SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 2010
| Avalon Oil & Gas, Inc. | ||
| (Exact name of registrant as specified in its charter) | ||
| Nevada | 1-12850 | 84-1168832 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS EmployerIdentification No.) |
| 7808 Creekridge Circle, Suite 105 | ||
| Minneapolis, MN 55439 | ||
| (Address of principal executive offices) (Zip Code) | ||
| (612) 359-9020 | ||
| Registrant's telephone number, including area code | ||
|
(Former name or former address, if changed since last report.)
|
||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 4 —Matters Related to Accountants and Financial Statements
Item 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On July 2, 2010, the officer of Avalon Oil & Gas, Inc. (the “Company”) authorized to take such action, after consultation with and upon recommendation from the Audit Committee of the Board of Directors of the Company, concluded the Company’s previously issued audited financial statements for the twelve months ended March 31, 2009 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2009, and all of the Company’s subsequent interim financial statements filed with the Securities and Exchange Commission prior to the fiscal year ended March 31, 2010, should no longer be relied upon and that disclosure should be made and action should be taken to prevent future reliance. The Company’s audited financial statements for the twelve months ended March 31, 2010 and March 31, 2009, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010, should be relied upon rather than the financial statements filed with the Securities and Exchange Commission prior to this date.
Such conclusion is based upon the following: The $481,072 referred to in the schedule on page F-31 of the audited financial statements for the twelve months ended March 31, 2010 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010 containing a comparison of the standardized measure of discounted future net cash flows to the net carrying value of proved natural gas and oil properties at March 31, 2010 is a result of a ceiling test write-down in accordance with Rule 4-10(c)(4) of Regulation S-X. $93,999 of this amount was written-down during the year ended March 31, 2007, and the balance of $387,073, was written down during the year ended March 31, 2009. There was no write-down in our financial statements for the year ended March 31, 2009 as originally filed with the SEC on July 14, 2009. We have included below our re-stated financial statements for the year ended March 31, 2009:
Avalon Oil and Gas, Inc.
Condensed Consolidated Balance Sheets
UNAUDITED
|
March 31, 2009
|
||||
|
Assets
|
RE-STATED
|
|||
|
Current assets
|
||||
|
Cash and cash equivalents
|
$ | 26,406 | ||
|
Accounts receivable
|
40,827 | |||
|
Deposits and prepaid expenses
|
43,340 | |||
|
Receivable from joint interests
|
159,208 | |||
|
Notes receivable
|
- | |||
|
Total current assets
|
269,781 | |||
|
Property and equipment, net
|
28,190 | |||
|
Unproven oil and gas properties
|
2,274,722 | |||
|
Producing oil and gas properties, net
|
421,440 | |||
|
Goodwill
|
- | |||
|
Intellectual property rights, net
|
962,583 | |||
|
Total assets
|
$ | 3,956,716 | ||
|
Liabilities and stockholders' deficit
|
||||
|
Current liabilities
|
||||
|
Accounts payable and accrued liabilities
|
$ | 744,892 | ||
|
Accrued liabilities-related parties
|
34,468 | |||
|
Dividends payable to related party
|
- | |||
|
Accrued liabilities to joint interests
|
42,265 | |||
|
Notes payable, net of discount
|
600,982 | |||
|
Total current liabilities
|
1,422,607 | |||
|
Accrued ARO liability
|
67,865 | |||
|
|
1,490,472 | |||
|
Commitments and contingencies
|
- | |||
|
Stockholders' deficit
|
||||
|
Preferred stock, Series A, $0.10 par value,
1,000,000 shares authorized; 100 shares
|
||||
|
issued and outstanding
|
500,000 | |||
|
Common stock, $0.001 par value; 50,000,000
shares authorized; 98,278,193
|
||||
|
shares issued and outstanding at March 31,
|
||||
|
2009
|
98,278 | |||
|
Additional paid-in capital
|
26,761,738 | |||
|
Common stock subscribed
|
3,175 | |||
|
Accumulated deficit
|
(24,896,947 | ) | ||
|
Total stockholder's equity
|
2,466,244 | |||
|
Total liabilities and stockholders' equity
|
$ | 3,956,716 | ||
Avalon Oil and Gas, Inc.
Condensed Consolidated Statements of Operations
UNAUDITED
|
|
For the
|
|||
|
Year Ended
|
||||
|
March 31, 2009
|
||||
|
|
||||
|
Oil and gas sales
|
$ | 320,712 | ||
|
Operating expenses:
|
||||
|
Lease operating expense, severance taxes
|
||||
|
and ARO accretion
|
71,970 | |||
|
Selling, general and administrative expenses
|
1,245,812 | |||
|
Stock based compensation
|
430,420 | |||
|
Acquisition costs
|
122,500 | |||
|
Impairment of producing wells
|
387,073 | |||
|
Depreciation, depletion, and amortization
|
346,994 | |||
|
Total operating expenses
|
2,604,769 | |||
|
Operating loss
|
(2,284,057 | ) | ||
|
Other expense:
|
||||
|
Interest (income) expense, net
|
43,472 | |||
|
Loss on sale of minority interest
|
37,500 | |||
|
Loss on sale of property
|
16,000 | |||
|
Total other (income) expense
|
96,972 | |||
|
Loss before taxes
|
(2,381,029 | ) | ||
|
Provision for taxes
|
- | |||
|
Net loss before minority interest
|
(2,381,029 | ) | ||
|
Net loss
|
(2,381,029 | ) | ||
|
Preferred stock dividend
|
(40,000 | ) | ||
|
Net loss attributable to common stock after preferred stock dividends
|
$ | (2,421,029 | ) | |
|
Net loss per share - basic and diluted
|
$ | (0.04 | ) | |
|
Weighted average shares outstanding - basic and diluted
|
57,636,261 | |||
Avalon Oil and Gas, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(A Development Stage Company)
|
For the
|
||||
|
Year Ended
|
||||
|
March 31,
|
||||
|
2009
|
||||
|
Cash flows from operating activities:
|
||||
|
Net loss
|
$ | (2,381,029 | ) | |
|
Adjustments to reconcile net loss to net
|
||||
|
cash used in operating activities:
|
||||
|
Loss on sale of minority interest in Bedford Energy assets
|
37,500 | |||
|
Loss on sale of oil and gas property
|
16,000 | |||
|
Write-off note receivable
|
25,000 | |||
|
Non-cash compensation
|
430,420 | |||
|
Impairment of goodwill
|
33,943 | |||
|
Impairment of producing wells
|
387,073 | |||
|
Depreciation
|
13,915 | |||
|
Depletion
|
102,526 | |||
|
Depreciation of ARO liability
|
2,898 | |||
|
Amortization of discount on notes payable
|
7,792 | |||
|
Amortization of intangible assets
|
220,822 | |||
|
Net change in operating assets and liabilities:
|
||||
|
Accounts receivable
|
(17,354 | ) | ||
|
Joint Interest receivable
|
(159,208 | ) | ||
|
Prepaid expenses
|
69,647 | |||
|
Accounts payable and other accrued expenses
|
121,026 | |||
|
Due to related party
|
42,265 | |||
|
Asset retirement obligation
|
5,795 | |||
|
Net cash used in operating activities
|
(1,040,969 | ) | ||
|
Cash flows from investing activities:
|
||||
|
Purchase of Bedford Energy assets
|
(900,000 | ) | ||
|
Purchase of interests in Grace wells
|
(45,194 | ) | ||
|
Sale of a minority interest in Bedford Energy assets
|
262,500 | |||
|
Principal payment received on note receivable
|
65,000 | |||
|
Purchase of fixed assets
|
(1,000 | ) | ||
|
Disposal to oil and gas properties
|
10,000 | |||
|
Additions to oil and gas properties
|
(131,527 | ) | ||
|
Net cash used in investing activities
|
(740,221 | ) | ||
|
Cash flows from financing activities:
|
||||
|
Proceeds from sale of common stock, net of costs
|
1,044,191 | |||
|
Proceeds from notes payable
|
660,000 | |||
|
Issuance of common stock for finders fee
|
122,217 | |||
|
Issuance of common stock for equity financing, net of fees
|
(32,500 | ) | ||
|
Payments on note payable
|
(95,000 | ) | ||
| 1,698,908 | ||||
|
Net cash provided by financing activities
|
||||
|
Net increase (decrease) in cash and cash equivalents
|
(82,282 | ) | ||
|
Cash and cash equivalents at beginning of period
|
108,688 | |||
|
Cash and cash equivalents at end of period
|
$ | 26,406 | ||
The related, revised disclosures on page F-9 of the audited financial statements for the twelve months ended March 31, 2009 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2009 are as follows:
“During the years ended March 31, 2009 and 2008, the Company recognized impairment expense of $387,073 and $0, respectively.”
The Company’s audited financial statements for the twelve months ended March 31, 2010, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010, corrects this error.
The Company, has discussed the foregoing matters with the Company’s independent registered public accounting firm, Bernstein & Pinchuk LLP, Inc., which concurs with the conclusion of the Company to take such action.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Avalon Oil & Gas, Inc. | |||
|
Date: July 23, 2010
|
By:
|
/s/ Kent Rodriguez | |
| Kent Rodriguez | |||
| President | |||