
37
|
78°
|
40'W
|
27°
|
30'
N
|
38
|
78°
|
30'W
|
27°
|
30'
N
|
39
|
78°
|
20'W
|
27°
|
30'
N
|
29
|
78°
|
20'W
|
27°
|
40'
N
|
18
|
78°
|
20'W
|
27°
|
50'
N
|
6
|
78°
|
20'W
|
28°
|
00'
N
|
7
|
78°
|
10'W
|
28°
|
00'
N
|
8
|
78°
|
00'W
|
28°
|
00'
N
|
20
|
78°
|
00'W
|
27°
|
50
N
|
Limits of
Area Neptune
All those
lands or submarine areas or both indicated on the attached plat situate in the
Commonwealth of the Bahamas and having an approximate area of 848,630
acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 3 (Area Neptune).
Block
No.
|
Longitude
|
Latitude
|
||
40
|
78°
|
10'W
|
27°
|
30'N
|
30
|
78°
|
10'W
|
27°
|
40'N
|
31
|
78°
|
00'W
|
27°
|
40'N
|
32
|
77°
|
50'W
|
27°
|
40'N
|
19
|
78°
|
10'W
|
27°
|
50'N
|
21
|
77°
|
50'W
|
27°
|
50'N
|
22
|
77°
|
40'W
|
27°
|
50'N
|
9
|
77°
|
50'W
|
28°
|
00'N
|
10
|
77°
|
40'W
|
28°
|
00'N
|
11
|
77°
|
30'W
|
28°
|
00'N
|
17
Limits of
Area Venus
All those
lands or submarine areas or both indicated on the attached plat situate in the
Commonwealth of the Bahamas and having an approximate area of 848,630
acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 4 (Area Venus).
Block
No.
|
Longitude
|
Latitude
|
||
11
|
78°
|
40'W
|
27°
|
00'
N
|
12
|
78°
|
30'W
|
27°
|
00'
N
|
13
|
78°
|
20'W
|
27°
|
00'
N
|
45
|
78°
|
10'W
|
27°
|
00'
N
|
10
|
78°
|
50'W
|
27°
|
00'
N
|
1
|
79°
|
00'W
|
27°
|
10'
N
|
2
|
78°
|
50'W
|
27°
|
10'
N
|
6
|
78°
|
10'W
|
27°
|
10'
N
|
43
|
79°
|
00'W
|
27°
|
20'
N
|
48
|
78°
|
10'W
|
27°
|
20'
N
|
LICENSED
AREAS HELD BY BAHAMAS EXPLORATION LIMITED
Limits of
Area Apollo
All those
lands or submarine areas or both situate in the Commonwealth of the Bahamas and
having an approximate area of 848,630 acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 5 (Area Apollo).
Block
No.
|
Longitude
|
Latitude
|
||
1
|
79°
|
10'W
|
28°
|
00'
N
|
2
|
79°
|
00'W
|
28°
|
00'
N
|
3
|
78°
|
50'W
|
28°
|
00'
N
|
4
|
78°
|
40'W
|
28°
|
00'
N
|
16
|
78°
|
40'W
|
28°
|
00'
N
|
41
|
79°
|
20'W
|
27°
|
20'
N
|
33
|
79°
|
20'W
|
27°
|
30'
N
|
23
|
79°
|
20'W
|
27°
|
40'
N
|
12
|
79°
|
20'W
|
27°
|
50'
N
|
13
|
79°
|
10'W
|
27°
|
50'
N
|
18
Limits
of Area Hermes
All
those lands or submarine areas or both situate in the Commonwealth of the
Bahamas and having an approximate area of 848,630 acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 6 (Area Hermes).
Block
No.
|
Longitude
|
Latitude
|
||
14
|
79°
|
20'W
|
26°
|
50'
N
|
7
|
79°
|
20'W
|
27°
|
00'
N
|
49
|
79°
|
20'W
|
27°
|
10'
N
|
50
|
79°
|
10'W
|
27°
|
10'
N
|
8
|
79°
|
10'W
|
27°
|
00'
N
|
15
|
79°
|
10'W
|
26°
|
50'N
|
42
|
79°
|
10'W
|
27°
|
20'N
|
34
|
79°
|
10'W
|
27°
|
30'
N
|
24
|
79°
|
10'W
|
27°
|
40'N
|
35
|
79°
|
00'W
|
27°
|
30'N
|
Limits of
Area Poseidon
All those
lands or submarine areas or both situate in the Commonwealth of the Bahamas and
having an approximate area of 848,630 acres.
The
following coordinates specify the Southwestern corner of each of the ten (10)
submarine blocks to be covered by License No. 7 (Area Poseidon).
Block
No.
|
Longitude
|
Latitude
|
||
44
|
78°
|
50'W
|
27°
|
20'N
|
36
|
78°
|
50'W
|
27°
|
30'N
|
25
|
79°
|
00'W
|
27°
|
40'N
|
26
|
78°
|
50'W
|
27°
|
40'N
|
27
|
78°
|
40'W
|
27°
|
40'N
|
28
|
78°
|
30'W
|
27°
|
40'N
|
14
|
79°
|
00'W
|
27°
|
50'N
|
15
|
78°
|
50'W
|
27°
|
50'N
|
17
|
78°
|
30'W
|
27°
|
50'N
|
5
|
78°
|
30'W
|
28°
|
00'N
|
Limits of
Area Zeus
All those
lands or submarine areas or both situate in the Commonwealth of the Bahamas and
having an approximate area of 169,726 acres.
The
following coordinates specify the Southwestern corner of each of the two (2)
submarine blocks to be covered by License No. 8 (Area Zeus).
Block
No.
|
Longitude
|
Latitude
|
4
|
78° 20'W
|
27° 20'N
|
5
|
78° 30'W
|
27° 20'N
|
19
Further
Exploration
The
Company has sufficient capital and exploration credits to ensure it meets its
operating requirements over the next year. The results of specific
exploration activity on the Licenses will be released as they become
available.
Regulations
Governing Gas and Oil in the Commonwealth of the Bahamas
Our
exploration activities are governed by the Government of the Bahamas, Petroleum
Act which regulates all petroleum exploration in the Bahamas and their
territorial waters. The Act covers among other things, the granting
of licenses, royalties to be paid to the government, pollution control, bonding,
exemption from customs and duties and other ancillary rights. Upon
the granting of the Licenses, the Company and its Subsidiaries will be in
compliance with all currently applicable regulations of the Bahamian
Government.
FISCAL
YEAR
Our
fiscal year end is December 31st.
TRANSFER
AGENT
Our
Transfer Agent and Registrar for the Common Stock is Olde Monmouth Stock
Transfer Co. Inc., 200 Memorial Parkway, Atlantic Highlands, New Jersey
07716.
EMPLOYEES
We have
no full-time employees. We rely primarily upon consultants and
contractors to accomplish our administration and exploration
activities. We are not subject to a union labor contract or
collective bargaining agreement. Management services are provided by
our executive officers on an "as-needed" basis. We have no employment
agreement with any of our officers and directors and we carry no key-man life
insurance.
STOCK
OPTION PLAN
On
September 8, 2008, we adopted the 2008 Stock Option Plan (the "Plan") under
which our officers, directors, consultants, advisors and employees may receive
stock options. The aggregate number of shares of common stock that
may be issued under the plan is 5,000,000. The purpose of the Plan is
to assist us in attracting and retaining selected individuals to serve as
directors, officers, consultants, advisors, and employees of Offshore who
contribute to our success, and to achieve long-term objectives that will inure
to the benefit of all shareholders through the additional incentive inherent in
the ownership of our common stock. Options granted under the plan
will be either "incentive stock options", intended to qualify as such under the
provisions of section 422 of the Internal Revenue Code of 1986, as from time to
time amended (the "Code") or "unqualified stock options". For the
purposes of the Plan, the term "subsidiary" shall mean “Subsidiary Corporation,”
as such term is defined in section 424(f) of the Code, and "affiliate" shall
have the meaning set forth in Rule 12b-2 of the Exchange Act.
The Plan
will be administered by the Board of Directors who will set the terms under
which options are granted. No options have been granted under the
Plan as of the date of this prospectus.
20
COMPETITION
There is
aggressive competition within the industry to discover and acquire properties
considered to have commercial potential. We compete for the
opportunity to participate in promising exploration projects with other
entities, many of which have much greater resources than we do. In
addition, we compete with others in efforts to obtain financing to explore and
develop oil and gas properties.
HISTORY
We were
incorporated in the State of New York on September 8, 1999 under the name
"Enviroclens Inc." as a wholly owned subsidiary of another
corporation. Our then parent-corporation formed the Company in order
to pursue a proposed business opportunity that was unrelated to its core
business. On September 30, 2002, our former parent corporation issued
shares of the Company as a dividend to its shareholders. The intended
project did not proceed. On January 23, 2007, the Company moved its
jurisdiction and was re-domiciled in the State of Delaware. On May 9,
2007, we changed our name to “Offshore Petroleum Corp.”
On
September 15, 2008, John Rainwater and Mickey Wiesinger were appointed to the
Board of Directors. At that time, Todd D. Montgomery, the then President and
sole Director of the Company, resigned. On March 12, 2009, Ryan
Bateman was appointed to the Board of Directors and on December 1, 2009, Gary
Adams was appointed to the Board of Directors. On December 16, 2009,
Howard Barth was appointed to the Board of Directors. On January 14,
2010, Mr. Rainwater was made Chairman of the Board of
Directors.
We
have two wholly-owned subsidiaries: Atlantic Petroleum Ltd. (“Atlantic”), a
Cayman Islands company, and Bahamas Exploration Limited (“Bahamas”), also a
Cayman Islands company. Atlantic and Bahamas together are sometimes
referred to herein as our “Subsidiaries.” The Subsidiaries were
acquired pursuant to a Share Purchase Agreement with NPT Oil Corporation Ltd.
which closed as of November 30, 2009. As of the closing date, the
Subsidiaries each had pending applications with the Government of the
Commonwealth of the Bahamas for certain rights to explore for oil and gas in
territorial waters controlled by the Commonwealth of the
Bahamas. Principals of NPT, Ryan Bateman, John Rainwater and Mickey
Wiesinger, are also directors of Offshore and were directors of the Company at
the time that the time that the Share Purchase Agreement was
negotiated. Mr. Bateman and Mr. Rainwater negotiated the Share
Purchase Agreement.
Private
Placements
The
Company completed private placements of 9,350,000 shares of its common stock at
$0.10 per share on the following dates with the following
investors. These private placements were exempt from registration
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to
exemptions provided by Regulation D and Regulation S promulgated
thereunder.
21
Name
|
Date Issued
|
Shares
|
$
|
|||
Sirius
Intervest Ltd.
|
April
14, 2009
|
1,000,000
|
100,000
|
|||
Allentown
Consulting Corp.
|
June
25, 2009
|
1,500,000
|
150,000
|
|||
Catalyst
Trading Inc
|
April
28, 2009
|
750,000
|
75,000
|
|||
Steven
Pearce
|
April
28, 2009
|
500,000
|
50,000
|
|||
Zul
Rashid
|
May
1, 2009
|
200,000
|
20,000
|
|||
Sirius
Intervest Ltd.
|
May
8, 2009
|
1,000,000
|
100,000
|
|||
Zul
Rashid
|
Sept
29, 2009
|
150,000
|
15,000
|
|||
Benjamin
Marler
|
Sept
30, 2009
|
50,000
|
5,000
|
|||
Shane
Manning
|
October
14, 2009
|
100,000
|
10,000
|
|||
Hubert
Manning
|
October
15, 2009
|
100,000
|
10,000
|
|||
Wade
Alexander
|
October
27, 2009
|
250,000
|
25,000
|
|||
Cottonwood
Investments, LLC
|
November
16, 2009
|
2,000,000
|
200,000
|
|||
Ray
Westall
|
November
16, 2009
|
250,000
|
25,000
|
|||
J.
L. Guerra, Jr.
|
November
25, 2009
|
500,000
|
50,000
|
|||
Pineview
Worldwide Corp.
|
December
4, 2009
|
1,000,000
|
100,000
|
|||
Total
|
|
|
9,350,000
|
|
935,000
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF
OPERATIONS
In the
event that we are successful in obtaining the Licenses from the Bahamian
Government through our Subsidiaries, our main focus will be raising the
additional financing necessary to pay rent owed under the Licenses for their
initial three-year term and meet our exploration expenditure
obligations. For more information regarding the Licenses please see
“PROPERTIES - Licenses for Exploration,” herein. We may seek a joint
venture partner with exploration experience and operational capability to
undertake our exploration activities and assist with financing. We
will require substantial additional capital to implement this plan and
additional financing to bring any one or more sites in the Licensed Area to
production, if production is warranted and feasible. We may raise
additional capital through a public offering, private placements of our
securities, a joint venture or through loans or some combination of the
foregoing. We estimate that we will have to raise approximately $4
million to fulfill the terms of the initial three years of the eight
Licenses. A future financing involving the issuance of Shares will
dilute the existing shareholders. If, following exploration, we
believe that any one or more sites in the Licensed Area warrants development, we
will engage a third party to undertake a feasibility study to asses whether a
reserve exists. If a reserve is found to exist, we will consider
options for development, including a joint venture with a significant producing
company or obtaining further financing and contracting for development and
production.
22
Discussion
of Operations & Financial Condition for the twelve-month periods ended
December 31, 2009 and 2008
Offshore
has no source of revenue and we continue to operate at a loss. We
have no oil or gas reserves of any kind. We expect our operating
losses to continue for so long as we remain in an exploration stage and perhaps
thereafter. As at December 31, 2009, we had accumulated losses of
$224,746. Our ability to emerge from the exploration stage and
conduct production operations is dependent, in large part, upon our ability to
raise additional financing. The report of our independent auditors,
on our audited financial statements for the twelve-month periods ended December
31, 2009 and 2008, indicates that there are a number of factors that raise
substantial doubt about our ability to continue as a going
concern. Our continued operations are dependent on our ability to
obtain financing and upon our ability to achieve future profitable operations
from the development of our oil exploration properties. If we are not
able to continue as a going concern, it is likely that our investors will lose
their investment.
As
described in greater detail below, the Company’s major endeavor for the year
ended December 31, 2009 has been its effort to complete the acquisition of
Atlantic and Bahamas and to raise additional working capital. If the
Licenses are granted by the Bahamian Government, we will continue our efforts to
raise additional capital to pursue exploration activities on the Licensed
Areas.
SELECTED FINANCIAL
INFORMATION
Dec. 31, 2009
|
Dec. 31, 2008
|
|||||||
(Audited)
|
(Audited)
|
|||||||
Revenues
|
Nil
|
Nil
|
||||||
Net
Loss
|
$ | 201,230 | $ | 10,862 | ||||
Loss
per share-basic and diluted
|
$ | 0.01 | $ | 0.00 | ||||
Total
Assets
|
$ | 3,796,574 |
Nil
|
|||||
Total
Liabilities
|
$ | 1,544,284 | $ | 10,758 | ||||
Cash
dividends declared per share
|
Nil
|
Nil
|
For
the year ended December 31, 2009, total assets included cash of $796,930,
deposits for License applications of $720,000 and oil and gas properties of
$2,279,644. The Company had no assets as of December 31,
2008. For more information regarding private placements, please see
“Private Placements” below.
Revenues
No
revenue was generated by the Company’s operations during the year ended December
31, 2009 or the year ended December 31, 2008.
Net
Loss
The
significant components of expense that have contributed to the total net loss
are discussed as follows:
(a) General and Administrative
Expense
Included
in operating expenses for the year ended December 31, 2009 are general and
administrative expenses of $172,965 , as compared with $10,862 for the year
ended December 31, 2008. General and administrative expense
represented 86% of the total operating expense for the year ended December 31,
2009 and 100% of the total operating expense for the year ended December 31,
2008. General and administrative expense increased by $162,103 in the
current year, compared to the prior year. These expenses include (a)
$118,190 in fees for general administrative services including bookkeeping and
support for private placements, (b) $13,802 in general office expense, (c)
$1,179 for logo and graphic design, (d) $4,330 for franchise tax and registered
agent fees, (e) $15,426 in legal expense, (f) $12,079 in audit fees, (g) $1,109
in filing fees with the SEC and the Alberta Securities Commission, (h) $6,250 in
interest expense on the promissory note payable to NPT and (i) $600 in bank
charges.
23
(b) Project
Expense
The
Company had no exploration activity prior to December 31, 2009 and as a result
there were no project expenses for the twelve-month periods ended December 31,
2009 and 2008.
Liquidity
and Capital Resources
The
following table summarizes the company’s cash flows and cash in
hand:
Year ended
|
Year ended
|
|||||||
Dec. 31, 2009
|
Dec. 31, 2008
|
|||||||
Cash
|
$ | 796,930 | $ | Nil | ||||
Working
capital (deficiency)
|
$ | 1,472,646 | $ | (10,758 | ) | |||
Cash
used in operating activities
|
$ | 858,526 | $ | 104 | ||||
Cash
provided by investing activities
|
$ | 720,356 | $ | Nil | ||||
Cash
provided by financing activities
|
$ | 935,100 | $ | 104 |
As at
December 31, 2009, the Company had working capital of $1,472,646 as compared to
a working capital deficiency of $10,758 as of December 31,
2008.
During
the twelve-month period ended December 31, 2009 the Company raised (gross)
$935,100 by issuing common shares for cash.
Recent
Accounting Pronouncements
FASB ASC
TOPIC 805 – “Business Combinations.” The objective of this topic is to
enhance the information that an entity provides in its financial reports about a
business combination and its effects. The Topic mandates: (i) how the
acquirer recognizes and measures the assets acquired, liabilities assumed and
any non-controlling interest in the acquiree; (ii) what information to disclose
in its financial reports and; (iii) recognition and measurement criteria for
goodwill acquired. This Topic is effective for any acquisitions made on or
after December 15, 2008. The adoption of this Topic did not have a
material impact on the Company’s financial statements and
disclosures.
FASB ASC
TOPIC 810 – “Noncontrolling Interests.” The objective of this Topic
is to improve the relevance, comparability, and transparency of the financial
information that a reporting entity provides in its consolidated financial
statements by establishing accounting and reporting standards that require: (i)
the ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated statement of
financial position within equity, but separate from the parent's equity; (ii)
the amount of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of the
consolidated statement of income; (iii) changes in a parent's ownership interest
while the parent retains its controlling financial interest in its subsidiary be
accounted for consistently; (iv) when a subsidiary is deconsolidated, any
retained noncontrolling equity investment in the former subsidiary be initially
measured at fair value. The gain or loss on the deconsolidation of the
subsidiary is measured using the fair value of any noncontrolling equity
investment rather than the carrying amount of that retained investment and; (v)
entities provide sufficient disclosures that clearly identify and distinguish
between the interests of the parent and the interests of the non-controlling
owners. This Topic is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. The adoption of this Topic did not have a
material impact on the Company’s financial statements and
disclosures.
24
FASB ASC
TOPIC 815 – “Derivatives and Hedging.” The use and complexity of derivative
instruments and hedging activities have increased significantly over the past
several years. This Topic requires enhanced disclosures about an
entity's derivative and hedging activities and thereby improves the transparency
of financial reporting. This Topic is effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008, with
early application encouraged. The adoption of this Topic did
not have a material impact on the Company’s financial statements and
disclosures.
FASB ASC
TOPIC 944 – “Financial Services – Insurance.” Diversity exists in
practice in accounting for financial guarantee insurance contracts by insurance
enterprises. That diversity results in inconsistencies in the recognition and
measurement of claim liabilities because of differing views about when a loss
has been incurred. This Topic requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation. This Topic is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and all interim periods within those
fiscal years, except for some disclosures about the insurance enterprise's
risk-management activities. The adoption of this Topic did not have a
material impact on the Company’s financial statements and
disclosures.
FASB
ASC TOPIC 855 - “Subsequent Events.” In May 2009, the FASB issued
Topic 855, which establishes general standards of accounting and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. In particular, this Topic sets forth:
(i) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (ii) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, (iii) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. This Topic should be applied to the
accounting and disclosure of subsequent events. This Topic does not apply to
subsequent events or transactions that are within the scope of other applicable
accounting standards that provide different guidance on the accounting treatment
for subsequent events or transactions. This Topic was effective for interim and
annual periods ending after June 15, 2009.
In
February 2010, the FASB issued ASU 2010-09-Subsequent Event (Topic 855)
Amendments to certain recognition and disclosure requirements. ASU
2010-09 removes the requirements for an SEC filer to disclose a date through
which subsequent events have been evaluated in both issued and revised financial
statements. The Company adopted ASU 2010-09 in February 2010 and did
not disclose the date through which subsequent events have been
evaluated.
FASB
ASC TOPIC 105 - “The FASB Accounting Standard Codification and the Hierarchy of
Generally Accepted Accounting Principles.” In June 2009, the FASB issued Topic
105, which became the source of authoritative GAAP recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants. On the effective date of this Topic, the Codification
will supersede all then-existing non-SEC accounting and reporting standards. All
other non-SEC accounting literature not included in the Codification will become
non-authoritative. This Topic identifies the sources of accounting principles
and the framework for selecting the principles used in preparing the financial
statements of nongovernmental entities that are presented in conformity with
GAAP and arranged these sources of GAAP in a hierarchy for users to apply
accordingly. This Topic is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. References made
to authoritative FASB guidance throughout the consolidated financial statements
have been updated to the applicable codification section.
25
FASB ASC
TOPIC 320 - “Recognition and Presentation of Other-Than-Temporary
Impairments.” In April 2009, the FASB issued Topic 320 amends
the other-than-temporary impairment guidance in GAAP for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. This Topic does not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities. The
Topic is effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
Earlier adoption for periods ending before March 15, 2009, is not permitted.
This Topic does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial adoption,
this Topic requires comparative disclosures only for periods ending after
initial adoption. The adoption of this Topic did not have a material impact on
the Company’s financial statements and disclosures.
FASB ASC
TOPIC 860 - “Accounting for Transfer of Financial Assets and Extinguishment of
Liabilities.” In June 2009, the FASB issued additional guidance under
Topic 860 which improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor’s continuing involvement, if any, in transferred financial assets.
This additional guidance requires that a transferor recognize and initially
measure at fair value all assets obtained (including a transferor’s beneficial
interest) and liabilities incurred as a result of a transfer of financial assets
accounted for as a sale. Enhanced disclosures are required to provide financial
statement users with greater transparency about transfers of financial assets
and a transferor’s continuing involvement with transferred financial assets.
This additional guidance must be applied as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is prohibited. This
additional guidance must be applied to transfers occurring on or after the
effective date. The adoption of this Topic is not expected to have a
material impact on the Company’s financial statements and
disclosures.
FASB ASC
TOPIC 810 - “Consolidation of Variables Interest and Special Purpose
Entities.” In June 2009, the FASB issued Topic 810, which requires an
enterprise to perform an analysis to determine whether the enterprise’s variable
interest or interests give it a controlling financial interest in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has both of the following
characteristics: (i) The power to direct the activities of a variable interest
entity that most significantly impact the entity’s economic performance and (ii)
The obligation to absorb losses of the entity that could potentially be
significant to the variable interest entity or the right to receive benefits
from the entity that could potentially be significant to the variable interest
entity. Additionally, an enterprise is required to assess whether it has an
implicit financial responsibility to ensure that a variable interest entity
operates as designed when determining whether it has the power to direct the
activities of the variable interest entity that most significantly impact the
entity’s economic performance. This Topic requires ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity
and eliminate the quantitative approach previously required for determining the
primary beneficiary of a variable interest entity, which was based on
determining which enterprise absorbs the majority of the entity’s expected
losses, receives a majority of the entity’s expected residual returns, or both.
This Topic is effective as of the beginning of each reporting entity’s first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period, and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The adoption
of this Topic is not expected to have a material impact on the Company’s
financial statements and disclosures.
26
FASB ASC
TOPIC 820 - “Fair Value measurement and Disclosures”, an Accounting Standard
Update. In September 2009, the FASB issued this Update to amendments to Subtopic
82010, “Fair Value Measurements and Disclosures”. Overall, for the fair value
measurement of investments in certain entities that calculates net asset value
per share (or its equivalent). The amendments in this Update permit, as a
practical expedient, a reporting entity to measure the fair value of an
investment that is within the scope of the amendments in this Update on the
basis of the net asset value per share of the investment (or its equivalent) if
the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments at the measurement date, any
unfunded commitment, and the investment strategies of the investees. The major
category of investment is required to be determined on the basis of the nature
and risks of the investment in a manner consistent with the guidance for major
security types in GAAP on investments in debt and equity securities in paragraph
320-10-50-lB. The disclosures are required for all investments within the scope
of the amendments in this Update regardless of whether the fair value of the
investment is measured using the practical expedient. The amendments in this
Update apply to all reporting entities that hold an investment that is required
or permitted to be measured or disclosed at fair value on a recurring or non
recurring basis and, as of the reporting entity’s measurement date, if the
investment meets certain criteria The amendments in this Update are effective
for the interim and annual periods ending after December 15, 2009. Early
application is permitted in financial statements for earlier interim and annual
periods that have not been issued. The adoption of this Topic did not
have a material impact on the Company’s financial statements and
disclosures.
FASB ASC
TOPIC 740 - “Income Taxes”, an Accounting Standard Update. In September 2009,
the FASB issued this Update to address the need for additional implementation
guidance on accounting for uncertainty in income taxes. For entities that are
currently applying the standards for accounting for uncertainty in income taxes,
the guidance and disclosure amendments are effective for financial statements
issued for interim and annual periods ending after September 15,
2009. The adoption of this Update did not have a material impact on
the Company’s financial statements and disclosures.
In
December 2008, the SEC issued revised reporting requirements for oil and natural
gas reserves that a company holds. Included in the new rule entitled
“Modernization of Oil and Gas Reporting Requirements”, are the following
changes: 1) permitting use of new technologies to determine proved reserves, if
those technologies have been demonstrated empirically to lead to reliable
conclusions about reserve volumes; 2) enabling companies to additionally
disclose their probable and possible reserves to investors, in addition to their
proved reserves; 3) allowing previously excluded resources, such as oil sands,
to be classified as oil and natural gas reserves rather than mining reserves; 4)
requiring companies to report the independence and qualifications of a preparer
or auditor, based on current Society of Petroleum Engineers criteria; 5)
requiring the filing of reports for companies that rely on a third party to
prepare reserve estimates or conduct a reserve audit; and 6) requiring companies
to report oil and natural gas reserves using an average price based upon the
prior 12-month period rather than year-end policies. The new
requirements are effective for registration statements filed on or after January
1, 2010, and for annual reports on Form 10K for fiscal years ending on or after
December 31, 2009. Early adoption is not permitted. The
Company is currently assessing the impact that adoption of this rule will have
on its financial disclosures.
In
January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-03 –
“Oil and Gas Reserve
Estimation and Disclosures.” The ASU aligns the current oil
and gas reserve estimation and disclosure requirements of FASB Accounting
Standards Codification Topic 932, Extractive Activities – Oil and
Gas, with those in SEC Final Rule Release No. 33-8995, Modernization of
Oil and Gas Reporting. The ASU will be effective for reporting
periods ending on or after December 31, 2009. The Company is
currently assessing the impact that adoption of this rule will have on our
financial statements.
Critical
Accounting Policies
The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires us to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements, the reported amount of revenues and expenses
during the reporting period and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates and
judgments. To the extent actual results differ from those estimates,
our future results of operations may be affected. Going forward, once
the Company begins exploration and production of its oil and gas reserves (if
reserves are established), we anticipate that the following accounting policies
will become critical to the preparation of our financial
statement: As of the date of this prospectus, the Company has no
“reserves” as that term is used in the oil and gas industry and for financials
reporting purposes. The Company is in an exploration
stage.
27
Full
Cost Accounting Method
The
Company accounts for its oil and gas producing activities using the full cost
method of accounting as prescribed by the United States Securities and Exchange
Commission (“SEC”). Accordingly, all costs associated with the
acquisition of properties and exploration with the intent of finding proved oil
and gas reserves contribute to the discovery of proved reserves, including the
costs of abandoned properties, dry holes, geophysical costs, and annual lease
rentals are capitalized. All general corporate costs are expensed as
incurred. In general, sales or other dispositions of oil and gas
properties are computed on the units of production method based on all proved
reserves on a country-by-country basis. The net capitalized costs of
evaluated oil and gas properties (full cost ceiling limitation) are not to
exceed their related estimated further net revenues from proved reserves
discounted at 10% and the lower of cost of estimated fair value of unproved
properties, net of tax considerations. These properties are included
in the amortization pool immediately upon the determination that the well is
dry.
Unproved
properties consist of lease acquisition costs and costs on wells currently being
drilled on the properties. The recorded costs of the investment in
unproved properties are not amortized until provided reserves associated with
the projects can be determined or until they are
impaired. Unevaluated oil and gas properties are assessed at least
annually for impairment either individually or on an aggregate
basis.
Estimates
of Proved Oil and Gas Reserves
Estimates
of proved oil and gas reserves will have a significant impact on the carrying
value of our oil and gas properties, the related property amortization expense
and related property impairment expense. Volumes of reserves actually recovered
and cash flows actually received from actual production may differ significantly
from the proved reserve estimates and the related projected cash flows,
respectively. As of the date of this prospectus, the Company has no
“reserves” as that term is used in the oil and gas industry and for financials
reporting purposes. The Company is in an exploration
stage.
Asset
Retirement Obligation
Asset
retirement obligations (“ARO”) associated with the retirement of a tangible
long-lived asset, including natural gas and oil properties, are recognized as
liabilities in the period in which it is incurred and become determinable, with
an offsetting increase in the carrying amount of the associated
assets. The cost of tangible long-lived assets, including the
initially recognized ARO, is depleted, such that the cost of the ARO is
recognized over the useful life of the assets. The ARO is recorded at
fair value, and accretion expense is recognized over time as the discounted fair
value is accreted to the expected settlement value.
The
fair value of the ARO is measured using expected future cash flow, discounted at
the Company’s credit-adjusted risk-free interest rate.
Impairment
of Long-Lived Assets
The
carrying value of intangible assets and other long-lived assets are reviewed on
a regular basis for the existence of facts or circumstances that may suggest
impairment. The Company recognizes impairment when the sum of the
expected undiscounted future cash flows is less than the carrying amount of the
asset. Impairment losses, if any, are measured as the excess of the
carrying amount of the asset over its estimated fair
value. Impairment on the properties with unproved reserves is
evaluated by considering criteria such as future drilling plans for the
properties, the results of geographic and geologic data related to the unproved
properties and the remaining term of the property leases.
28
Basis
loss per share
Basic
loss per share is computed using the weighted average number of shares
outstanding during the period. Diluted earnings per share are
computed similar to basic income per share except that the denominator is
increased to include the number of common stock equivalents. Common
stock equivalents represent the dilutive effect of the assumed exercise of any
outstanding stock equivalents, using the treasury stock method, at either the
beginning of the respective period presented or the date of issuance, whichever
is later, and only if the common stock equivalents are considered dilutive based
upon the Company’s net income (loss) position at the calculation
date. There are no common stock equivalents outstanding and, thus,
diluted and basic loss per share are the same.
Income
Taxes
The
Company recognizes deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Deferred income taxes are provided using the
liability method. Under the liability method, deferred income taxes
are recognized for all significant temporary differences between the tax and
financial statement bases of assets and liabilities.
Current
income tax expense (recovery) is the amount of income taxes expected to be
payable (recoverable) for the current period. A deferred tax asset
and/or liability is computed for both the expected future impact of differences
between the financial statement and tax bases of assets and liabilities and for
the expected future tax benefit to be derived from tax
losses. Valuation allowances are established when necessary to reduce
deferred tax asset to the amount expected to be “more likely than not” realized
in future tax returns. Tax law and rate changes are reflected in
income in the period such changes are enacted.
Off-Balance
Sheet Arrangement
The
Company had no off balance sheet transactions.
Contractual
Obligations and Commercial Commitments
As of
January 1, 2009, the Company entered into a one year consulting services
contract with Lance Capital Corp. (“Lance”) pursuant to which Lance will
administer the Company’s daily corporate operations. Under the consulting
services contract the Company is required to pay Lance $7,500 per month as
consideration for such services. Lance provides a full compliment of
administrative and corporate services, including bookkeeping, investor support,
contract negotiation and administration, oversight of consultants, oversight of
and assistance in all public filings and financial statements, assistance to a
market maker in the OTC Bulletin Board listing process if required, oversight of
the website (when applicable) and administration of the Company’s expense
payments pursuant to internal control procedures implemented by
management. Lance is based in Oakville, Ontario.
On
October 20, 2009, the Company entered into a Consulting Agreement with Pembroke
Communications Corp. (“Pembroke”) for certain consulting services for a term of
expiring September 30, 2011. The Company shall issue 1,500,000 Shares
of restricted common stock which shall be earned in the following
manner: 1,500,000 shares will be earned by Pembroke in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April 1,
2011. The Consultant must return any unearned shares upon termination
of the Consulting Agreement. Pursuant to the Consulting Agreement,
Pembroke will assist the Company in communicating its announcements, publicizing
financial statements and accessing institutional and other investors throughout
the world. The Pembroke office with which we have contracted is based
in Panama.
29
On
October 20, 2009, the Company entered into a Consulting Agreement with Power One
Capital Corp. (“Power One”) for certain consulting services for a term of
expiring September 30, 2011. The Company shall issue 1,500,000 Shares
of restricted common stock which will be earned in the following
manner: 1,500,000 shares will be earned by Power One in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April 1,
2011. The Consultant must return any unearned shares upon termination
of the Consulting Agreement. Power One will assist the Company with
strategic and operating advice and may introduce strategic investors to the
Company. If the Company seeks a joint venture partner to assist it
with drilling and other exploration operations in the Licensed Areas, Power One
will assist the Company in finding a suitable joint venture partner and
negotiating the joint venture agreement. The Power One office with
which we have contracted is based in Panama.
As of
November 30, 2009, the Company closed a Share Purchase Agreement with NPT Oil
Corporation Ltd, a Cayman Islands company (“NPT”) to purchase from NPT all of
the equity stock of two Cayman Island companies (the “Share Purchase
Agreement”). Pursuant to the Share Purchase Agreement, Offshore
acquired its two Cayman Subsidiaries, Atlantic Petroleum Ltd. (“Atlantic”) and
Bahamas Exploration Limited (“Bahamas”). Offshore paid consideration
to NPT consisting of: (a) 15 million Shares of Offshore and (b) a promissory
note with a face amount of $1.5 million payable over a two-year term and bearing
interest at 5%.
Each of
the eight Licenses to be issued to Atlantic and Bahamas will have an initial
three-year term and require advance annual rental payments of $50,000 per
License in the first year (already paid upon application for the Licenses),
$75,000 in the second year and $100,000 in the third year. Atlantic
and Bahamas each are required to spend an aggregate of $250,000 on qualifying
exploration and/or development expenditures in the first year on their four
respective Licensed Areas and an aggregate of $375,000 in each of the two
following years. Each of Atlantic and Bahamas are required to post a
$1,000,000 bond for performance of the work commitments. See the
section entitled “PROPERTIES – Licenses for Exploration” for more
information.
DISCLOSURE
CONTROLS AND PROCEDURES
In
connection with our compliance with securities laws and rules, our Chief
Financial Officer and our Chief Executive Officer evaluated our disclosure
controls and procedures on March 25, 2010. They concluded that our
disclosure controls and procedures are effective. There have been no
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their
evaluation.
Our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures, as required by Exchange Act Rule 13a-15(e). Based on that
evaluation, our CEO and CFO concluded that our disclosure controls and
procedures were effective.
Management
of Offshore is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company's principal executive officer and principal
financial officers and effected by the company's board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States and includes those policies and procedures that:
* Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the
company;
30
* 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 and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and
* 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.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is
possible to design into the process safeguards to reduce this risk.
In making
this assessment, management, used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in the Internal
Control-Integrated Framework.
Inherent
in small business is the pervasive problem of segregation of
duties. Given that the Company has a small accounting department,
segregation of duties cannot be completely accomplished at this stage in the
corporate lifecycle. Management has added many compensating controls
to effectively reduce and minimize the risk of a material misstatement in the
Company’s financial statements.
Based on
its assessment, management has concluded that the Company's disclosure controls
and procedures and internal control over financial reporting is effective based
on those criteria.
For
the period ended December 31, 2009, there have been no changes to the Company’s
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of
the date of this prospectus, there are 45,450,000 shares of common stock
outstanding, held by 564 shareholders of record. We are registering a
total of 17,502,500 Shares in this prospectus, which will be available for
re-sale when this prospectus becomes effective.
We
have outstanding 27,947,500 Shares not covered by this
prospectus. Such shares are considered “restricted shares” under
applicable U.S. securities regulations and cannot be re-sold unless an exemption
from registration under the Securities Act is available. Other than the Shares
covered by this prospectus, we have not agreed to register any of our securities
under the Securities Act for sale by shareholders.
To date
we have not paid any dividends on our common stock and we do not expect to
declare or pay any dividends on our common stock in the foreseeable
future. Payment of any dividends will depend upon our future
earnings, if any, our financial condition, and other factors deemed relevant by
the Board of Directors.
31
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
Board
of Directors
The
following persons are Directors of Offshore Petroleum as of the date of this
prospectus. Each Director will serve until the next meeting of
shareholders or until replaced.
Name
|
Position Held with the
Company
|
Date First Elected or
Appointed
|
Age
|
Estimate of
Time to be
Allocated to the
Company (1)
|
||||||
John
Rainwater
|
Director
and Chairman of the Board, President and Chief Executive
Officer
|
September
15, 2008
|
62
|
30%
|
||||||
Mickey
Wiesinger
|
Director,
Chief Financial Officer and Secretary
|
September
15, 2008
|
60
|
30%
|
||||||
|
||||||||||
Ryan
Bateman
|
Director
|
March
12, 2009
|
36
|
15%
|
||||||
Gary
Adams
|
Director
|
December
1, 2009
|
59
|
As
Required
|
||||||
Howard
Barth
|
Director
|
December 16,
2009
|
57
|
As
Required
|
(1)
|
The
estimates of time to be allocated to the business of the Company in this
column will increase at such time as the Company commences exploration
activities. Mr. Adams and Mr. Barth will make themselves
available for committee and board meetings as
required.
|
Business
Experience
The
following table lists the positions held by our directors in other companies and
the periods during which such positions were held.
Name
|
Company
|
Symbol
|
Position
|
Dates
|
||||||
John
Rainwater
|
JROC
(JR’s Oil Company)
|
CEO
|
Presently
|
|||||||
Pacific
Energy Resources, Ltd. (TSX)
|
PFE
|
COO
|
Sept.
2006- present
|
|||||||
Carneros
Energy, Inc.
|
CEO
|
April
2001 – Sept. 2006
|
||||||||
R
& R Offshore Resources, Ltd.
|
Managing
Director
|
April
1998- present
|
||||||||
Gothic
Energy Corporation (OTCBB)
|
GOTH
|
1994 – 1998 | ||||||||
Energy
Exchange Corporation (NYSE)
|
EEX
|
1981 – 1986 | ||||||||
Mickey
Wiesinger
|
JROC
(JR’s Oil Company)
|
CFO
|
Presently
|
|||||||
Pacific
Energy Resources, Ltd. (TSX)
|
PFE
|
CFO
|
July
2006 – Dec. 2008
|
|||||||
Carneros
Energy, Inc.
|
CFO
|
2001
– July 2006
|
||||||||
Ryan
Bateman
|
Bateman
& Company, Ltd.
|
Managing
Director
|
Dec.
2004 – present
|
|||||||
Gary
Adams
|
Adams
Affiliates, Inc.
|
President
|
Presently
|
|||||||
Howard
Barth
|
China
Auto Logistics Inc. (OTCBB)
|
CALG
|
Director
|
Nov.
2008 – present
|
||||||
New
Oriental Energy & Chemical Corporation (NASDAQ)
|
NOEC
|
Director
|
April
2007 – present
|
|||||||
Nuinsco
Resources Inc. (TSX)
|
NWI
|
Director
|
Dec.
2005 – present
|
|||||||
Yukon
Gold Corporation Inc. (OTCBB)
|
YGDC
|
Director
|
June
2005 – May 2009
|
|||||||
Orsus
Zelent Technologies Inc. (AMEX)
|
ORS
|
Director
|
Feb.
2007 – Oct. 2008
|
|||||||
Uranium
Hunter Corporation (OTCBB)
|
URHN
|
Director
|
Mar.
2007 – Oct. 2008
|
32
John Rainwater – Mr. Rainwater
has over thirty years experience as an executive in the public and private oil
and gas industry, both domestically and internationally. He as served
as the Chief Executive Officer of Energy Exchange Corporation (NYSE), Integrated
Petroleum Corporation, and Carneros Energy Corporation (a Warburg Pincus
portfolio company). He co-founded and served as an officer and
director of Gothic Energy Corporation (NASDAQ) and has been the Managing
Director of R&R Offshore Resources as well as the Bahamas Exploration
Company since their inception. He also was the chief operating
officer and executive vice president of Pacific Energy Resources Ltd, a
TSX-listed company. In 1986 Mr. Rainwater served as the financial
advisor to Sol Petroleum of Argentina in connection with Sol Petroleum’s
acquisition of OXY’s Bolivia production and acreage. Companies that
he has founded and/or managed have drilled more than 1,000 oil and gas wells in
the U.S., Canada, Bolivia, and international waters. Mr. Rainwater
holds a Bachelor of Science in economics/finance magna cum laude and a MBA in
management magna cum laude from the University of Tulsa. He also
serves as a Board Member of the California Independent Producers Association and
the Board of Petroleum Industry Advisors to Gerson Lehman Partners of New
York.
Mickey Wiesinger – Mr.
Wiesinger is a certified public accountant. He earned a Bachelor of Business
Administration degree from Texas A&M University and a Masters of Business
Administration degree from the University of Phoenix. Mr. Wiesinger
served as Accounting Manager of Superior Oil Company from 1972 until
1982, in both the Philippine Islands and in the U.S. Mr. Wiesinger
has also served as Vice President and Chief Financial Officer of Ferguson
Energy, a California Independent producer, Carneros Energy Corporation (a
Warburg Pincus portfolio company) and Pacific Energy Resources Ltd. (a
TSX-listed company).
Ryan Bateman – Mr. Bateman has
15 years of experience in the investment industry. Mr. Bateman is
chairman and founder of Bateman Financial, an international financial firm
specializing in asset management, trading and advisory. Prior to
forming Bateman Financial, Mr. Bateman was in the asset management department of
the LOM Group where he concentrated on public and private financings for six
years. From 1997 to 1999, Mr. Bateman worked at Emerging Equities
Inc., specializing in venture capital financing. Prior to 1997, Mr.
Bateman was employed with Citibank NA London, Manager of Special Situations for
the European debt derivatives group.
Gary Adams - Mr. Adams has
over thirty years experience as an executive in the public and private oil and
gas industry, both domestically and internationally. He is President
of Adams Affiliates, Inc. located in Tulsa, Oklahoma. He founded and
served as President of CNG, a company focused on the mid-stream business of
gathering, processing, treating and marketing of natural gas and natural gas
liquids. Mr. Adams was also involved in the oilfield supply business
in the ownership of two companies that operated in the US, SE Asia and
Canada. He served as Executive Vice President of OKC Corporation,
Dallas. Mr. Adams was Assistant to the President of a large savings
and loan business. He holds a Bachelors Degree from the University of
Kansas.
Howard Barth – Mr. Barth has
operated his own public accounting firm in Toronto since 1985 and has over 30
years experience as a public accountant serving a wide variety of
clientele. He serves as a director and Chairman of the Audit
Committee for New Oriental Energy & Chemical Corporation (a Nasdaq listed
company), China Auto Logistics Inc. (a Nasdaq listed company), MDHO Holdings
Inc. (an OTCBB listed company). Previously he has served as director
and Chairman of the Audit Committee for Nuinsco Resources Limited (a TSX listed
company), Yukon Gold Corporation (dual listed on the OTCBB and TSX), Orsus
Xelent Technologies Inc. (an Amex listed company) and as a director of Uranium
Hunter Corporation (an OTCBB listed company). Mr. Barth is a member
of the Canadian Institute of Chartered Accountants and the Ontario Institute of
Chartered Accountants.
33
Family
Relationships
There are
no family relationships between any Director, executive officer or significant
employee of the Company.
Committees
of the Board
Our Board
of Directors has the authority to appoint committees to perform certain
management and administrative functions. Currently, we have an Audit
Committee with a financial expert. We do not have any other
committees.
Audit
Committee
The Audit
Committee is comprised of three directors: Mickey Wiesinger, Gary Adams and
Howard Barth. Mr. Adams and Mr. Barth are independent
directors. The Audit Committee assists the Board of Directors in its
oversight of the quality and accuracy of the Company’s financial statements and
in assessing the effectiveness of the Company’s internal
controls. The Audit Committee also oversees the work of the Company’s
independent auditor. The Audit Committee has reviewed the financial
statements of the Company included with this prospectus.
Pursuant
to the Audit Committee’s Charter, the Audit Committee must consist of at least
two members of the Board of Directors and not less than two members of the Audit
Committee must be independent directors. At least one member of the Audit
Committee shall have financial expertise, in the judgment of the Board,
including accounting or related financial management expertise. The Audit
Committee must meet at least four times per year. The Audit Committee also must
meet separately with the Chief Executive Officer and with the Chief Financial
Officer of the Company, at least annually.
In
addition to overseeing financial and reporting compliance, the Audit Committee
is authorized to establish “whistle blower” procedures and is empowered, in its
charter, to conduct any special investigation and/or engage expert assistance to
conduct an investigation in the discretion of the Audit Committee.
The Audit
Committee must report to the Board no less than annually with respect to its
examinations and recommendations.
Involvement
in Certain Legal Proceedings
Our
Directors, officers and control persons have not been involved in any of the
following events during the past five years:
(a) any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy except
as follows: John Rainwater and Mickey Wiesinger were executive
officers of Pacific Energy Resources Ltd., which filed for Chapter 11 bankruptcy
protection in the United States District Court of
Delaware,
(b) any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses).
(c) being
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities, or being found by a court of
competent jurisdiction (in a civil action), the SEC or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or
vacated.
34
Code
of Ethics
On June
15, 2009, our Board of Directors adopted a code of business conduct and ethics
policy, referred to herein as the “Code of Ethics.” The adoption of
the Code of Ethics allows us to focus our Board of Directors on areas of ethical
risk, provide guidance to Directors and officers to help them recognize and deal
with ethical issues, provide mechanisms to report unethical conduct and help
foster a culture of honesty and accountability.
EXECUTIVE
COMPENSATION
Except
for compensation paid for services provided by entities owned by some of our
officers and Directors, as more particularly described in CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, no officer or Director has received any remuneration
from us, directly or indirectly, since our inception. Although we
have no compensation plan currently, it is possible that we will adopt such a
plan in the future to pay or accrue compensation for our officers and Directors
for services related to the operation of our business. Although we
have no retirement, incentive, defined benefit, actuarial, pension or
profit-sharing programs for the benefit of Directors, officers or other
employees currently, it is possible that we will adopt such plans in the future.
We have no employment contract or compensatory plan or arrangement with any of
our Directors or officers. We have a Stock Option Plan that is
described in STOCK OPTION PLAN.
35
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
We
have 45,450,000 shares of common stock issued and outstanding. The
last column of the table below reflects the voting rights of each officer and/or
director as a percentage of the total voting shares outstanding as of March 31,
2010.
Name and Address
Of Beneficial Owner
|
Number of Shares of
Common Stock
|
Percentage of Class
Held
|
|||
John
Rainwater
|
3,806,000 |
8.4%
of Common
Shares |
|||
Mickey
Wiesinger
|
672,000 |
1.5%
of Common
Shares |
|||
Ryan
Bateman
|
6,940,000 | (1) |
15.3%
of Common
Shares |
||
Gary
Adams
|
2,000,000 | (2) |
4.4%
of Common
Shares |
||
TOTAL
|
13,418,000 |
29.6%
|
(1)
|
4,477,000
of Ryan Bateman’s shares are held by Milo Holdings Ltd., a corporation
controlled by Mr. Bateman.
|
(2)
|
2,000,000
shares held by Cottonwood Investments, LLC are 50% owned by Adams
Affiliates, Inc., which is controlled by family members of Gary Adams and
50% owned by Melissa Nolley Adams, wife of Gary
Adams.
|
As a
group, management and the directors own or control 29.6% of the issued and
outstanding shares of the Company.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The
Officers and Directors have received no compensation for their services to the
Company as of the date of this report.
Ryan
Bateman, John Rainwater and Mickey Wiesinger are all shareholders of NPT Oil
Corporation Ltd. (NPT), the other party to the Share Purchase
Agreement. See PROPERTIES – Share Purchase
Agreement. Messrs. Bateman, Rainwater and Wiesinger are Directors of
the Company and Mr. Rainwater is also the Chairman of the Board. Mr.
Rainwater is the Company’s Chief Executive Officer and Mr. Wiesinger is the
Company’s Chief Financial Officer and Secretary. They received common
stock of the Company in connection with the completion of the closing of the
Share Purchase Agreement. Mr. Bateman received 2,463,000 shares, Mr.
Rainwater received 3,806,000 shares and Mr. Wiesinger received 672,000 shares.
Mr. Bateman controls an additional 4,477,000 shares that are held by Milo
Holdings Ltd., a corporation controlled by Mr. Bateman. Also in
connection with the Share Purchase Agreement, the Company issued to NPT a
promissory note for $1,500,000, bearing interest at 5%. Mr. Bateman
owns 46.3% of the equity of NPT, Mr. Rainwater own 25.4% of the equity of NPT
and Mr. Wiesinger owns 4.5% of the equity of NPT.
36
Gary
Adams purchased shares held by Cottonwood Investments, LLC, a company that is
owned 50% by Adams Affiliates, Inc., which is controlled by family members of
Gary Adams and 50% by Melissa Nolley Adams, Mr. Adams’ wife.
ORGANIZATION
WITHIN THE LAST FIVE YEARS
We were
incorporated in the State of New York on September 8, 1999 under the name
"Enviroclens Inc." as a wholly owned subsidiary of another
corporation. Our then parent-corporation formed the Company in order
to pursue a proposed business opportunity that was unrelated to its core
business. On September 30, 2002, our former parent corporation issued
shares of the Company as a dividend to its shareholders. The intended project
did not proceed. On January 23, 2007, the Company moved its
jurisdiction and was re-domiciled in the State of Delaware. On May 9,
2007, we changed our name to “Offshore Petroleum Corp.”
All
transactions among the Company and related parties are described in “CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS” above.
DESCRIPTION
OF SECURITIES
The
following description is a summary of the material terms of our common
stock. This summary is subject to and qualified in its entirety by
our Articles of Incorporation as amended, our Bylaws and by the applicable
provisions of the State of Delaware law. Our authorized capital stock
consists of 200,000,000 shares of Common Stock having a par value of $0.0001 per
share. There is no cumulative voting for the election of directors.
There are no preemptive rights to purchase shares. The holders of shares of
common stock are entitled to dividends, out of funds legally available
therefore, when and as declared by the Board of Directors. The Board of
Directors has never declared a dividend and does not anticipate declaring a
dividend in the future. Each outstanding share of common stock entitles the
holder thereof to one vote per share on all matters presented to the
shareholders for a vote. In the event of liquidation, dissolution or winding up
of our affairs, holders are entitled to receive, ratably, our net assets
available to shareholders after payment of all creditors. All of our issued and
outstanding shares of common stock are duly authorized, validly issued, fully
paid, and non-assessable. To the extent that our unissued shares of
common stock are subsequently issued, the relative interests of existing
shareholders will be diluted.
USE
OF PROCEEDS
We will
not receive any of the proceeds from the sale of the shares of common stock
offered hereunder by the selling shareholders. We will not pay any
commissions or any of the expenses of the selling shareholders related to the
sale of these shares.
DETERMINATION
OF OFFERING PRICE
The
offering price has been estimated solely for the purpose of calculating the
registration fee payable to the Securities and Exchange Commission in connection
with this prospectus. The offering price is not an indication of
value nor has it been established by any recognized methodology for deriving the
value of the Shares.
SELLING
SHAREHOLDERS AND PLAN OF DISTRIBUTION
The
registration statement, of which this prospectus forms a part, relates to our
registration, for the account of the Selling Shareholders listed below, of an
aggregate of 17,502,500 shares of common stock.
37
The
Selling Shareholders may arbitrarily set an offering price for the Shares of
$0.10 per Share until a market for the Shares develops, if at
all. Such offering price is not based upon our net worth, total asset
value or any other objective measure of value based on accounting
measurements. If a market for the Shares develops, the Selling
Shareholders may offer to sell their shares at prevailing market prices or at
negotiated prices. The sale of the Selling Shareholders' Shares by
the Selling Shareholders may be effected from time to time in transactions,
which may include block transactions by or for the account of the selling
shareholders, in the over-the-counter market or in negotiated transactions, or
through the writing of options on the selling shareholders' shares, a
combination of these methods of sale, or otherwise. Sales may be made at market
prices prevailing at the time of sale, or at negotiated prices. We are not aware
of any underwriting arrangements that have been entered into by the selling
shareholders. We will file a post-effective amendment to our
registration statement with the SEC if any selling shareholder enters into an
agreement to sell shares through broker-dealers acting as principals after the
date of this prospectus.
The
Selling Shareholders, during the time each is engaged in distributing shares
covered by this prospectus, must comply with the requirements of Regulation M
under the Exchange Act. Generally, under those rules and regulations
they may not: (i) engage in any stabilization activity in connection with our
securities, and (ii) bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as permitted
under the Exchange Act.
The
Selling Shareholders and broker-dealers, if any, acting in connection with these
sales might be deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act. Any commission they receive and any profit upon the
resale of the securities might be deemed to be underwriting discounts and
commissions under the Securities Act.
Rules 15g-1
through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended,
impose sales practice and disclosure requirements on FINRA broker-dealers who
make a market in "a penny stock". A penny stock generally includes
any non-FINRA equity security that has a market price of less than $5.00 per
share. Our shares may be quoted on the OTC Bulletin Board, and the price of our
shares may fall within a range which would cause our shares to be considered a
“penny stock”. The additional sales practice and disclosure
requirements imposed upon broker-dealers handling “penny stocks” may discourage
broker-dealers from effecting transactions in our shares, which could severely
limit the market liquidity of the shares and impede the sale of our shares in
the market.
Under the
“penny stock” regulations, a broker-dealer selling “penny stocks” to anyone
other than an established customer or "accredited investor" (generally, an
individual with net worth in excess of $1,000,000 or an annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to purchase, unless the broker-dealer
or the transaction is otherwise exempt.
In
addition, the “penny stock” regulations require the broker-dealer to deliver,
prior to any transaction involving a “penny stock,” a disclosure schedule
prepared by the Commission relating to the “penny stock” market, unless the
broker-dealer or the transaction is otherwise exempt. A broker-dealer is also
required to disclose commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally, a
broker-dealer is required to send monthly statements disclosing recent price
information with respect to the “penny stock” held in a customer's account and
information with respect to the limited market in “penny stocks.” All
of the foregoing may affect the marketability of the securities.
Sales of
any shares of common stock by the Selling Shareholders may depress the price of
the common stock in any market that may develop for the common
stock.
38
At the
time a particular offer of the shares is made by or on behalf of a selling
stockholder, to the extent required, a prospectus supplement will be distributed
which will set forth the number of shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers, or agents,
the purchase price paid by any underwriter for shares purchased from the selling
stockholder and any discounts commissions, or concessions allowed or re-allowed
or paid to dealers, and the proposed selling price to the public.
Under the
Securities Exchange Act of 1934, as amended, and its regulations, any person
engaged in the distribution of shares of common stock offered by this prospectus
may not simultaneously engage in market-making activities with respect to the
common stock during the applicable "cooling off" period prior to the
commencement of this distribution. In addition, and without limiting
the foregoing, the Selling Shareholders will be subject to applicable provisions
of the Exchange Act and its rules and regulations, including without limitation
Regulation M promulgated under the Exchange Act, in connection with transactions
in the shares, which provisions may limit the timing of purchases and sales of
shares of common stock by the Selling Shareholders.
The
following table sets forth information known to us regarding ownership of our
common stock by each of the selling shareholders as of the date hereof and as
adjusted to reflect the sale of shares offered by this
prospectus. None of the Selling Shareholders has had any position
with, held any office of, or had any other material relationship with us during
the past three years,
We
believe, based on information supplied by the following persons that the persons
named in this table have sole voting and investment power with respect to all
shares of common stock which they beneficially own. Because the
Selling Shareholders may sell all or only a portion of the 17,502,500 shares of
common stock registered hereby, we cannot estimate the number of these shares
that will be held by the Selling Shareholders upon termination of the
offering. The information in the last column of the table below
assumes that the Selling Shareholders sell all of their shares offered in this
prospectus.
39
SELLING
SHAREHOLDERS
Shareholder
|
No. of
Shares
Owned
|
Relationship
with Issuer
|
Shares
Owned
After
Offering
|
||||
Robert
Lush
|
450,000 |
None
|
None
|
||||
Pippin
Investments (1)
|
2,140,000 |
None
|
None
|
||||
Sunny
Ventures Co. Ltd. (2)
|
2,140,000 |
None
|
None
|
||||
Atlantic
Power Co. (3)
|
2,140,000 |
None
|
None
|
||||
Darion
Investments Inc. (4)
|
2,140,000 |
None
|
None
|
||||
Liberty
Point Investments SA (5)
|
2,140,000 |
None
|
None
|
||||
Republic
Asset Management Corp. (6)
|
2,140,000 |
None
|
None
|
||||
S.
K. Kelley & Associates Inc. (7)
|
2,110,000 |
None
|
None
|
||||
Joanne
Hughes
|
30,000 |
None
|
None
|
||||
Three
Eff Corporation (8)
|
2,072,500 |
None
|
None
|
||||
17,502,500 |
(1)
|
Pippin
Investments is controlled by Kevin Bell, Belize City,
Belize.
|
(2)
|
Sunny
Ventures Co. Ltd. is controlled by Theodore Blackmore, Belize
City, Belize.
|
(3)
|
Atlantic
Power Co. is controlled by Daniel Leinweber, Republic of
Panama.
|
(4)
|
Darion
Investments Inc. is controlled by Philip Young, Republic of
Panama.
|
(5)
|
Liberty
Point Investments SA David Faulkner, Republic of
Panama.
|
(6)
|
Republic
Asset Management Corp. is controlled by Cody Bateman, Republic of
Panama. Cody Bateman is Ryan Bateman’s brother. Ryan
Bateman is a director of the Company and a principal of Bateman &
Company Ltd., a broker-dealer registered in the Cayman
Islands. Ryan Bateman disclaims any control over Cody Bateman
and Republic Asset Management. Ryan Bateman is not a Selling
Shareholder and has no current agreement or understanding, directly or
indirectly, with respect to the re-sale of the shares he owns personally
or controls through Milo Holdings Ltd. Bateman & Company
Ltd. has no current agreement or understanding, directly or indirectly,
with respect to the re-sale of the shares owned or controlled by Ryan
Bateman.
|
(7)
|
S.
K. Kelley & Associates Inc. is controlled by Patricia Kelley,
Oakville, Ontario, Canada.
|
(8)
|
Three
Eff Corporation is controlled by Habsburg Foundation, Willemstad, Curacao
Netherlands Antilles.
|
We intend
to keep this prospectus effective for one year from the date of this prospectus,
although we reserve the right to terminate the distribution under this
prospectus prior to that time.
40
State
Blue Sky Information Relating to the Shares
The
Selling Shareholders may offer and sell their Shares only in States in the
United States where exemptions from registration under State securities laws are
available. The Company intends to obtain an exemption, known as the
“manual exemption,” in approximately 38 States where such exemption is
available. Generally, the manual exemption is available to issuers
that maintain an up-to-date listing that includes certain information about the
issuer in a recognized securities manual. The Company intends to
obtain a listing in “Standard & Poor’s Corporation Records,” or Mergent’s
(formerly Moody’s) Manuals and News Reports, both recognized
securities manuals The States that provide the manual exemption
include: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, the
District of Columbia, Florida, Guam, Hawaii, Idaho, Indiana, Iowa, Kansas,
Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode
Island, South Carolina, South Dakota, Texas, U.S. Virgin Islands, Utah,
Washington, West Virginia, and Wyoming. Each State’s law is
different. Some of the States provide a general exemption for
issuers’ securities that are listed in a “recognized securities manual” (or
similar language) while other States have provisions that name the recognized
securities manuals that qualify an issuer for the exemption in that
State. Investors, Selling Shareholders and securities professionals
are advised to check each State’s securities laws and regulations (known as
“Blue Sky” laws) to ascertain whether an exemption exists for the Company’s
shares in a particular state. When our registration statement (of
which this prospectus forms a part) becomes effective, and a selling security
holder indicates in which state(s) he desires to sell his shares, the Company
will be able to identify whether it will need to register or will rely on an
exemption there from.
LEGAL
PROCEEDINGS
We are
not a party to any existing or pending legal proceeding and none of our property
is the subject of a pending legal proceeding.
LEGAL
MATTERS
The
validity of the issuance of the common stock offered in this prospectus has been
passed upon by Kavinoky Cook LLP, Buffalo, New York.
EXPERTS
The
financial statements for the period from the date of inception
(September 8, 1999) through December 31, 2009 were audited by
Schwartz Levitsky Feldman LLP, independent auditors, as set forth in their
report thereon appearing in this prospectus, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing. Information regarding the Licenses was prepared by the
Company.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
The
Delaware Business Corporation Act and our by-laws, provide that we shall
indemnify our officers and directors and hold harmless each person who was, is
or is threatened to be made a party to or is otherwise involved in any
threatened proceedings by reason of the fact that he or she is or was our
director or officer, against losses, claims, damages, liabilities and expenses
actually and reasonably incurred or suffered in connection with such proceeding.
However, the statutory indemnity does not apply to: (a) acts or omissions of the
director finally adjudged to be intentional misconduct or a knowing violation of
law; (b) unlawful distributions; or (c) any transaction with respect to which it
was finally adjudged that such director personally received a benefit in money,
property, or services to which the director was not legally
entitled. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the forgoing provisions or otherwise, we have
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
41
HOW
TO GET MORE INFORMATION
We
have filed with the Securities and Exchange Commission a registration statement
on Form S-1 under the Securities Act with respect to the securities offered by
this prospectus. This prospectus, which forms a part of the
registration statement, does not contain all the information set forth in the
registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to us and the
securities offered by this prospectus, reference is made to the registration
statement. The material terms of all exhibits have been expressed in
this prospectus. Statements contained in this prospectus as to the
contents of any contract or other document that we have filed as an exhibit to
the registration statement are qualified in their entirety by reference to the
exhibits for a complete statement of their terms and conditions. The
registration statement and other information may be read and copied at the
Commission's Public Reference Room at 100 F Street, NE, Washington, D.C.
20549. The public may obtain information on the operation of the
Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the Commission
and you can reach us at info@offshorepetroleumcorp.com. Stafford
Kelley acts as the Information Officer for the Company and can be reached at
905-845-8168.
Upon
effectiveness of the registration statement, we will be subject to the reporting
and other requirements of the Exchange Act and we intend to furnish our
stockholders annual reports containing financial statements audited by our
independent auditors and to make available quarterly reports containing
unaudited financial statements for each of the first three quarters of each
year.
GLOSSARY
OF TERMS
Proved
reserves
|
The
estimated quantities of oil, natural gas and natural gas liquids which
geological and engineering data demonstrate with reasonable certainty to
be commercially recoverable from known reservoirs under current economic
and operating conditions, operating methods, and government
regulations.
|
Seismic
|
Geophysical
prospecting using the generation and propagation of elastic waves at the
earth’s surface, reflecting from the subsurface strata, detection,
measurement and recording back at the earth’s surface and subsequent
analysis of the data. A trace is the data recorded at a single
station. A series of traces comprises a line. The
subsurface structure may be identified by a consistent pattern on each
trace along a section of the line. A grid of lines is acquired
to define potential traps from hydrocarbon accumulation. 2D
seismic is the conventional technique, as distinct from 3D seismic in
which investigations are sufficiently closely spaced to allow a three
dimensional picture of the subsurface to be
obtained.
|
42
INDEX
TO FINANCIAL STATEMENTS
OFFSHORE
PETROLEUM CORP.
(A
Delaware Corporation)
Audited
Consolidated Financial Statements of Offshore Petroleum Corp. for the Years
Ended
December
31, 2009 and 2008
Report
of Independent Registered Public Accounting Firm
Consolidated
Balance Sheets as of December 31, 2009 and December 31,
2008
Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended December 31,
2009 and December 31, 2008 and for the period from inception (September 8, 1999)
to December 31, 2009
Consolidated
Statements of Changes in Stockholders' Equity/(Deficiency) for the Years Ended
December 31, 2009 and December 31, 2008 and for the period from inception
(September 8, 1999) to December 31, 2009
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and December 31,
2008 and for the period from inception (September 8, 1999) to December 31,
2009
Notes to
Financial Statements
43
INDEX TO
FINANCIAL STATEMENTS
OFFSHORE
PETROLEUM CORP.
(FORMERLY
ENVIROCLENS INC.)
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
(Amounts
expressed in US Dollars)
CONTENTS
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheets as of December 31, 2009 and December 31,
2008
|
F-2
|
Consolidated
Statements of Operations and Comprehensive Loss for the years
ended December 31, 2009 and December 31, 2008 and for the
period from inception (September 8, 1999) to December 31,
2009
|
F-3
|
Consolidated
Statements of Changes in Stockholders' Equity/(Deficiency) for the years
ended December 31, 2009 and December 31, 2008 and for the
period from inception (September 8, 1999) to December 31,
2009
|
F-4
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009 and
December 31, 2008 and for the period from inception (September 8,
1999) to December 31, 2009
|
F-5
|
Consolidated
Notes to the Financial Statements
|
F-6 - F-19
|
44
Schwartz
Levitsky Feldman llp
CHARTERED
ACCOUNTANTS
LICENSED
PUBLIC ACCOUNTANTS
TORONTO
· MONTREAL
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Offshore
Petroleum Corp.
(An
Exploration Stage Company)
We have
audited the accompanying consolidated balance sheets of Offshore Petroleum Corp.
(an Exploration Stage Company) as at December 31, 2009 and 2008 and the related
consolidated statements of operations and comprehensive loss, cash flows and
stockholders’ equity (deficiency) for the years ended December 31, 2009 and 2008
and for the period from inception (September 8, 1999) to December 31, 2009.
These consolidated 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 the 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Offshore Petroleum Corp. as
at December 31, 2009 and 2008 and the results of its operations and its cash
flows for the years ended December 31, 2009 and 2008 and for the period from
inception (September 8, 1999) to December 31, 2009 in conformity with United
States generally accepted accounting principles.
The
company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal controls
over financial reporting. Accordingly, we express no such opinion.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3
to the financial statements, the Company is an exploration stage company, has no
established source of revenues, has yet to achieve profitable operations, has
accumulated losses since its inception and expects to incur further losses in
the development of its business. These conditions raise substantial doubt about
its ability to continue as a going concern. Management’s plans
regarding these matters are also described in the notes to the consolidated
financial statements. The consolidated financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
“SCHWARTZ
LEVITSKY FELDMAN LLP”
Toronto,
Ontario, Canada
|
Chartered
Accountants
|
March
17, 2010
|
Licensed
Public Accountants
|
F-1
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Balance Sheets as at December 31, 2009 and 2008
(Amounts
expressed in US Dollars)
2009
|
2008
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
|
796,930 | - | ||||||
Deposits
(note 5)
|
720,000 | - | ||||||
Total
Current Assets
|
1,516,930 | - | ||||||
Long
Term
|
||||||||
Oil
and gas properties (note 6)
|
2,279,644 | - | ||||||
Total
Assets
|
3,796,574 | |||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts
payable
|
19,522 | - | ||||||
Accrued
liabilities
|
24,762 | 10,758 | ||||||
Total
Current Liabilities
|
44,284 | 10,758 | ||||||
Promissory
note (note 7)
|
1,500,000 | |||||||
Total Liabilities | 1,544,284 | 10,758 | ||||||
Going Concern (note
3)
|
||||||||
Commitments and
Contingencies (note 14)
|
||||||||
Subsequent Events (note
15)
|
||||||||
STOCKHOLDERS'
EQUITY/(DEFICIENCY)
|
||||||||
Capital Stock (note
9)
|
||||||||
Common
stock, $0.0001 par value, 200,000,000 shares authorized, 45,300,000 issued
and outstanding (December 31, 2008 -17,950,000)
|
4,530 | 1,795 | ||||||
Additional
Paid-in Capital
|
2,743,328 | 10,963 | ||||||
Deferred Stock Compensation
(note 12)
|
(270,822 | ) | - | |||||
Deficit
Accumulated During the Exploration Stage
|
(224,746 | ) | (23,516 | ) | ||||
Total
Stockholders' Equity/(Deficiency)
|
2,252,290 | (10,758 | ) | |||||
Total
Liabilities and Stockholders' Equity/(Deficiency)
|
3,796,574 | - |
APPROVED
ON BEHALF OF THE BOARD
John
Rainwater
|
Director
|
Mickey
Wiesinger
|
Director
|
(The
accompanying notes are an integral part of these financial
statements.)
F-2
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Statements of Operations and Comprehensive Loss
For
Year Ended December 31, 2009 and 2008
And
for the period from inception (September 8, 1999) to December 31,
2009
(Amounts
expressed in US Dollars)
Cumulative
|
||||||||||||
Since
|
||||||||||||
Inception
|
||||||||||||
2009
|
2008
|
|||||||||||
$
|
$
|
$
|
||||||||||
Operating Expenses
|
||||||||||||
General
and administrative
|
196,481 | 172,965 | 10,862 | |||||||||
Amortization
of deferred compensation
|
29,178 | 29,178 | ||||||||||
Total
Operating Expenses
|
225,659 | 202,143 | 10,862 | |||||||||
Loss
from Operations
|
(225,659 | ) | (202,143 | ) | (10,862 | ) | ||||||
Other
income – interest
|
913 | 913 | - | |||||||||
Loss
Before Income Taxes
|
(224,746 | ) | (201,230 | ) | (10,862 | ) | ||||||
Provision
for income taxes
|
- | - | - | |||||||||
Net
Loss and Comprehensive Loss
|
(224,746 | ) | (201,230 | ) | (10,862 | ) | ||||||
Basic
and Diluted loss per share
|
(0.01 | ) | (0.00 | ) | ||||||||
Weighted
Average Number of Shares Outstanding - Basic and Diluted
|
23,839,452 | 17,950,000 |
(The
accompanying notes are an integral part of these financial
statements.)
F-3
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Statements of Changes in Stockholders' Equity/(Deficiency) for the year
ended
December
31, 2009 and December 31, 2008 and for the period from
inception
(September 8, 1999) to December 31, 2009
(Amounts
expressed in US Dollars)
Common
Stock
|
|
Accumulated
|
||||||||||||||||||||||
Deficit
|
Total
|
|||||||||||||||||||||||
Paid-in
|
Deferred
|
during
the
|
Stockholders'
|
|||||||||||||||||||||
Additional
|
Stock
Based
|
Exploration
|
Equity/
|
|||||||||||||||||||||
Number
|
Amount
|
Capital
|
Compensation
|
Stage
|
(Deficiency)
|
|||||||||||||||||||
of Shares
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
For
the period from inception (September 8, 1999) through January 1,
2006
|
17,950,000 | 1,795 | 7,574 | 9,369 | ||||||||||||||||||||
Net
loss
|
- | - | - | (9,369 | ) | (9,369 | ) | |||||||||||||||||
Balance,
December 31, 2006
|
17,950,000 | 1,795 | 7,574 | (9,369 | ) | - | ||||||||||||||||||
Contribution
to additional paid-in capital
|
- | - | 3,285 | 3,285 | ||||||||||||||||||||
Net
loss
|
- | - | - | (3,285 | ) | (3,285 | ) | |||||||||||||||||
Balance,
December 31, 2007
|
17,950,000 | 1,795 | 10,859 | (12,654 | ) | - | ||||||||||||||||||
Contribution
to additional paid-in capital
|
104 | 104 | ||||||||||||||||||||||
Net
loss
|
- | - | - | (10,862 | ) | (10,862 | ) | |||||||||||||||||
Balance
December 31, 2008
|
17,950,000 | 1,795 | 10,963 | (23,516 | ) | (10,758 | ) | |||||||||||||||||
Common
shares issued for cash (net)
|
9,350,000 | 935 | 934,065 | - | - | 935,000 | ||||||||||||||||||
Common
stock issued to a consultant
|
3,000,000 | 300 | 299,700 | - | - | 300,000 | ||||||||||||||||||
Common
stock issued on acquisition of a subsidiary
|
15,000,000 | 1,500 | 1,498,500 | - | - | 1,500,000 | ||||||||||||||||||
Unamortized
deferred stock compensation
|
(270,822 | ) | (270,822 | ) | ||||||||||||||||||||
Contribution
to capital
|
100 | 100 | ||||||||||||||||||||||
Net
loss
|
- | - | - | (201,230 | ) | (201,230 | ) | |||||||||||||||||
Balance
December 31, 2009
|
45,300,000 | 4,530 | 2,743,328 | (270,822 | ) | (224,746 | ) | 2,252,290 |
(The
accompanying notes are an integral part of these financial statements.)
F-4
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Statements of Cash Flows for the years ended
December
31, 2009 and 2008
And
for the period from inception (September 8, 1999) to December 31,
2009
(Amounts
expressed in US Dollars)
Cumulative
|
||||||||||||
Since
|
||||||||||||
Inception
|
2009
|
2008
|
||||||||||
$
|
$
|
$
|
||||||||||
Cash
Flows from Operating Activities
|
||||||||||||
Net
loss
|
(224,746 | ) | (201,230 | ) | (10,862 | ) | ||||||
Changes
in non-cash working capital
|
||||||||||||
Shares
issued for consultant services expenses
|
29,178 | 29,178 | — | |||||||||
Accounts
payable
|
19,522 | 19,522 | - | |||||||||
Accrued
liabilities
|
24,762 | 14,004 | 10,758 | |||||||||
Deposits
|
(720,000 | ) | (720,000 | ) | ||||||||
Net
cash used in operating activities
|
(871,284 | ) | (858,526 | ) | (104 | ) | ||||||
Cash
Flows from Investing Activities
|
||||||||||||
Acquisition
of oil and gas properties
|
(779,644 | ) | (779,644 | ) | - | |||||||
Promissory
note
|
1,500,000 | 1,500,000 | - | |||||||||
Net
cash provided by financing activities
|
720,356 | 720,356 | - | |||||||||
Cash
Flows from Financing Activities
|
||||||||||||
Issuance
of common shares for cash
|
936,795 | 935,000 | — | |||||||||
Contribution
to capital
|
11,063 | 100 | 104 | |||||||||
Net
cash provided by financing activities
|
947,858 | 935,100 | 104 | |||||||||
Net
Change in Cash
|
796,930 | 796,930 | - | |||||||||
Cash-
beginning of year
|
- | - | - | |||||||||
Cash
- end of year
|
796,930 | 796,930 | - | |||||||||
Supplemental
Cash Flow Information
|
||||||||||||
Interest
paid
|
- | - | - | |||||||||
Income
taxes paid
|
- | - | - |
(The
accompanying notes are an integral part of these financial statements.)
F-5
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
1.
|
Nature
of Business and Operations
|
Offshore
Petroleum Corp. (the "Company"), was originally incorporated on September 8,
1999 as Enviroclens Inc. under the laws of the State of New York. On December
13, 2006, Enviroclens dissolved its business in the State of New York and was
incorporated in the State of Delaware on January 23, 2007. On May 9, 2007 the
Company changed its name to Offshore Petroleum Corp. The
Company has the authority to issue 200,000,000 shares of common stock, par value
$.0001 per share.
On
November 18, 2009 the Company entered into a Share Purchase Agreement with NPT
Oil Corporation Ltd (NPT) to acquire all of the outstanding shares of Atlantic
Petroleum Ltd. (Atlantic) and Bahamas Exploration Limited
(Bahamas). Upon payment of the purchase price at the closing, NPT
will sell and deliver to the Company, free and clear of all claims, security
interests, liens or other encumbrances of any nature and the Company will
purchase all of the shares. The agreement was completed in escrow on November
30, 2009 when the Company deposited the purchase price consisting of 15,000,000
shares of its common stock and a promissory note for $1,500,000 in escrow and
NPT deposited all of the outstanding shares of Atlantic and Bahamas in escrow
all to be released on delivery of the 8 Licenses executed by the Bahamian
Government on or before December 31, 2009. If the Licenses are not
delivered on or before December 31, 2009 or such later date as the parties to
the agreement may agree, the Share Purchase Agreement shall become null and void
and the escrowed items shall be returned (see note 15). The
promissory note issued by the Company shall bear interest at the rate of 5% per
annum and is payable on demand.
Under the
terms of the Agreement, the Company acquired from NPT certain technical
information about the properties to be leased by Atlantic and Bahamas pursuant
to the delivery of the Licenses in exchange for all of the issued and
outstanding stock of Atlantic and Bahamas in exchange for 15,000,000 shares of
the Company’s common stock at the agreed price of $0.10 per share and a
promissory note for $1,500,000. The transaction was measured at the fair value,
being the market value of the equity instruments delivered on the transaction
date.
The fair
value of the assets acquired was allocated as follows:
|
||||
Cash
|
$
|
356 | ||
Deposit
for License Applications
|
720,000 | |||
Oil
and Gas Technical Information
|
2,279,644 | |||
Consideration
Given
|
3,000,000 |
As per
the Agreement the Company and NPT agreed that the costs of obtaining the
technical information is included in the purchase price and all amounts due from
Atlantic and Bahamas would be forgiven and cancelled at
closing. Prior to the acquisition NPT had incurred costs totaling
$1,407,944. These amounts were forgiven on November 30, 2009.
The
consolidated financial statements include the accounts of the Company and its
subsidiaries, Atlantic Petroleum Ltd. and Bahamas Exploration
Limited. All material inter-company accounts and transactions have
been eliminated.
F-6
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
2.
|
Financial
Instruments
|
The
Company follows ASC 820-10, “Fair Value Measurements and Disclosures” (ASC
820-10), which among other things, defines fair value, establishes a consistent
framework for measuring fair value and expands disclosure for each major asset
and liability category measured at fair value on either a recurring or
nonrecurring basis. Fair value is an exit price, representing the amount that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a
market-based measurement that should be determined based on assumptions that
market participants would use in pricing an asset or liability. As a basis for
considering such assumptions, a three-tier fair value hierarchy has been
established, which prioritizes the inputs used in measuring fair value as
follows:
• Level
1—Inputs are unadjusted, quoted prices in active markets for identical assets or
liabilities at the measurement date.
Assets
that are generally included in this category are cash equivalents comprised of
money market funds, restricted cash and short-term investments.
• Level
2—Inputs (other than quoted prices included in Level 1) are either directly or
indirectly observable for the asset or liability through correlation with market
data at the measurement date and for the duration of the instrument’s
anticipated life.
At
December 31, 2009 and 2008, the Company did not have any assets or liabilities
classified as Level 2.
• Level
3—Inputs reflect management’s best estimate of what market participants would
use in pricing the asset or liability at the measurement date. Consideration is
given to the risk inherent in the valuation technique and the risk inherent in
the inputs to the model.
Assets
and liabilities measured at fair value as of December 31, 2009 and 2008 are
classified below based on the three fair value hierarchy tiers described
above:
Fair value measurements using
|
||||||||||||||||
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
December
31, 2009:
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
equivalents
|
$ | 796,930 | $ | 796,930 | $ | - | $ | - | ||||||||
Deposits
|
720,000 | 720,000 | - | - | ||||||||||||
Total
assets
|
$ | 1,516,930 | $ | 1,516,930 | $ | - | $ | - | ||||||||
December
31, 2008:
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
equivalents
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Deposits
|
- | - | - | - | ||||||||||||
Oil
and gas properties
|
- | - | - | - | ||||||||||||
Total
assets
|
$ | - | $ | - | $ | - | $ | - |
F-7
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
2.
|
Financial
Instruments, cont.
|
Carrying Value
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
December
31, 2009:
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Accounts
payable
|
$ | 19,522 | $ | 19,522 | $ | - | $ | - | ||||||||
Accrued
liabilities
|
24,762 | 24,762 | - | - | ||||||||||||
Promissory
note
|
1,500,000 | 1,500,000 | - | - | ||||||||||||
Total
liabilities
|
$ | 1,544,284 | $ | 1,544,284 | $ | - | $ | - | ||||||||
December
31, 2008:
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Accrued
liabilities
|
$ | 10,758 | $ | 10,758 | $ | - | $ | - | ||||||||
Total
liabilities
|
$ | 10,758 | $ | 10,758 | $ | - | $ | - |
3.
|
Going
Concern
|
The
Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The
Company is in the development stage and has not yet realized revenues from its
planned operations. The Company has incurred a cumulative loss of
$224,746 from inception to December 31, 2009 and has funded operations through
the sale of capital stock and additional paid-in capital.
The
Company raised $935,000 through the issuance of capital stock. Management’s plan
is to raise additional funds through future equity financing until it achieves
profitable operations from its activities.
4.
|
Summary
of Significant Accounting Policies
|
The
accounting policies of the Company are in accordance with accounting principles
generally accepted in the United States of America and their basis of
application is consistent with that of the previous year. Outlined
below are the significant accounting policies:
Basis
of Presentation
a) Cash
and Cash Equivalents
Cash
consists of cash and cash equivalents, which are short-term, highly liquid
investments with original terms to maturity of 90 days or less.
b) Stock
Based Compensation
All
awards granted to employees and non-employees are valued at fair value using the
Black-Scholes option pricing model and recognized on a straight line basis over
the service periods of each award. Equity instruments issued in exchange for the
receipt of goods or services from other than employees. Costs are
measured at the estimated fair market value of the consideration received or the
estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of equity instruments issued for
consideration to other than employee services is determined on the earlier of a
performance commitment or completion of performance by the provider of goods or
services.
There was
no stock-based compensation expense relating to employees and non employees for
the periods presented.
F-8
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
c) Use
of Estimates
Preparation
of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
related notes to financial statements.
These
estimates are based on management's best knowledge of current events and actions
the Company may undertake in the future. Actual results may ultimately differ
from such estimates. Significant estimates include accruals.
d) Income
taxes
The
Company recognizes deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Deferred income taxes are provided using the liability method.
Under the liability method, deferred income taxes are recognized for all
significant temporary differences between the tax and financial statement bases
of assets and liabilities.
Current
income tax expense (recovery) is the amount of income taxes expected to be
payable (recoverable) for the current period. A deferred tax asset and/or
liability is computed for both the expected future impact of differences between
the financial statement and tax bases of assets and liabilities and for the
expected future tax benefit to be derived from tax losses. Valuation allowances
are established when necessary to reduce deferred tax asset to the amount
expected to be “more likely than not” realized in future tax returns. Tax law
and rate changes are reflected in income in the period such changes are
enacted.
e) Comprehensive
Income
In
addition to items included in net income, comprehensive income includes items
currently charged or credited directly to stockholders’ equity, such as foreign
currency translation adjustments. There are no items in comprehensive
income.
f)
Full
Cost Accounting Method
The
Company accounts for its oil and gas producing activities using the full cost
method of accounting as prescribed by the United States Securities and Exchange
Commission (“SEC”). Accordingly, all costs associated with the acquisition of
properties and exploration with the intent of finding proved oil and gas
reserves contribute to the discovery of proved reserves, including the costs of
abandoned properties, dry holes, geophysical costs, and annual lease rentals are
capitalized. All general corporate costs are expensed as incurred. In general,
sales or other dispositions of oil and gas properties are computed on the units
of production method based on all proved reserves on a country-by-country basis.
The net capitalized costs of evaluated oil and gas properties (full cost ceiling
limitation) are not to exceed their related estimated further net revenues from
proved reserves discounted at 10%, and the lower of cost of estimated fair value
of unproved properties, net of tax considerations. These properties are included
in the amortization pool immediately upon the determination that the well is
dry.
Unproved
properties consist of lease acquisition costs and costs on wells currently being
drilled on the properties. The recorded costs of the investment in unproved
properties are not amortized until proved reserves associated with the projects
can be determined or until they are impaired. Unevaluated oil and gas properties
are assessed at least annually for impairment either individually or on an
aggregate basis.
F-9
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
g) Estimates
of Proved Oil and Gas Reserves
Estimates
of proved oil and gas reserves will have a significant impact on the carrying
value of the Company’s oil and gas properties, the related property amortization
expense and related property impairment expense. Volumes of reserves actually
recovered and cash flows actually received from actual production may differ
significantly from the proved reserve estimates and the related projected cash
flows, respectively.
h) Asset
Retirement Obligation
Asset
retirement obligations (“ARO”) associated with the retirement of a tangible
long-lived asset, including natural gas and oil properties, are recognized as
liabilities in the period in which it is incurred and becomes determinable, with
an offsetting increase in the carrying amount of the associated assets. The cost
of tangible long-lived assets, including the initially recognized ARO, is
depleted, such that the cost of the ARO is recognized over the useful life of
the assets. The ARO is recorded at fair value, and accretion expense is
recognized over time as the discounted fair value is accreted to the expected
settlement value.
The fair
value of the ARO is measured using expected future cash flow, discounted at the
Company’s credit-adjusted risk-free interest rate.
i) Impairment
of Long-lived Assets
The
carrying value of intangible assets and other long-lived assets are reviewed on
a regular basis for the existence of facts or circumstances that may suggest
impairment. The Company recognizes impairment when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the asset.
Impairment losses, if any, are measured as the excess of the carrying amount of
the asset over its estimated fair value. Impairment on the properties with
unproved reserves is evaluated by considering criteria such as future drilling
plans for the properties, the results of geographic and geologic data related to
the unproved properties and the remaining term of the property
leases.
j) Basic
loss per share
Basic
loss per share is computed using the weighted average number of shares
outstanding during the period. Diluted earnings per share are computed similar
to basic income per share except that the denominator is increased to include
the number of common stock equivalents. Common stock equivalents represent the
dilutive effect of the assumed exercise of any outstanding stock equivalents,
using the treasury stock method, at either the beginning of the respective
period presented or the date of issuance, whichever is later, and only if the
common stock equivalents are considered dilutive based upon the Company’s net
income (loss) position at the calculation date. There are no common stock
equivalents outstanding and, thus, diluted and basic loss per share are the
same.
k) Recent
Accounting Pronouncements
FASB ASC
TOPIC 805 – “Business Combinations.” The objective of this topic is to
enhance the information that an entity provides in its financial reports about a
business combination and its effects. The Topic mandates: (i) how the
acquirer recognizes and measures the assets acquired, liabilities assumed and
any non-controlling interest in the acquiree; (ii) what information to disclose
in its financial reports and; (iii) recognition and measurement criteria for
goodwill acquired. This Topic is effective for any acquisitions made on or
after December 15, 2008. The adoption of this Topic did not have a material
impact on the Company’s financial statements and disclosures.
F-10
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
l)
|
Recent
Accounting Pronouncements
|
FASB ASC
TOPIC 810 – “Noncontrolling Interests.” The objective of
this Topic is to improve the relevance, comparability, and transparency of the
financial information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting standards that
require: (i) the ownership interests in subsidiaries held by parties other than
the parent be clearly identified, labeled, and presented in the consolidated
statement of financial position within equity, but separate from the parent's
equity; (ii) the amount of consolidated net income attributable to the parent
and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of income; (iii) changes in a parent's
ownership interest while the parent retains its controlling financial interest
in its subsidiary be accounted for consistently; (iv) when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value. The gain or loss on the
deconsolidation of the subsidiary is measured using the fair value of any
noncontrolling equity investment rather than the carrying amount of that
retained investment and; (v) entities provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the non-controlling owners. This Topic is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Earlier adoption is prohibited. The adoption of
this Topic did not have a material impact on the Company’s financial statements
and disclosures.
FASB ASC
TOPIC 815 – “Derivatives and Hedging.” The use and complexity of
derivative instruments and hedging activities have increased significantly over
the past several years. This Topic requires enhanced disclosures
about an entity's derivative and hedging activities and thereby improves the
transparency of financial reporting. This Topic is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The adoption of this Topic
did not have a material impact on the Company’s financial statements and
disclosures.
FASB ASC
TOPIC 944 – “Financial Services – Insurance.” Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises. That diversity results in inconsistencies in the
recognition and measurement of claim liabilities because of differing views
about when a loss has been incurred. This Topic requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation.
This
Topic is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years,
except for some disclosures about the insurance enterprise's risk-management
activities. The adoption of this Topic did not have a material impact on
the Company’s financial statements and disclosures.
FASB
ASC TOPIC 855 - “Subsequent Events.” In May 2009, the FASB issued
Topic 855, which establishes general standards of accounting and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. In particular, this Topic sets forth :
(i) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (ii) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, (iii) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. This Topic should be applied to the
accounting and disclosure of subsequent events. This Topic does not apply to
subsequent events or transactions
that are within the scope of other applicable accounting standards that provide
different guidance on the accounting treatment for subsequent events or
transactions. This Topic was effective for interim and annual periods ending
after June 15, 2009.
F-11
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
l)
|
Recent
Accounting Pronouncements, cont.
|
In
February 2010, the FASB issued ASU 2010-09-Subsequent Event (Topic 855)
Amendments to certain recognition and disclosure requirements. ASU 2010-09
removes the requirements for an SEC filer to disclose a date through which
subsequent events have been evaluated in both issued and revised financial
statements. The Company adopted ASU 2010-09 in February 2010 and
did not disclose the date through which subsequent events have been
evaluated.
FASB ASC
TOPIC 105 - “The FASB Accounting Standard Codification and the Hierarchy of
Generally Accepted Accounting Principles.” In June 2009, the FASB issued Topic
105, which became the source of authoritative GAAP recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants. On the effective date of this Topic, the Codification
will supersede all then-existing non-SEC accounting and reporting standards. All
other non-SEC accounting literature not included in the Codification will become
non-authoritative. This Topic identifies the sources of accounting principles
and the framework for selecting the principles used in preparing the financial
statements of nongovernmental entities that are presented in conformity with
GAAP and arranged these sources of GAAP in a hierarchy for users to apply
accordingly. This Topic is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. References made to
authoritative FASB guidance throughout the consolidated financial statements
have been updated to the applicable codification section.
FASB ASC
TOPIC 320 - “Recognition and Presentation of Other-Than-Temporary
Impairments.” In April 2009, the FASB issued Topic 320 amends
the other-than-temporary impairment guidance in GAAP for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. This Topic does not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities. The
Topic is effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
Earlier adoption for periods ending before March 15, 2009, is not permitted.
This Topic does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial adoption,
this Topic requires comparative disclosures only for periods ending after
initial adoption. The adoption of this Topic did not have a material impact on
the Company’s financial statements and disclosures.
FASB ASC
TOPIC 860 - “Accounting for Transfer of Financial Assets and Extinguishment of
Liabilities.” In June 2009, the FASB issued additional guidance under
Topic 860 which improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor’s continuing involvement, if any, in transferred financial assets.
This additional guidance requires that a transferor recognize and initially
measure at fair value all assets obtained (including a transferor’s beneficial
interest) and liabilities incurred as a result of a transfer of financial assets
accounted for as a sale. Enhanced disclosures are required to provide financial
statement users with greater transparency about transfers of financial assets
and a transferor’s continuing involvement with transferred financial assets.
This additional guidance must be applied as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is prohibited. This
additional guidance must be applied to transfers occurring on or after
the
effective date. The adoption of this Topic is not expected to have a
material impact on the Company’s financial statements and
disclosures.
F-12
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
l)
|
Recent
Accounting Pronouncements, cont.
|
FASB ASC
TOPIC 810 - “Consolidation of Variables Interest and Special Purpose
Entities.” In June 2009, the FASB issued Topic 810, which requires an
enterprise to perform an analysis to determine whether the enterprise’s variable
interest or interests give it a controlling financial interest in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has both of the following
characteristics: (i)The power to direct the activities of a variable interest
entity that most significantly impact the entity’s economic performance and
(ii)The obligation to absorb losses of the entity that could potentially be
significant to the variable interest entity or the right to receive benefits
from the entity that could potentially be significant to the variable interest
entity. Additionally, an enterprise is required to assess whether it has
an implicit financial responsibility to ensure that a variable interest entity
operates as designed when determining whether it has the power to direct the
activities of the variable interest entity that most significantly impact the
entity’s economic performance. This Topic requires ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity
and eliminate the quantitative approach previously required for determining the
primary beneficiary of a variable interest entity, which was based on
determining which enterprise absorbs the majority of the entity’s expected
losses, receives a majority of the entity’s expected residual returns, or both.
This Topic is effective as of the beginning of each reporting entity’s first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period, and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The adoption of this
Topic is not expected to have a material impact on the Company’s financial
statements and disclosures.
FASB ASC
TOPIC 820 - “Fair Value measurement and Disclosures”, an Accounting Standard
Update. In September 2009, the FASB issued this Update to amend Subtopic 820-10,
“Fair Value Measurements and Disclosures”. Overall, for the fair value
measurement of investments in certain entities that calculates net asset value
per share (or its equivalent). The amendments in this Update permit, as a
practical expedient, a reporting entity to measure the fair value of an
investment that is within the scope of the amendments in this Update on the
basis of the net asset value per share of the investment (or its equivalent) if
the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments at the measurement date, any
unfunded commitment, and the investment strategies of the investees. The major
category of investment is required to be determined on the basis of the nature
and risks of the investment in a manner consistent with the guidance for major
security types in GAAP on investments in debt and equity securities in paragraph
320-10-50-lB. The disclosures are required for all investments within the scope
of the amendments in this Update regardless of whether the fair value of the
investment is measured using the practical expedient. The amendments in this
Update apply to all reporting entities that hold an investment that is required
or permitted to be measured or disclosed at fair value on a recurring or non
recurring basis and, as of the reporting entity’s measurement date, if the
investment meets certain criteria The amendments in this Update are effective
for the interim and annual periods ending after December 15, 2009. Early
application is permitted in financial statements for earlier interim and annual
periods that have not been issued. The adoption of this Topic did not have
a material impact on the Company’s financial statements and
disclosures.
F-13
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
4.
|
Summary
of Significant Accounting Policies,
cont.
|
l)
|
Recent
Accounting Pronouncements, cont.
|
FASB ASC
TOPIC 740 - “Income Taxes”, an Accounting Standard Update. In September 2009,
the FASB issued this Update to address the need for additional implementation
guidance on accounting for uncertainty in income taxes. For entities that are
currently applying the standards for accounting for uncertainty in income taxes,
the guidance and disclosure amendments are effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
adoption of this Update did not have a material impact on the Company’s
financial statements and disclosures.
In
December 2008, the SEC issued revised reporting requirements for oil and natural
gas reserves that a company holds. Included in the new rule entitled
-Modernization of Oil and Gas Reporting Requirements”, are the following
changes: 1) permitting use of new technologies to determine proved reserves, if
those technologies have been demonstrated empirically to lead to reliable
conclusions about reserve volumes; 2) enabling companies to additionally
disclose their probable and possible reserves to investors, in addition to their
proved reserves; 3) allowing previously excluded resources, such as oil sands,
to be classified as oil and natural gas reserves rather than mining reserves; 4)
requiring companies to report the independence and qualifications of a preparer
or auditor, based on current Society of Petroleum Engineers criteria; 5)
requiring the filing of reports for companies that rely on a third party to
prepare reserve estimates or conduct a reserve audit; and 6) requiring companies
to report oil and natural gas reserves using an average price based upon the
prior 12-month period, rather than year-end prices. The new requirements are
effective for registration statements filed on or after January 1, 2010, and for
annual reports on Form 10K for fiscal years ending on or after December 31,
2009. Early adoption is not permitted. The Company is currently assessing the
impact that adoption of this rule will have on its financial
disclosures.
In
January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-03 -
“Oil and Gas Reserve
Estimation and Disclosures.” The ASU aligns the current oil and gas
reserve estimation and disclosure requirements of FASB Accounting Standards
Codification Topic 932, Extractive Activities — Oil and
Gas, with those in SEC Final Rule Release No. 33-8995, Modernization of
Oil and Gas Reporting. The ASU will be effective for reporting periods ending on
or after December 31, 2009. The Company is currently assessing the impact that
adoption of this rule will have on our financial statements.
5.
|
Deposits
|
The total
amount of $720,000 represents deposits made for oil exploration application fees
in the specific amounts of $400,000 for Atlantic and $320,000 for Bahamas
respectively.
6.
|
Oil
and Gas Properties
|
December 31, 2009
|
||||||||
Bahamas
|
Total
|
|||||||
Unproved
properties
|
||||||||
-
acquisition costs
|
$ | $2,279,644 | $ | 2,279,644 | ||||
$ | $2,279,644 | $ | 2,279,644 |
F-14
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
6.
|
Oil
and Gas Properties, cont.
|
On
November 18, 2009 the Company entered into a Share Purchase Agreement with NPT
Oil Corporation Ltd (NPT) to acquire all of the outstanding shares of Atlantic
and Bahamas. Under the terms of the Agreement, the Company acquired
from NPT certain technical information about the properties to be leased by
Atlantic and Bahamas pursuant to the delivery of the Licenses and all of the
issued and outstanding stock of Atlantic and Bahamas in exchange for 15,000,000
shares of the Company’s common stock at the agreed price of $0.10 per share and
a promissory note for $1,500,000.
7.
|
Promissory
Note
|
The
promissory note is for the principal amount of $1,500,000 and is payable to the
order of NPT. The note is payable over a two-year period and bears interest of
5% per annum until all principal and interest has been fully repaid. Interest
expense on the note at December 31, 2009 was $6,250 and has been
accrued.
8.
|
Segmented
Information
|
The
assets of the Company are segmented as follows: cash in the amount of $796,930
is held in a United States banking institution, deposits in the amount of
$720,000 are held by the Government of the Commonwealth of the Bahamas and oil
and gas properties in the amount of $2,279,644 are located in territorial waters
controlled by the Commonwealth of the Bahamas.
9.
|
Capital
Stock
|
Year ended December 31,
1999
In August
1999, NatQuote Financial Inc. was presented with a business opportunity in the
bottle cleaning and sterilization industry. While NatQuote decided it did not
fit with its core business objectives, its major shareholder requested that the
opportunity be pursued on behalf of the Company and its
shareholders.
NatQuote’s
President, J. Paul Hines was instructed to form a new corporation, Enviroclens
Inc., incorporated in the State of New York, on September 9, 1999, to carry out
the new business. In consideration for the assignment it was agreed that
NatQuote would be issued 1,795,000 common shares of Enviroclens Inc. at par
value.
Year ended December 31,
2002
In
September 2002 the Board of Directors of NatQuote Financial Inc. resolved to
assign all their rights to receive shares of Enviroclens Inc. to their
shareholders by order of a stock dividend. To effect this assignment NatQuote
requested that Enviroclens Inc. split its own shares 10:1 for a total of
17,950,000 common shares.
Year ended December 31,
2005
In
November 2005, the Board of Directors of Enviroclens Inc. resolved to terminate
its interest in the bottle sanitization Business opportunity and instead seek
other opportunities.
F-15
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
9.
|
Capital
Stock, cont.
|
Year ended December 31,
2007
In
February 2007 the Board of Directors approved the sale of 17,052,500 of the
Company’s common shares to Roman Marble Marketing Company. Of the
17,052,500 common shares sold, 16,525,200 were held by J. Paul Hines and 527,300
were held by his company, Ship Island Investments Ltd.
In May
2007 the Board of Directors of Enviroclens Inc. resolved to change the Company
name to Offshore Petroleum Corp.
Year ended December 31,
2008
In
September 2008, the Board of Directors approved the sale of 17,052,500 common
shares of the Company by Roman Marble Marketing Company to a number of other
investors.
Year ended December 31,
2009
On March
9, 2009 the Company authorized the issuance of 30,000,000 common shares of the
Company at 10 cents per share in private placements for a total amount of
$3,000,000. By December 31, 2009, the Company had raised $935,000 through the
issuance of 9,350,000 common shares at a share price of $0.10 per
share.
On
October 20, 2009, the Company issued 3,000,000 shares for two consulting
agreements at a price of $0.10 per share (refer to note 14).
On
November 18, 2009, the Company issued 15,000,000 shares under a Share Purchase
Agreement at a price of $0.10 per share (refer to note 14).
10.
|
Employee
Stock Option Plan
|
In
September 2008, the Board of Directors approved an employee stock option plan
("2008 Stock Option Plan"), the purpose of which is to enhance the
Company's stockholder value and financial performance by attracting, retaining
and motivating the Company's directors, key employees, consultants and to
encourage stock ownership by such individuals by providing them with a means to
acquire a proprietary interest in the Company's success through stock ownership.
Under the 2008 Stock Option Plan, directors, employees and consultants who
provide services to the Company may be granted incentive options and
nonstatutory Stock Options to acquire common shares of the Company at not less
than 110 percent of the fair market value of the stock on the date of
grant. Options will have a term of 5 years. The total
number of shares reserved for issuance under the 2008 Stock Option Plan is
5,000,000. As of December 31, 2009, no options were granted under the
2008 Stock Option Plan.
11.
|
Changes
in Directors and Management
|
|
a)
|
Mr.
J. Paul Hines was appointed the sole director of Enviroclens Inc. on its
incorporation and resigned on February 24,
2007.
|
|
b)
|
On
February 23, 2007 Todd Montgomery was appointed as the sole director of
Enviroclens Inc. and on May 9, 2007 the company’s name was changed to
Offshore Petroleum Corp. Todd Montgomery subsequently resigned on
September 16, 2008.
|
|
c)
|
On
September 15, 2008 John Rainwater and Mickey Wiesinger were appointed
directors of the Company.
|
F-16
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
11.
|
Changes
in Directors and Management, cont.
|
|
d)
|
On
March 12, 2009 Ryan Bateman was appointed a director of the
Company.
|
|
e)
|
On
December 16, 2009 Howard Barth was appointed a director of the
Company
|
12.
|
Deferred
Stock Compensation
|
The
Company issued 1,500,000 restricted common stock each to two consultants, for a
total of 3,000,000 common stock valued at $300,000. The Company
expensed proportionate consulting expenses of $29,178 during the year ended
December 31, 2009 and the balance of $270,822 is reflected as deferred stock
compensation expense under the stockholders’ equity in the balance
sheet.
13.
|
Income
Taxes
|
The
Company's current and deferred income taxes are as follows:
2009
|
2008
|
|||||||
Loss
before income taxes
|
$ | (201,230 | ) | $ | (10,862 | ) | ||
Expected
income tax recovery at the statutory rates of 35% (2008 -
35%)
|
$ | (70,430 | ) | $ | (3,802 | ) | ||
Increase
in income taxes resulting from:
|
||||||||
Valuation
allowance
|
70,430 | 3,802 | ||||||
Provision
for income taxes
|
$ | - | $ | - |
The
Company has deferred income tax assets as follows:
2009
|
2008
|
|||||||
Net
operating loss carry forward
|
$ | 224,746 | $ | 23,516 | ||||
Deferred
Income tax on loss carry forward
|
$ | 78,661 | 8,231 | |||||
Valuation
allowance
|
$ | (78,661 | ) | (8,231 | ) | |||
Deferred
income taxes
|
$ | - | $ | - |
As of
December 31, 2009 the Company has non-capital losses of approximately $224,746
available to offset future taxable incomes which expire as follows:
2026
|
$ | 9,369 | ||
2027
|
$ | 3,285 | ||
2028
|
$ | 10,862 | ||
2029
|
$ | 201,230 | ||
|
$ | 224,746 |
F-17
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
14.
|
Commitments
and Contingencies
|
The
Company has entered into a one year renewable contract with Lance Capital Corp.
for consulting services commencing January 1, 2009, at a rate of $7,500 per
month.
The
Company resolved to issue through a private placement 30,000,000 common shares
for total cash consideration of $3,000,000. These common shares are to be issued
at $0.10 per share. As of December 31, 2009, 9,350,000 common shares for
$935,000 had been issued.
On
October 20, 2009, the Company entered into a Consulting Agreement with Pembroke
Communications Corp. (Pembroke) for certain consulting services for a term of
expiring September 30, 2011. The Company issued 1,500,000 shares of restricted
common stock of the Company which shall be earned in the following
manner: 1,500,000 shares will be earned by Pembroke in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April 1,
2011. The said 1,500,000 Shares were tendered in one certificate upon execution
of the agreement and are deemed to be in Pembroke’s possession. The Consultant
must return any unearned shares upon termination of the Consulting
Agreement.
On
October 20, 2009, the Company entered into a Consulting Agreement with Power One
Capital Corp. (Power One) for certain consulting services for a term of expiring
September 30, 2011. The Company issued 1,500,000 shares of restricted common
stock of the Company which shall be earned in the following
manner: 1,500,000 shares will be earned by Power One in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April
1, 2011. The said 1,500,000 Shares were tendered in one certificate upon
execution of the agreement and are deemed to be in Power One’s possession The
Consultant must return any unearned shares upon termination of the Consulting
Agreement.
On
November 18, 2009 the Company entered into a Share Purchase Agreement with NPT
Oil Corporation Ltd (NPT) to acquire all of the outstanding shares of Atlantic
and Bahamas. The agreement was completed in escrow on November 30,
2009 when the Company deposited the purchase price consisting of 15,000,000
shares of its common stock and a promissory note for $1,500,000 in escrow and
NPT deposited all of the outstanding shares of Atlantic and Bahamas in escrow
all to be released on delivery of the 8 Licenses executed by the Bahamian
Government on or before December 31, 2009. If the Licenses are not
delivered on or before December 31, 2009 or such later date as the parties to
the agreement may agree the Share Purchase Agreement shall become null and void
and the escrowed items shall be returned and the Share Purchase Agreement shall
be at an end (see note 15). The promissory note issued by the Company
shall bear interest at the rate of 5% per annum and payable on
demand.
NPT has
confirmed that for the period of the escrow, Offshore controls the shares of
Atlantic and Bahamas that are held in escrow and that Offshore is permitted to
vote such shares and otherwise exercise the rights of a shareholder during the
period that they are held in such escrow as if Offshore had full possession of
such shares.
On
December 22, 2009, by way of an Addendum, the date of December 31, 2009 for
delivery of the Licenses from the Bahamian Government and completion of the
Escrow condition, where referred to in the Share Purchase Agreement was extended
to February 15, 2010. All other terms and conditions of the Agreement remained
the same.
15.
|
Subsequent
events
|
On
January 12, 2010 Lance Capital Ltd. was compensated with 150,000 shares of the
Company for consulting services valued at $0.10 per share.
F-18
OFFSHORE
PETROLEUM CORP.
(Formerly
Enviroclens Inc.)
(An
Exploration Stage Company)
Consolidated
Notes to the financial statements
December
31, 2009 and 2008
(Amounts
expressed in US Dollars)
15.
|
Subsequent
events, cont.
|
On
January 19, 2010 the Company revoked the resolution approved on March 9, 2010
authorizing the issuance of 30,000,000 common shares at $0.10 for a total of
$3,000,000.
On
February 15, 2010, by way of an Addendum, the date of December 31, 2009 for
delivery of the Licenses from the Bahamian Government and completion of the
Escrow condition, where referred to in the Share Purchase Agreement was extended
to on or before March 31, 2010. All other terms and conditions of the Agreement
remained the same.
On March
25, 2010, a Closing Agreement was entered into by and among the Company and
NPT for the Share Purchase Agreement dated November 18, 2009 (this “Closing
Agreement”). The Company and NPT agreed that the requirements contained in the
Purchase Agreement for the issuance of the Licenses and related approvals of the
Bahamian Government were waived by both parties. The Company and NPT
further agreed that all conditions of closing contained in the Purchase
Agreement are considered satisfied by both Offshore and NPT. The Company
and NPT instructed the Escrow Agent to deliver all closing documents in the
possession of the Escrow Agent to the appropriate party, as contemplated in the
Purchase Agreement. The duties of the Escrow Agent were deemed to
have been satisfied and the Escrow Agent will have no further responsibility to
the parties to the Purchase Agreement.
F-19
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION
OF DIRECTORS
Our
by-laws indemnify each person (including the heirs, executors, administrators,
or estate of such person) who is or was a director or officer of Offshore
Petroleum to the fullest extent permitted or authorized by current or future
legislation or judicial or administrative decision against all fines,
liabilities, costs and expenses, including attorney’s fees, arising out of his
or her status as a director, officer, agent, employee or
representative. The foregoing right of indemnification shall not be
exclusive of other rights to which those seeking an indemnification may be
entitled. Offshore Petroleum may maintain insurance, at its expense,
to protect itself and all officers and directors against fines, liabilities,
costs and expenses, whether or not Offshore Petroleum would have the legal power
to indemnify them directly against such liability.
Costs,
charges, and expenses (including attorney’s fees) incurred by a person referred
to above in defending a civil or criminal proceeding shall be paid by Offshore
Petroleum in advance of the final disposition thereof upon receipt of any
undertaking to repay all amounts advanced if it is ultimately determined that
the person is not entitled to be indemnified by Offshore Petroleum and upon
satisfaction of other conditions required by current or future
legislation.
If this
indemnification or any portion of it is invalidated on any ground by a court of
competent jurisdiction, Offshore Petroleum nevertheless indemnifies each person
described above to the fullest extent permitted by all portions of this
indemnification that have not been invalidated and to the fullest extent
permitted by law.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of Offshore
Petroleum pursuant to the foregoing provisions, or otherwise, be advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore
unenforceable.
EXHIBITS
INDEX
The
following exhibits are filed as part of this registration
statement.
Exhibit
No.
|
Description
|
|
3.1
|
Certificate
of Incorporation of the Company filed on September 7, 1999 with the New
York Secretary of State (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
3.2
|
By
Laws of the Company (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
3.3
|
Certificate
of Conversion from a Non-Delaware Corporation to a Delaware Corporation
dated January 22, 2007 (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
3.4
|
|
Certificate
of Amendment of the Certificate of Incorporation of the Company dated May
9, 2007 and filed with the Delaware Secretary of State on May 18,
2007 (previously filed with the Company’s Registration
Statement on Form S-1 on January 26,
2010)
|
45
3.5
|
Certificate
of Amendment of the Certificate of Incorporation of the Company dated
September 8, 2008 and filed with the Delaware Secretary of State on
February 18, 2009 (previously filed with the Company’s
Registration Statement on Form S-1 on January 26,
2010)
|
|
3.6
|
Code
of Ethics adopted as of June 15, 2009 (previously filed with
the Company’s Registration Statement on Form S-1 on January 26,
2010)
|
|
3.7
|
Audit
Committee Charter (previously filed with the Company’s
Registration Statement on Form S-1 on January 26,
2010)
|
|
5.1
|
Legal
Opinion dated January 20, 2010 of Kavinoky Cook LLP (previously
filed with the Company’s Registration Statement on Form S-1 on January 26,
2010)
|
|
10.1
|
Consulting
Services Agreement between the Company and Lance Capital Ltd. dated
January 1, 2009 (previously filed with the Company’s
Registration Statement on Form S-1 on January 26,
2010)
|
|
10.2
|
2008
Stock Option Plan (previously filed with the Company’s
Registration Statement on Form S-1 on January 26,
2010)
|
|
10.3
|
Consulting
Agreement between the Company and Power One Capital Corp. dated
as of October 20, 2009 (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
10.4
|
Consulting
Agreement between the Company and Pembroke Communications Corp. dated as
of October 20, 2009 (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
10.5
|
Share
Purchase Agreement with NPT Oil Corporation Ltd. (previously
filed with the Company’s Registration Statement on Form S-1 on January 26,
2010)
|
|
10.6
|
Closing
Agreement for Share Purchase Agreement dated March 17,
2010
|
|
23.1
|
Consent
of Schwartz Levitsky Feldman LLP dated January 25,
2010 (previously filed with the Company’s Registration
Statement on Form S-1 on January 26, 2010)
|
|
23.2
|
|
Consent
of Kavinoky Cook LLP (included in Exhibit 5.1) (previously filed with the
Company’s Registration Statement on Form S-1 on January 26,
2010)
|
23.3
|
Consent
of Schwartz Levitsky Feldman LLP dated April 13,
2010
|
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth expenses, incurred or expected to be incurred by
Offshore Petroleum in connect with the registration of the securities being
offered by the selling shareholders. Items marked with an asterisk
(*) represent estimated expenses. We have agreed to pay all the costs
and expenses of this registration. Selling security holders will not
pay any part of these expenses.
SEC
Registration Fee
|
$ | 124.79 | ||
Legal
Fees and Expenses*
|
$ | 80,000.00 | ||
Accounting
Fees and Expenses*
|
$ | 30,000.00 | ||
Printing
|
$ | 1,000.00 | ||
Miscellaneous*
|
$ | 2,000.00 | ||
TOTAL*
|
$ | 113,124.79 |
46
RECENT
SALE OF UNREGISTERED SECURITIES
The
Company completed private placements of common stock at $0.10 per share from the
following accredited investors in the number of shares and on the dates set out
opposite their names:
Name
|
Shares
|
Date
Issued
|
||
Sirius
Intervest Ltd.
|
1,000,000
|
April
14, 2009
|
||
Allentown
Consulting Corp.
|
1,500,000
|
June
25, 2009
|
||
Catalyst
Trading Inc.
|
750,000
|
April
28, 2009
|
||
Steven
Pearce
|
500,000
|
April
28, 2009
|
||
Zul
Rashid
|
200,000
|
May
1, 2009
|
||
Sirius
Intervest Ltd.
|
1,000,000
|
May
8, 2009
|
||
Zulfikar
Rashid
|
150,000
|
September
29, 2009
|
||
Benjamin
Marler
|
50,000
|
September
30, 2009
|
||
Shane
Manning
|
100,000
|
October
26, 2009
|
||
Hubert
Manning
|
100,000
|
October
26, 2009
|
||
Wade
Alexander
|
250,000
|
October
27, 2009
|
||
Cottonwood
Investments
|
2,000,000
|
November
16, 2009
|
||
Ray
Westall
|
250,000
|
November
16, 2009
|
||
J.L.
Guerra, Jr.
|
500,000
|
November
25, 2009
|
||
Pineview
Worldwide Corp.
|
|
1,000,000
|
|
December
4, 2009
|
The
Company entered into a Consulting Agreement with Pembroke Communications Corp.
(“Pembroke”) for certain consulting services for a term expiring September 30,
2011. The Company shall issue 1,500,000 shares of restricted common
stock of the Company which shall be earned in the following
manner: 1,500,000 shares will be earned by Pembroke in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April 1,
2011.
The
Company entered into a Consulting Agreement with Power One Capital Corp. (“Power
One”) for certain consulting services for a term expiring September 30,
2011. The Company shall issue 1,500,000 shares of restricted common
stock of the Company which shall be earned in the following
manner: 1,500,000 shares will be earned by Power One in equal
installments of 500,000 shares on April 1, 2010, October 1, 2010 and April 1,
2011.
On
January 12, 2010 Lance Capital Ltd. was compensated with 150,000 shares of the
Company for consulting services valued at $0.10 per share.
The
Company completed a Share Purchase Agreement to acquire its Subsidiaries, and
the following shares were issued to the following, in the number of shares and
on the dates set out opposite their names :
Name
|
Shares
|
Date
Issued
|
||
Ryan
Bateman
|
2,463,000
|
November
30, 2009
|
||
John
Lowell Rainwater
|
3,806,000
|
November
30, 2009
|
||
NPT
Fund
|
2,238,000
|
November
30, 2009
|
||
Milo
Holdings Ltd. (1)
|
4,477,000
|
November
30, 2009
|
||
Mickey
W. Wiesinger
|
672,000
|
November
30, 2009
|
||
Kevin
Gottshall
|
|
1,344,000
|
|
November
30, 2009
|
47
(1) Milo
Holdings Ltd. is a company that is controlled by Ryan Bateman.
UNDERTAKINGS
The
undersigned Registrant hereby undertakes:
To file,
during any period in which it offers or sells securities, a post-effective
amendment to this registration statement to:
(i)
|
Include
any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
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(ii)
|
Reflect
in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration
statement;
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(iii)
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Include
any additional or changed material information on the plan of
distribution; and
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(iv)
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Remove
from registration any of the securities that remain unsold at the end of
the offering.
|
That, for
determining liability under the Securities Act, the Registrant shall treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the
event that a claim for indemnification against such liabilities, (other than the
payment by the Registrant of expenses incurred and paid by a director, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding), is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
48
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bakersfield, California on April 12, 2010.
OFFSHORE
PETROLEUM CORP.
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|||
By: /s/
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John Rainwater
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||
Name:
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John
Rainwater
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||
Title:
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Chairman
of the Board, President and Chief
|
||
Executive
Officer
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE
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TITLE
|
DATE
|
||||
/s/
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John Rainwater
|
Director,
Chairman of the Board of
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April
12, 2010
|
|||
John
Rainwater
|
Directors,
President and Chief
|
|||||
Executive
Officer
|
||||||
/s/
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Mickey Wiesinger
|
Director,
Chief Financial Officer
|
April
12, 2010
|
|||
Mickey
Wiesinger
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and
Secretary
|
|||||
/s/
|
Ryan Bateman
|
Director
|
April
12, 2010
|
|||
Ryan
Bateman
|
||||||
/s/
|
Gary Adams
|
Director
|
||||
Gary
Adams
|
April
12, 2010
|
|||||
/s/
|
Howard Barth
|
Director
|
April
12, 2010
|
|||
Howard
Barth
|
|
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49