Imperial Resources, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - Imperial Resources, Inc.	v192652_ex32.htm
EX-31.2 - Imperial Resources, Inc.	v192652_ex31-2.htm
EX-31.1 - Imperial Resources, Inc.	v192652_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

Commission File Number 333-152160

IMPERIAL RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Nevada	83-0512922
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

123 West Nye Lane, Suite 129, Carson City, NV

(Address of principal executive offices)

(775) 884-9380

(Registrant’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required o submit and post such files). ¨ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if smaller

reporting company)

Smaller Reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

July 28, 2010: 40,000,000 common shares

IMPERIAL RESOURCES, INC.

FORM 10-Q

June 30, 2010

INDEX

		Page Number

PART I.	FINANCIAL INFORMATION

ITEM 1.	Financial Statements	1

	Balance Sheet as at June 30, 2010 (unaudited) and March 31, 2010	1

	Statement of Operations For the three month periods ended June 30, 2010 and 2009 and for the period from August 2, 2007 (Date of Inception) to June 30, 2010 (unaudited)	2

	Statement of Changes in Stockholders’ Deficiency For the three month period ended June 30, 2010 and for the period from August 2, 2007 (date of inception) to June 30, 2010 (unaudited)	3

	Statement of Cash Flows For the three month periods ended June 30, 2010 and 2009 and for the period from August 2, 2007 (Date of Inception) to June 30, 2010 (unaudited)	4

	Notes to the Financial Statements.	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

ITEM 3.	Quantitative and Qualitative Disclosure about Market Risk	12

ITEM 4.	Controls and Procedures	12

PART II.	OTHER INFORMATION	12

ITEM 1.	Legal Proceedings	12

ITEM 1A	Risk Factors	13

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13

ITEM 3.	Defaults Upon Senior Securities	13

ITEM 4.	Reserved	13

ITEM 5.	Other Information	13

ITEM 6.	Exhibits	13

	SIGNATURES	14

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms, or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual report on Form 10-K for the fiscal year ended March 31, 2010, filed on July 9, 2010.

As used in this Form 10-Q, “we,” “us,” and “our” refer to Imperial Resources, Inc., which is also sometimes referred to as the “Company.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

June 30, 2010

(Unaudited)

	June 30			March 31
	2010			2010

ASSETS

Current Assets
Cash	$	-		$	-
Accounts receivable		50,913			29,724

Total Current Assets		50,913			29,724

OIL AND GAS LEASE (Note 3)		897,424			898,712

Total Assets	$	948,337		$	928,436

CURRENT LIABILITIES
Accounts payable	$	56,922		$	41,563
Accounts Payable- related parties		35,779			31,340

Total Current Liabilities		92,701			72,903

NOTE PAYABLE (Note 4)		900,000			900,000

Total Liabilities	$	992,701		$	972,903

STOCKHOLDERS' DEFICIENCY
500,000,000 shares authorized, $0.001 par value, ;
40,000,000 shares issued and outstanding		40,000			40,000
Capital in excess of par value		43,525			39,625
Accumulated deficit during the exploration stage		(127,889	)		(124,092	)

Total Stockholders' Deficiency		(44,364	)		(44,467	)

	$	948,337		$	928,436

The accompanying notes are an integral part of these consolidated financial statements

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS

For three months ended June 30, 2010 and 2009 and for the period from

August 2, 2007 (date of inception) to June 30, 2010

(Unaudited)

							From Aug 2,
	Three Months			Three Months			2007 (date of
	ended			ended			Inception) to
	June 30 ,2010			June 30, 2009			June 30,2010

REVENUES
Oil and gas revenue	$	21,189		$	-		$	50,913
Less: Depletion		(1,288	)		-			(2,576	)
Operating costs		(4,670	)		-			(18,290	)
Net gain on oil and gas revenue		15,231			-			30,047

ADMINISTRATIVE EXPENSES
Accounting and audit		3,725			2,050			45,043
Consulting		-			-			20,000
Edgarizing		-			263			3,150
Exploration		-			-			11,217
Filing fees		-			-			50
Incorporation costs		-			-			1,479
Legal		-			-			8,913
Management fees		3,000			3,000			33,000
Office		122			211			1,752
Rent		600			600			6,600
Telephone		300			300			3,300
Transfer agent fees		31			-			1,955
Travel		-			-			1,474
Total expenses		7,778			6,424			137,933

Loss From Operations		7,453			(6,424	)		(107,886	)

OTHER EXPENSES
Interest on promissory note		(11,250	)		-			(20,003	)

NET LOSS	$	(3,797	)	$	(6,424	)	$	(127,889	)

NET LOSS PER COMMON SHARE
Basic	$	(0.00	)	$	(0.00	)

AVERAGE OUTSTANDING SHARES
Basic		40,000,000			40,000,000

The accompanying notes are an integral part of these consolidated financial statements

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

CONSOLIDATED STATEMENT IN STOCKHOLDERS' DEFICIENCY

Period August 2, 2007 (date of inception) to June 30, 2010

(Unaudited)

	Common Stock				Capital Excess			Accumulated
	Shares		Amount		of Par Value			Deficit
	#		$		$			$

Balance - August 2, 2007 (Date of Inception)		-	$	-	$	-		$	-

Issuance of common shares on October 31,2007		32,000,000		32,000		(29,000	)		-

Issuance of common shares on December 31,2007		8,000,000		8,000		29,625			-

Capital contributions - expenses		-		-		7,800			-

Net loss for the period ended Mar 31,2008		-		-		-			(45,549	)

Balance - March 31, 2008		40,000,000		40,000		8,425			(45,549	)

Capital contributions - expenses		-		-		15,600			-

Net loss for the year ended Jan 31,2009		-		-		-			(55,930	)

Balance - March 31, 2009		40,000,000		40,000		24,025			(101,479	)

Capital contributions - expenses		-		-		15,600			-

Net loss for the year end March 31, 2010		-		-		-			(22,613	)

Balance - March 31, 2010		40,000,000	$	40,000	$	39,625		$	(124,092	)

Capital contributions - expenses		-		-		3,900			-

Net loss for the year end June 30, 2010		-		-		-			(3,797	)

Balance - June 30, 2010		40,000,000	$	40,000	$	43,525		$	(127,889	)

The accompanying notes are an integral part of these consolidated financial statements

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

For three months ended June 30, 2010 and 2009 and for the period from

August 2, 2007 (date of inception) to June 30, 2010

(Unaudited)

	Three Months			Three Months			August 2, 2007
	ended			ended			to
	June 30,			June 30,			June 30,
	2010			2009			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(3,797	)	$	(6,424	)	$	(127,889	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Capital contributions - expenses		3,900			3,900			42,900
Depletion expense		1,288						2,576
Changes in accounts receivable		(21,189	)					(50,913	)
Changes in accounts payable		15,358			(5,188	)		56,922

NET CASH FLOWS USED IN OPERATING ACTIVITIES		(4,440	)		(7,712	)		(76,404	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Gas & Oil lease		(900,000	)		-			(900,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans from related parties		4,440			7,712			35,779
Note payable - purchase of Gas & Oil lease		900,000			0			900,000
Proceeds from issuance of common stock		-			0			40,625

NET CASH PROVIDED BY FINANCING ACTIVITIES		904,440			7,712			976,404

NET INCREASE IN CASH		-			-			-

CASH AT BEGINNING OF PERIOD		-			57			-

CASH AT END OF PERIOD	$	-		$	57		$	-

The accompanying notes are an integral part of these consolidated financial statements

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

1.	ORGANIZATION

The Company, Imperial Resources, Inc., was incorporated under the laws of the State of Nevada on August 2, 2007 with the authorized capital stock of 500,000,000 shares at $0.001 par value. The Company organized its wholly-owned subsidiary, Imperial Oil & Gas Inc. (“Imperial Oil”) under the laws of the State of Delaware on January 8, 2010.

The Company was organized for the purpose of acquiring and exploring a mineral property and later abandoned it. The Company has decided to focus its core activities on development and exploration of oil and gas assets in the United States through its wholly-owned subsidiary.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Basic and Diluted Net Income (loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidulutive and then only the basic per share amounts are shown in the report.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Imperial Resources, Inc. (parent) and its subsidiary, Imperial Oil & Gas Inc., from their inception. All significant intercompany accounts and balances have been eliminated in consolidation.

Impairment of Long-Lived Assets

The Company reviews and evaluates long-term assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 60-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35 Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Term Assets.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

On June 30, 2010 the Company had a net operating loss carry forward of $127,889 for income tax purposes. The tax benefit of approximately $38,300 from the loss carry forward has been fully offset by a valuation reserve because the future tax benefit is undeterminable since the Company is unable to establish a predictable projection of operating profits for future years. Losses will expire during 2031.

Foreign Currency Translations

Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Revenue Recognition

Revenue is recognized on the sale and delivery of a product or the completion of a service provided.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Environmental Requirements

At the report date environmental requirements related to the oil and gas leases acquired are unknown and therefore any estimate of any future cost cannot be made.

Recent Accounting Pronouncements

On December 31, 2008, the SEC issued the final rule, “Modernization of Oil and Gas Reporting” (“Final Rule”). The Final Rule adopts revisions to the SEC’s oil and gas reporting disclosure requirements and is effective for annual reports on Form 10-K for years ending on or after December 31, 2009. Early adoption of the Final Rule is prohibited. The revisions are intended to provide investors with a more meaningful and comprehensive understanding of oil and gas reserves to help investors evaluate their investments in oil and gas companies. The amendments are also designed to modernize the oil and gas disclosure requirements to align them with current practices and changes in technology. Revised requirements in the SEC’s Final Rule include, but are not limited to:

●

Oil and gas reserves must be reported using the average price over the prior 12 month period, rather than the year-end prices;

●

Companies will be allowed to report, on an optional basis, probable and possible reserves;

●

Non-traditional reserves, such as oil and gas extracted from coal and shales, will be included in the definition of “oil and gas producing activities”;

●

Companies will be permitted to use new technologies to determine proven reserves, as long as those technologies have been demonstrated empirically to lead to reliable conclusions with respect to reserve volumes;

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

●

Companies will be required to disclose, in narrative form, additional details on their proved undeveloped reserves (PUDs), including to total quantity of PUDs at year end, any material changes in PUDs that occurred during the year, investment and progress made to convert PUDs to developed oil and gas reserves and an explanation of the reasons why material concentrations of PUDs in individual fields or countries have remained undeveloped for five years or more after disclosure as PUDs;

●

Companies will be required to report the qualifications and measures taken to assure the independence and objectivity of any business entity or employee primarily responsible for preparing or auditing the reserve estimates.

The Company is currently evaluating the potential impact of the Final Rule. The SEC is discussion the Final Rule with FASB staff to align FASB accounting standards with the new SEC rules. These discussions may delay the required compliance date.

Oil and gas leases

The Company intends to drill for oil and natural gas on their leases. Drilling costs will be treated as work in progress until such time as the well has been finished and its commercial potential evaluated.

The Company follows the successful efforts method of accounting and will capitalize successful wells and related leasehold costs. These costs will be amortized using the unit of production method. Dry hole and related leasehold costs will be expensed. On June 30, 2010, the Company had one producing gas well.

3.	OIL AND GAS LEASE

On January 20, 2010, Coach Capital, LLC (“Coach”), an unrelated company, assigned to the Company’s wholly owned subsidiary a 14.9% working interest in the oil, gas and mineral leases in the Greater Garwood hydrocarbon exploration project located in Colorado County, Texas (the “Project”). The assignment was made subject to the terms and conditions of the leases and that certain unrecorded Participation Agreement dated November 5, 2008 between El Paso E & P Company, L.P. and Baytor Energy LLC, and the Carry Agreement dated October 27, 2009 between Baylor Energy LLC and Coach.

4.	NOTE PAYABLE

On January 19, 2010, Imperial Oil borrowed $900,000 from Coach pursuant to a promissory note issued to Coach. The outstanding balance under the note will accrue interest at 5% per annum and is due in full on January 19, 2013. If the note and accrued interest are not repaid in full between one year and three years after January 19, 2010, Coach will be paid 75% of the production revenue received by Imperial Oil from the lease, excluding the interest in the Cochran #1 well. If the note and accrued interest are not repaid in full after three years from January 19, 2010, Coach will be paid 100% of the net production revenue received by Imperial Oil from the lease, excluding the interest in the Cochran #1 well.

The interest on the Note for the period from issuance to June 30, 2010 is $11,250 and has been credited to accounts payable.

5.	SIGNIFICANT TRANSACTIONS WITH RELATED PARTY

Officers-directors and their families have no shares in the Company and have made no interest, demand loans to the Company of $35,779 and have made contributions to capital of $42,900 in the form of expenses paid for the Company.

6.	CAPITAL STOCK

On October 31, 2007, Company completed a private placement consisting of 195,450,000 post dividend common shares sold to directors and officers for a total consideration of $3,000. On December 31, 2007, the Company completed a private placement of 49,665,000 post dividend common shares a total consideration of $37,625. On November 3, 2009, the Company issued a stock dividend to shareholders of record whereby the Company issued sixty-five shares of its common stock for each share of common stock held by such investors. Subsequent to December 31, 2009, 165,750,000 post dividend common shares were returned to Treasury and later a further 29,465,000 post dividend common shares were cancelled and returned to Treasury leaving an outstanding balance of 49,900,000 common shares.

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

6.	CAPITAL STOCK - Continued

On April 29, 2010, a stockholder of the Company returned 9,900,000 shares of the Company’s common stock to treasury for cancellation. As a result, the number of shares of the Company’s common stock outstanding was reduced from 49,900,000 to 40,000,000.

The 40,000,000 post dividend common shares are shown from the date of inception.

7.	CONTRACTUAL COMMITMENTS

On January 19, 2010, Imperial Oil entered into a Net Profit Agreement whereby Imperial agreed to share profits from certain mutually beneficial oil and gas exploration and development opportunities in Canada and the continental United States (“Prospects”). Pursuant to the this Agreement, Imperial Oil granted Mara Energy, LLC (“Mara”), a Delaware corporation, an interest in the Prospects by way of a Net Profit Interest. The Net Profit Interest is an interest in the Prospects that entitles Imperial Oil to receive a monthly amount equal to 50% of the Net Proceeds resulting from the sale of petroleum substances obtained from the Prospects.

Mr. Robert Durbin, Imperial Oil’s Chief Executive Officer and Chairman of the Board, owns a 15% interest in Mara.

Consulting Service Agreement

On April 1, 2010, Imperial Oil & entered into a Consulting Service Agreement with Mara Energy, LLC. whereby Mara will provides services associated with any future development of Imperial Oil’s working interest in both the Greater Garwood oil and gas development exploration assets and the producing Cochran #1.

Royalty Agreement

On April 1, 2010, Imperial Oil entered into an Assignment of Overriding Royalty Interest Agreement whereby Imperial Oil agrees to pay Sydney Oil & Gas, LLC, a Texas limited liability company owned by Mr. Robert Durbin, a gross overriding royalty of 6.6% of 8/8 for each lease or working interest acquired by Imperial Oil.

On June 28, 2010, Imperial Oil and Gas, Inc., a Delaware corporation (“Imperial Oil”) and a wholly owned subsidiary of Imperial Resources, Inc., entered into a letter agreement (the “Hydro Letter Agreement”) with HydroFX Holding, Ltd. (“Hydro”) to fund an oil and gas waste water disposal operation located in Wise County, Texas (the “Venture”) contingent upon Hydro working out agreements with their creditors, acceptable to Imperial, to resolve its current obligations. Pursuant to the Hydro Letter Agreement, Imperial Oil agreed to loan $1,500,000 to Hydro, pursuant to the terms of a promissory note which may be converted, at the election of Imperial Oil, into a 40% ownership interest in the Venture. The funds contributed by Imperial Oil will be used to complete the drilling of the site as well as other operating costs.

8.	GOING CONCERN

The Company intends to seek business opportunities that will provide a profit. However, the Company does not have the working capital necessary to be successful in this effort and to service its debt, which raises substantial doubt about its ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional loans from related parties, and equity funding, which will enable the Company to operate for the coming year.

IMPERIAL RESOURCES, INC. AND SUBSIDIARY

(Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

9.	SUBSEQUENT EVENTS

On July 1, 2010, Imperial Oil entered into a participation agreement and joint operating agreement with OKT Resources, LLC (“OKT”) to acquire an undivided 70% working interest in two wells located on leases acquired by OKT. Pursuant to the participation agreement, Imperial Oil agreed to pay to OKT certain fees and costs for such wells, estimated at $1,744,475, including geologic prospect fees of both wells, drilling, and completion costs for one well.

On July 12, 2010, Imperial Oil entered into a participation agreement, area of mutual interest (AMI) agreement and joint operating agreement (the “Husky Agreements”) with Husky Ventures, Inc. (“Husky”) to acquire a 50% working interest in a horizontal oil and gas drilling project and 5,000 acres of acreage to be leased. Pursuant to the participation agreement, Imperial Oil agreed to pay to Husky an amount of $398,750 for 50% of the acreage costs plus Imperial Oil’s share of the drilling and completion expenses estimated at $1,503,225.

Other

The Company has evaluated subsequent events from the balance sheet date through to the date of this report and has found no material subsequent events to report.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

Background

We were incorporated under the laws of the State of Nevada on August 2, 2007. Our operations were initially focused on exploration of our mineral property located in the District of Andhra Pradesh, India. Exploration of that property did not locate any proven or probable mineral reserves. We have now shifted our business focus to oil and gas exploration and development. Our wholly-owned subsidiary, Imperial Oil and Gas, Inc. (“Imperial Oil” or “our subsidiary”), was incorporated under the laws of the State of Delaware on January 8, 2010 and also engages in oil and gas exploration and development.

On January 19, 2010, our subsidiary entered into a Net Profits Agreement (the “NPA”) with Mara Energy, LLC (“Mara”) whereby our subsidiary and Mara agreed to share profits from certain mutually beneficial oil and gas exploration and development opportunities in Canada and the continental United States (the “Prospects”). Pursuant to the NPA, our subsidiary granted Mara an interest in the Prospects by way of a “Net Profits Interest”. The Net Profits Interest is an interest in the Prospects that entitles our subsidiary to receive a monthly amount equal to 50% of the net proceeds resulting from the sale of petroleum substances obtained from the Prospects.

On January 19, 2010, our subsidiary borrowed $900,000 from Coach Capital, LLC (“Coach”) pursuant to a promissory note issued to Coach. The outstanding balance under the note will accrue interest at 5% per annum and is due in full on January 19, 2013. If the note and accrued interest are not repaid in full between 1 year and 3 years after January 19, 2010, Coach will be paid 75% of the net production revenue received by our subsidiary from the Project (as defined below), excluding the interest in the Cochran #1 well. If the note and accrued interest are not repaid in full after 3 years from January 19, 2010, Coach will be paid 100% of the net production revenue received by our subsidiary from the Project, excluding the interest in the Cochran #1 well.

On January 20, 2010, Coach assigned our subsidiary a 14.9% working interest in the oil, gas and mineral leases in the Greater Garwood hydrocarbon exploration project (the “Project”) located in Colorado County, Texas from Coach. The assignment was made subject to the terms and conditions of the leases and that certain unrecorded Participation Agreement dated November 5, 2008 between El Paso E&P Company, L.P. and Baytor Energy LLC, and the Carry Agreement dated October 27, 2009 between Baytor Energy LLC and Coach.

On April 1, 2010, our subsidiary entered into a Supply of Services Agreement with Sydney Oil & Gas, LLC (“Sydney Oil”), a Texas limited liability company owned by Robert R. Durbin, Sydney Oil’s CEO, whereby Mr. Durbin acting on behalf of Sydney Oil will provide services to our subsidiary related to the maintenance and development of our subsidiary’s oil and gas exploration and development interests. Additionally, our subsidiary and Sydney Oil entered into an Assignment of Overriding Royalty Interest, whereby our subsidiary agrees to pay Sydney Oil a gross overriding royalty of 6.5% of 8/8 for each lease or working interest acquired by our subsidiary.

On April 1, 2010, our subsidiary entered into a Consulting Services Agreement with Mara, whereby the parties agreed that Mara will provide services associated with any future development of Imperial Oil’s working interest in both the Greater Garwood oil and gas development exploration asset and the producing Cochran #1 well located in the Greater Garwood prospect in Colorado County, Texas.

In April 2010, we decided to concentrate our business efforts on the exploration and development of oil and gas assets in the United States, both independently and through our subsidiary.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements. A description of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended March 31, 2010. As of, and for the three months ended June 30, 2010, there have been no material changes or updates to our critical accounting policies.

Results of Operations

The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, filed on July 9, 2010.

The financial statements mentioned above have been prepared in conformity with U.S. GAAP and are stated in United States dollars.

Comparison of three month periods ended June 30, 2010 and June 30, 2009

For the three month periods ended June 30, 2010 and June 30, 2009, we incurred a comprehensive loss of $3,797 and $6,424, respectively. The decrease was largely attributed to an increase in oil and gas revenue.

Management fees for the three month period ended June 30, 2010 amounted to $3,000 compared to $3,000 in the same period of 2009. Accounting and audit expenses for the three month period ended June 30, 2010 amounted to $3,725 compared to $2,050, in the same period of 2009. General and administrative expenses for the three month period ended June 30, 2010 amounted to $1,053 compared to $1,374, in the same period of 2009.

We had revenue of $21,189 during the three month period ended June 30, 2010 compared to no revenue in the same period of 2009.

Period from inception, August 2, 2007 to June 30, 2010

We have an accumulated deficit during the development stage of $127,889.

As a development stage company, we currently have limited operations, principally directed at potential acquisition targets and revenue-generating opportunities.

Liquidity and Capital Resources

As of June 30, 2010, we had no cash and working capital deficiency of $44,364. During the three month period ended June 30, 2010, we funded our operations from the proceeds of equity and debt financing and our oil and gas revenues. We plan to continue to seek financings, and we believe that this will provide sufficient working capital to fund our operations for at least the next six months. Pursuant to the terms of the Carry Agreement, our subsidiary will be responsible for partially funding the Second Well (as defined in the Carry Agreement) to be developed in the Project. This and other possible changes in our operating plans, increased expenses, additional acquisitions, or other events, may require us to raise a significant amount of capital through equity or debt financings.

For the three month period ended June 30, 2010, we used net cash of $4,440 in operations. Net cash flow used in operating activities reflected a decrease in accounts receivable of $21,189 and an increase in accounts payable of $15,358.

Our management believes that we will be able to generate sufficient revenue or raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term and long-term obligations. However, there are no assurances that we will be able to raise the required working capital on favorable terms, or that such working capital will be available on any terms when needed.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer along with our Chief Financial Officer, of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e) and 15a-15(e)) as of the end of the period covered by this report (the “Evaluation Date”) pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer along with our Principal Financial Officer concluded that our disclosure controls and procedures are not effective as of the end of the period covered by this annual report in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses were identified:

●

Our Audit Committee does not function as an Audit Committee should since there is a lack of independent directors on the Committee and our Board of Directors has not identified an “expert”, one who is knowledgeable about reporting and financial statements requirements, to serve on the Audit Committee.

●	We have limited segregation of duties which is not consistent with good internal control procedures.

●	We do not have a written internal control procedurals manual which outlines the duties and reporting requirements of our Directors and any staff to be hired in the future. This lack of a written internal control procedurals manual does not meet the requirements of the SEC or good internal control.

● There are no effective controls instituted over financial disclosure and the reporting processes.

Our management feels the weaknesses identified above, being the latter three, have not had any affect on our financial results. Our management will have to address the lack of independent members on our Audit Committee and identify an “expert” for the Committee to advise other members as to correct accounting and reporting procedures.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls or in other factors that could affect our disclosure controls and procedures subsequent to the Evaluation Date, nor any deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A

RISK FACTORS

None.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

RESERVED

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

The following exhibits are included as part of this report by reference:

Exhibit Number		Name
3.1		Certificate of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on July 7, 2008, Registration No. 333-152160)

3.2		Articles of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on July 7, 2008, Registration No. 333-152160)

3.3		By-laws (incorporated by reference from our Registration Statement on Form S-1 filed on July 7, 2008, Registration No. 333-152160)

4		Specimen Stock Certificate (incorporated by reference from our Registration Statement on Form S-1 filed on July 7, 2008, Registration No. 333-152160)

10.1		Letter Agreement with HydroFX Holding, Ltd., dated June 28, 2010 (incorporated by reference from our Form 8-K filed on July 16, 2010)

10.2		Participation Agreement with OKT Resources, LLC, dated July 1, 2010 (incorporated by reference from our Form 8-K filed on July 16, 2010)

10.3		Letter Agreement with Husky Ventures, Inc., dated July 12, 2010 (incorporated by reference from our Form 8-K filed on July 16, 2010)

31.1		Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)

31.2		Rule 13a-14(d)/15d-14(d) Certification (Principal Financial Officer)

32		Section 1350 Certifications

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IMPERIAL RESOURCES, INC.

Date: August 6, 2010	By:	/s/ James Payyappilly
		James Payyappilly, President, Chief Executive Officer and Director (Principal Executive Officer)

Date: August 6, 2010	By:	/s/ Josey Sajan
		Josey Sajan, Chief Financial Officer, Chief Accounting Officer, Secretary and Director (Principal Financial Officer and Principal Accounting Officer)

Imperial Resources, Inc. Reports

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