Attached files
file | filename |
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EX-32.1 - Avant Diagnostics, Inc | v197003_ex32-1.htm |
EX-31.1 - Avant Diagnostics, Inc | v197003_ex31-1.htm |
EX-31.2 - Avant Diagnostics, Inc | v197003_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended July 31,
2010
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from ________ to ________
COMMISSION
FILE NUMBER 000-54004
AMERICAN
LIBERTY PETROLEUM CORP.
(Exact name of
registrant as specified in its charter)
Nevada
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98-0599151
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(State
or other jurisdiction of incorporation or
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(I.R.S.
Employer Identification No.)
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organization)
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4900
California Ave, Tower B-210
Bakersfield,
CA 93309
(Address
of principal executive offices)
(661)
377-2911
(Registrant’s
telephone number, including area code)
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.
Yes x 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 to submit and post such files).Yes ¨ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company x
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Indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨
No x
As of
September 17, 2010, there were 91,887,500 shares of the registrant’s common
stock, $0.00001 par value, issued and outstanding.
INDEX
Page
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PART
I
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FINANCIAL
INFORMATION
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Item
1. Financial Statements
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3
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Balance
Sheets – July 31, 2010 (Unaudited) and October 31, 2009
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3
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Statements
of Operations (Unaudited) – the three- and nine-month periods ended July
31, 2010 and 2009, and for the period from October 16, 2008
(Inception) to July 31, 2010
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4
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Statements
of Cash Flows (Unaudited) – the nine-month periods ended July 31, 2010 and
2009, and for the period from October 16, 2008 (Inception) to July
31, 2010
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5
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Notes
to the Financial Statements (Unaudited)
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6
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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9
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Item
3. Quantitative and Qualitative Disclosures About Market
Risk
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12
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Item
4. Controls and Procedures
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12
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PART
II
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OTHER
INFORMATION
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Item
1. Legal Proceedings
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13
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Item
1A. Risk Factors
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13
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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13
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Item
3. Defaults Upon Senior Securities
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13
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Item
4. Submission of Matters to a Vote of Security Holders
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13
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Item
5. Other Information
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14
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Item
6. Exhibits
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14
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EX-10.1
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EX-31.1
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EX-31.2
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EX-32.1
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Signatures
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14
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2
PART
I - FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS.
AMERICAN
LIBERTY PETROLEUM CORP.
(Formerly
known as Oreon Rental Corporation)
(AN
EXPLORATION STAGE COMPANY)
BALANCE
SHEETS
July 31,
|
October 31,
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|||||||
2010
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2009
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
Assets
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||||||||
Cash
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$ | 27,760 | $ | - | ||||
Prepaid
Assets
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156,250 | - | ||||||
Total
current assets
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184,010 | - | ||||||
Oil
and gas properties (full cost method)
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477,069 | - | ||||||
Total
assets
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661,079 | - | ||||||
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
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||||||||
Current
Liabilities
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||||||||
Accounts
Payable and accrued liabilities
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$ | 67,405 | $ | 1,882 | ||||
Total
current liabilities
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67,405 | 1,882 | ||||||
Total
liabilities
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67,405 | 1,882 | ||||||
Commitments
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||||||||
SHAREHOLDERS'
EQUITY (DEFICIT)
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||||||||
Common
Stock, $.00001 par value,450,000,000 authorized
|
||||||||
91,887,500
and 175,700,000 issued and outstanding at
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||||||||
July
31, 2010 and October 31, 2009 respectively
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1,899 | 1,757 | ||||||
Treasury
Stock
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(980 | ) | - | |||||
Additional
paid in capital
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933,152 | 30,245 | ||||||
Deficit
accumulated during the exploration stage
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(340,397 | ) | (33,884 | ) | ||||
Total
shareholders' equity(deficit)
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593,674 | (1,882 | ) | |||||
Total
liabilities and shareholders' equity (deficit)
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$ | 661,079 | $ | - |
The
accompanying notes form an integral part of these financial
statements
3
AMERICAN
LIBERTY PETROLEUM CORP.
(Formerly
known as Oreon Rental Corporation)
(AN
EXPLORATION STAGE COMPANY)
STATEMENTS
OF OPERATIONS
THREE
AND NINE MONTHS ENDED JULY 31, 2010 AND 2009 AND PERIOD
FROM
OCTOBER 16, 2008 (INCEPTION) THROUGH JULY 31, 2010
(Unaudited)
Three Months Ended
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Nine Months Ended
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Inception
Through
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||||||||||||||||||
July 31,
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July 31,
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July 31,
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||||||||||||||||||
2010
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2009
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2010
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2009
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2010
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Operating
expenses
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||||||||||||||||||||
General
and administrative
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$ | 220,988 | $ | 4,649 | $ | 306,513 | $ | 18,686 | $ | 340,397 | ||||||||||
Loss
from Operations
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$ | ( 220,988 | ) | $ | (4,649 | ) | $ | (306,513 | ) | $ | (18,686 | ) | $ | (340,397 | ) | |||||
Net
loss
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$ | (220,988 | ) | $ | (4,649 | ) | $ | (306,513 | ) | $ | (18,686 | ) | $ | (340,397 | ) | |||||
Net
loss per share:
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||||||||||||||||||||
Basic
and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
Weighted
average shares outstanding:
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||||||||||||||||||||
Basic
and diluted
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136,977,853 | 175,700,000 | 162,884,753 | 167,461,538 |
The accompanying notes form an
integral part of these financial statements
4
AMERICAN
LIBERTY PETROLEUM CORP.
(Formerly
known as Oreon Rental Corporation)
(AN
EXPLORATION STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
NINE
MONTHS ENDED JULY 31, 2010 AND 2009 AND PERIOD
FROM
OCTOBER 16, 2008 (INCEPTION) THROUGH JULY 31, 2010
(Unaudited)
Inception
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||||||||||||
Nine Months Ended
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Through
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|||||||||||
July 31,
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July 31,
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|||||||||||
2010
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2009
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2010
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||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
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$ | (306,513 | ) | $ | (18,686 | ) | $ | (340,397 | ) | |||
Net
loss
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||||||||||||
Adjustment
to reconcile net loss to net
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||||||||||||
cash
used in operating activities
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||||||||||||
Donated
consulting services and expenses
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- | 4,500 | 6,500 | |||||||||
Imputed
interest on related party advance
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- | - | 2 | |||||||||
Changes
in:
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||||||||||||
Prepaid
assets
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(156,250 | ) | - | (156,250 | ) | |||||||
Accounts
payable
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65,523 | 476 | 67,405 | |||||||||
NET
CASH USED IN OPERATING ACTIVITIES
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(397,240 | ) | (13,710 | ) | (422,740 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||||||
Purchase
of oil and gas properties
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(175,000 | ) | - | (175,000 | ) | |||||||
NET
CASH USED IN INVESTING ACTIVITIES
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(175,000 | ) | - | (175,000 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||||||
Proceeds
from Common stock and other securities issued for cash
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600,000 | 25,500 | 625,500 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
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600,000 | 25,500 | 625,500 | |||||||||
NET
INCREASE IN CASH
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27,760 | 11,790 | 27,760 | |||||||||
Cash,
beginning of period
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- | 100 | - | |||||||||
Cash,
end of period
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$ | 27,760 | $ | 11,890 | $ | 27,760 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
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||||||||||||
Common
stock and warrants issued for oil and gas leases
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$ | 302,069 | $ | - | $ | 302,069 |
The accompanying notes form an
integral part of these financial statements
5
AMERICAN
LIBERTY PETROLEUM CORP.
(Formerly
known as Oreon Rental Corporation)
(An
Exploration Stage Company)
NOTES
TO THE FINANCIAL STATEMENTS
July
31, 2010
(Unaudited)
Note 1 –
Basis of Presentation
The
accompanying unaudited interim financial statements of American Liberty
Petroleum Corp. (“ALP” or the “Company”) have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules and regulations of the Securities and Exchange Commission (the “SEC”) for
interim financial reporting. Accordingly, these financial statements do not
include all information and footnote disclosures required for an annual set of
financial statements prepared under United States generally accepted accounting
principles. In the opinion of our management, all adjustments, consisting of
normal recurring adjustments, considered necessary for a fair presentation of
the financial position, results of operations and cash flows as of July 31, 2010
and for all interim periods presented herein have been reflected in these
financial statements and the notes thereto. Interim results for the three-
and nine-month periods ended July 31, 2010 are not necessarily indicative
of the results to be expected for the fiscal year as a whole. These
financial statements should be read in conjunction with the audited financial
statements and accompanying notes included in our Annual Report on Form 10-K for
the fiscal year ended October 31, 2009. Notes to the financial statements which
would substantially duplicate the disclosures contained in the audited financial
statements for the fiscal year ended October 31, 2009, as reported herein, have
been omitted.
As used in this Quarterly Report, the terms “we,” “us,” “our,”
“ALP” and “the Company” mean American Liberty Petroleum Corp. unless otherwise
indicated. All dollar amounts in this Quarterly Report are in U.S. Dollars
unless otherwise stated.
Certain
amounts in the 2009 financial statements have been reclassified to conform to
the 2010 financial presentation.
On June
14, 2010, the Company filed an amendment to its Articles of Incorporation with
the Nevada Secretary of State, which included the following
amendments:
|
1.
|
A
change in the Company’s name from Oreon Rental Corporation to American
Liberty Petroleum Corp,
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2.
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An
increase in the number of authorized shares of Common Stock from
75,000,000 to 450,000,000.
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3.
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A
new Article authorizing the Board of Directors to adopt, alter, amend or
repeal the Bylaws of the Company, including any Bylaw adopted by the
stockholders.
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4.
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A
new Article stating that the Company may indemnify a director or officer
of the Company to the fullest extent allowed by Nevada law, and may
indemnify any other person for whom indemnification is allowed by Nevada
law, and to purchase insurance for this
purpose.
|
Note 2 -
Oil and Gas Properties
The
Company follows the full cost accounting method to account for oil and gas
properties, whereby costs incurred in the acquisition, exploration and
development of oil and gas reserves are capitalized. Such costs include
lease acquisition, geological and geophysical activities, rentals on
non-producing leases, drilling, completing and equipping of oil and
gas wells and administrative costs directly attributable to those
activities and asset retirement costs. Disposition of oil and gas
properties are accounted for as a reduction of capitalized costs, with no
gain or loss recognized unless such adjustment would significantly alter the
relationship between capital costs and proved reserves of oil and gas, in
which case the gain or loss is recognized to income.
The
capitalized costs of oil and gas properties, excluding unevaluated and unproved
properties, are amortized using the units-of-production method based on
estimated proved recoverable oil and gas reserves. Amortization of unevaluated
and unproved property costs begins when the properties become proved or their
values become impaired. Impairment of unevaluated and unproved
prospects is assessed periodically based on a variety of factors, including
management’s intention with regard to future exploration and development of
individually significant properties and the ability of the Company to obtain
funds to finance such exploration and development.
Oil and
gas properties at July 31, 2010 consist solely of the acquisition
costs incurred by the Company because no explorations have occurred as
discussed in Note 6.
Note 3 –
Recently Issued Accounting Pronouncements
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 is
effective for reporting periods ending on or after December 31,
2009. The adoption of ASC 810 did not have any impact on the
Company’s financial statements.
6
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
10-K for fiscal years ending on or after December 31, 2009. The
adoption of this rule did not have any impact on the Company’s financial
disclosures.
Note 4 –
Related Party Transactions
On
January 11, 2010, the sole director advanced $100 to the Company, which was used
to open bank accounts. In February 2010, the Company agreed to pay director fees
of $8,500 per month to Diamante Services Ltd. in exchange for Mr. Alvaro
Vollmers’ services as director of the Company.
On June
30, 2010 the Company reimbursed the director the $100 used to open the bank
account.
Note 5 –
Capital Stock
ALP has
completed several private placements of equity interest Units since the
beginning of the year. Each Unit has consisted of 1 share of Common
Stock, and 1 warrant to buy a share of Common Stock at an exercise price of
approximately $0.091 any time within 3 years after issuance. In each case, the
Units were sold to a single purchaser at a price of approximately $0.057 per
Unit. For each of the following issuances, the relative fair market value of the
warrants issued was approximately 49% of the proceeds.
All
issuances of Common Stock, and descriptions of the number of shares of Common
Stock issuable upon the exercise of a warrant, have been retroactively adjusted,
if necessary, to reflect the 70:1 forward stock split effective June 25, 2010,
which is described in more detail below.
On
February 19, 2010 ALP completed a private placement of 875,000
Units. The gross proceeds of the offering were $50,000, which were
used to pay general operating expenses.
On April
27, 2010, ALP completed a private placement of 875,000 Units. The gross
proceeds of the offering were $50,000, which were used to pay a portion of the
payments due under the Option Agreement discussed in Note 6 and the
Company’s general operating expenses.
On April
30, 2010, ALP completed a private placement of 5,250,000 Units. The gross
proceeds of the offering were $300,000, which were used to pay a portion of the
payments due under the Option Agreement discussed in Note 6 and the
Company’s general operating expenses.
On May 4,
2010, Dzvenyslava Protskiv, the former founder and CEO of the Company at its
time of inception, transferred 108,500,000 shares of Common Stock to Alvaro
Vollmers for cash consideration of $155, pursuant to a stock purchase agreement.
Mr. Vollmers is President, Secretary, Treasurer, and the sole director of the
Company. Mr. Vollmers used his personal funds for the purchase of those
shares.
On May 4,
2010, Ms. Protskiv transferred 31,500,000 shares of Common Stock to John G.
Rhoden for cash consideration of $45, pursuant to a stock purchase agreement.
Mr. Rhoden used his personal funds for the purchase of those shares. As a
consequence of the two sales on May 4, 2010, Ms. Protskiv transferred all shares
that had been issued to her by the Company.
On May
24, 2010, Alvaro Vollmers transferred 98,000,000 shares of Common Stock to the
Company. The Company intends to hold these shares in treasury until
cancelled by further action by the board of directors. Mr. Vollmers
received no consideration from the Company for the shares he transferred.
Immediately prior to the stock transfer described above, Mr. Vollmers owned
108,500,000 shares of Common Stock, or 59.4% of the issued and outstanding
shares of Common Stock. Immediately after the stock transfer, Mr. Vollmers owned
10,500,000 shares of Common Stock, or approximately 12.4% of the issued and
outstanding shares of Common Stock.
7
On May
25, 2010, the Company issued 2,187,500 shares of Common Stock to New World
Petroleum Corp. at a price of approximately $0.057 per share, as repayment of an
$125,000 installment paid on behalf of the Company under the Option Agreement
discussed in Note 6.
On June
2, 2010, the Company completed a private placement of 3,500,000 Units, with each
Unit consisting of 1 share of Common Stock, and 1 warrant to buy a share of
Common Stock at an exercise price of approximately $0.091 any time within 3
years after issuance. The Units were sold to a single purchaser at a price
of approximately $0.057 per Unit. The gross proceeds of the offering were
$200,000, which were used to make certain payments under the Option
Agreement.
On June
24, 2010, the Company received approval from FINRA to proceed with a 70:1
forward split of its Common Stock (the “Stock Split”) and a change of the
Company’s name to American Liberty Petroleum Corp. Consistent with
the approval by FINRA, the Stock Split was made effective June 25,
2010. As of such date, each existing share of the Company’s Common
Stock was reclassified and changed into seventy (70) new shares, and each
holder of the Company’s Common Stock was entitled to receive, upon delivery
of an existing stock certificate, a new certificate or certificates
representing seventy (70) shares for each one (1) share of Common Stock
represented by the existing certificate or certificates of such holder at the
close of business on such date.
The Stock
Split was approved by Alvaro Vollmers, the sole director of the Company, and
stockholders holding at least a majority of the issued and outstanding shares of
the Company, acting by written consent, as disclosed on the Company’s Current
Report on Form 8-K filed with the SEC on May 24, 2010.
On June
30, 2010 the Company issued 1,500,000 shares of restricted Common Stock to
Desert Discoveries to fulfill the Company’s obligation under the Option
Agreement discussed in Note 6.
On July
4, 2010 the Company issued warrants to purchase 1,600,000 shares of Common Stock
to Desert Discoveries to fulfill the Company’s obligation under the Option
Agreement discussed in Note 6.
Note 6 –
Commitments
On May
11, 2010, ALP and Desert Discoveries, LLC, a Nevada limited liability company
(“Desert Discoveries”), entered into an Option Agreement (the “Option
Agreement”) under which Desert Discoveries granted ALP an option (the
“Desert Discoveries Option”) to purchase Desert Discoveries’ interest in five
oil and gas leases covering an aggregate of 9,877.28 acres of land in Nye,
Esmeralda and Mineral Counties, Nevada (the “Leases”). The Company’s
right to exercise the Desert Discoveries Option is subject to the terms of the
Option Agreement. As partial consideration for the Desert Discoveries
Option, ALP has paid a signing fee and an initial option fee totaling $300,000,
and must place another $600,000 in an escrow account, which Desert
Discoveries will use to develop the Leases prior to their acquisition by
ALP. As of July 31, 2010, the Company has paid the first installment of $150,000
of the $600,000 into an escrow account. A second payment of $250,000 is due on
or before October 4, 2010 and the last payment of $200,000 is due on or before
January 4, 2010. The
Company may exercise its option at any time until March 4, 2011, by providing at
least 30 days’ notice to Desert Discoveries and paying an additional $100,000
above the amount to be placed in escrow.
The Company does not have the funds currently available to make
all of the remaining payments required under the Option Agreement. If the
Company is not successful in raising sufficient funds in the time required, or
if it otherwise fails to timely make all payments as noted in the
Option Agreement, then Desert Discoveries may terminate the Option
Agreement and keep all funds paid prior to the date of termination, including
any shares of Common Stock and Warrants (defined below) issued to Desert
Discoveries prior to such termination.
In
addition to the cash payments, the Company issued 1,500,000 shares of Common
Stock (the “Restricted Shares”) to Desert Discoveries, along with warrants to
purchase 1,600,000 shares of Common Stock for $0.75 per share (the “Warrants”),
at any time until May 11, 2015. The number of Restricted Shares reflected
the Stock Split. The Restricted Shares issued to Desert
Discoveries were not registered under the Securities Act of 1933, as
amended, or any state securities laws, and are subject to all applicable
restrictions on sale under such laws. The Common Stock and Warrants were valued
at $85,714 and $91,355, respectively, and are included in Oil and Gas
Properties. In addition, the Restricted Shares and Warrants are subject to
the following restrictions on transfer and exercise, respectively:
|
-
|
500,000
of the Restricted Shares became transferrable, and 500,000 of the Warrants
became exercisable, on July 4,
2010;
|
|
-
|
500,000
of the Restricted Shares shall become transferrable, and 500,000 of the
Warrants shall become exercisable, on January 4, 2011;
and
|
|
-
|
500,000
of the Restricted Shares shall become transferrable, and 600,000 of the
Warrants shall become exercisable, on July 4,
2011.
|
8
Note 7 –
Going Concern
There are
no assurances that the Company will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations; or (2)
obtain additional financing through private placements, public offerings and/or
bank financings necessary to support the Company’s working capital requirements.
To the extent that funds generated from any private placements, public offerings
and/or bank financings are insufficient to support the Company’s working capital
requirements, the Company will have to raise additional working capital from
alternative financing sources. No assurance can be given that alternative
financing will be available, or if available, will be on terms acceptable to the
Company. If adequate working capital is not available, then the Company may
not be able to continue its operations.
These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.
Forward-Looking
Statements
Certain
statements contained in this Quarterly Report on Form 10-Q constitute
“forward-looking statements”. These forward-looking statements, which may be
identified by words such as “plan,” “anticipate,” “believe,” “estimate,”
“should,” “expect” and similar expressions include our expectations and
objectives regarding our future financial position, operating results and
business strategy. The Company’s forward-looking statements reflect the current
views of management with respect to future events and are subject to risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from those
described in the forward-looking statements. Such risks and uncertainties
include those set forth under Item 1A. “Risk Factors” of the Company’s Annual
Report on Form 10-K for the fiscal year ended October 31, 2009. We advise you to
carefully review the reports and documents we file from time to time with the
SEC, particularly our periodic reports filed with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The
Company cautions readers not to place undue reliance upon any forward-looking
statement contained in this Quarterly Report. Forward-looking statements
speak only as of the date they were made and the Company assumes no obligation
to update or revise any such statements upon any change in applicable
circumstances.
OVERVIEW
The
Company was incorporated on October 16, 2008 in the State of Nevada as “Oreon
Rental Corporation”. At the time of its incorporation, the management of the
Company intended to operate electronics rental stores in Ternopil and other
similar cities throughout Ukraine. However, at the time of its incorporation and
its initial public offering of common stock in October 2008, the Company did not
own any such stores, nor did it have any ongoing business
operations. The Company underwent a change in management in January
2010. See Note 5 to the Financial Statements. Following the
change in management, the Company decided not to proceed with its original plan
of operations and to shift its business focus to that of an independent oil and
gas company engaged in the acquisition, drilling and production of oil and
natural gas properties and prospects. The Company anticipates
implementing this new business focus by pursuing interests in oil and natural
gas properties by acquiring leases, such as the Gas Leases that it may acquire
by exercising the Desert Discoveries Option described below. The Company plans
to act as a non-operator, which means the Company will not directly manage
exploration, drilling or development activities, but instead will seek joint
ventures with oil and gas companies that have exploration, development and
drilling expertise.
Option
Agreement
On May
11, 2010, the Company and Desert Discoveries entered into an Option Agreement,
under which Desert Discoveries granted the Company an option to
purchase Desert Discoveries’ interest in the Leases covering an aggregate of
9,877.28 acres of land located in Nye, Esmeralda and Mineral Counties, Nevada,
subject to the Company’s performance of its obligations under the Option
Agreement. See Note 6 to the Financial Statements.
9
As of
July 31, 2010, the Company has paid Desert Discoveries option fees totaling
$300,000. The Company has placed an additional $150,000 into an escrow
account. The Company must make additional payments into
the escrow account of $250,000 and $200,000 on October 4, 2010 and January 4,
2011, respectively. See Note 6 to the Financial Statements. The
Company has also issued 1,500,000 shares of Common Stock, and Warrants to
purchase 1,600,000 shares of Common Stock at $.75 per share, to Desert
Discoveries as additional consideration. See Part II, Item 4, “Unregistered Sales of Equity
Securities and Use of Proceeds”. The Company may exercise the Desert
Discoveries Option at any time until March 4, 2011, if the required payments
have been made, by providing at least 30 days’ notice to Desert
Discoveries and paying an additional $100,000.
The
Company does not have the funds currently available to make all of the remaining
payments required under the Option Agreement. The Company is currently in
the process of seeking one or more investors to provide the funds to make the
$250,000 payment required on October 4, 2010 under the Option Agreement. The
Company will need to raise such funds in one or more financing transactions
prior to the October 4, 2010 and January 4, 2011 due dates. If the Company is
not successful in raising sufficient funds in the time required, or if it
otherwise fails to timely make all payments as required in the Option Agreement,
then Desert Discoveries may terminate the Option Agreement and keep all funds
paid prior to the date of termination, including any shares of Common Stock and
Warrants issued to Desert Discoveries prior to such termination.
The
Option Agreement also grants to Desert Discoveries a right of first refusal
to participate in any future stock offerings at the greater of one cent ($0.01)
or the then-actual offering price to the extent required to maintain Desert
Discoveries’ ownership interest in the Company on the closing date. If the
Company proposes to make an offering of shares or securities convertible into
shares of Common Stock, the Company shall notify Desert Discoveries of its
right to purchase its pro rata share of such convertible securities, defined as
the ratio between the number of outstanding shares of Common Stock owned by
Desert Discoveries and the aggregate number of shares of Common Stock owned
by all stockholders, on a fully diluted basis. Desert Discoveries may
exercise its rights of first refusal by providing written notice to the Company
within 10 days of receiving the Company’s notice. If Desert
Discoveries does not timely exercise its rights of first refusal, or only
exercises them as to certain of the securities that it could purchase, then the
Company may sell those remaining securities to another party on the same
conditions as were offered to Desert Discoveries for 90 days after the end of
the Desert Discoveries’ 10-day option period. The rights of first refusal
granted to Desert Discoveries do not apply to stock dividends, securities issued
in exchange of other securities of the Company, or in connection with the
acquisition of another company by the Company in a merger or asset purchase,
securities issuable under stock options or instruments convertible into shares
of the Company that are currently outstanding, and any options or shares of
securities that may be granted under any employee stock option
plan.
In
connection with the Option Agreement, the Company has pursued discussions with
High Sierra Exploration, LLC (“High Sierra”) and with Nancy Fagen (“Fagen”) to
enter into two separate joint operator agreements for the development of the
Leases. To date, the Company, High Sierra and Fagen have agreed on a form of
joint operator agreement that the Company intends to execute with each of such
parties to develop the Leases. The Company anticipates that the joint operator
agreements will be signed concurrently with the Company’s exercise of
the Desert Discoveries Option.
The
Company’s decision to execute the Option Agreement and to take the actions
associated with the Option Agreement represents the previously disclosed shift
in the Company’s business focus to that of an independent oil and gas company
engaged in the acquisition, drilling and production of oil and natural gas
properties and prospects.
PLAN
OF OPERATION
Limited
Operating History; Need for Additional Capital
There is
no meaningful historical financial information about us upon which to base an
evaluation of our performance. We are in Exploration Stage operations and have
not yet generated any revenues. We cannot guarantee we will be successful in our
business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns.
We are
seeking additional equity financing in order to obtain the capital required to
continue operating our business. During the most recent quarter, the Company
completed private placements resulting in gross proceeds of $200,000. However, the Company needs
to raise more capital in order to pay its planned expenses over the next 12
months, including the payments due under the option Agreement. We have no
assurance that future financing will be available to us on acceptable terms. If
a substantial amount of financing is not available to us on satisfactory terms,
we may be unable to continue, develop or expand our operations. Equity financing
could result in additional dilution to our existing shareholders.
We
anticipate that we will incur the following expenses over the next twelve
months:
Category
|
Planned Expenditures Over
The Next 12 Months (US$)
|
|||
General
& Administrative
|
$
|
185,000
|
||
Exploration
expense
|
$
|
600,000
|
||
TOTAL
|
$
|
785,000
|
10
As of
July 31, 2010, we had cash on hand of $27,760. We will require additional
financing to sustain our business operations. We currently do not have any
binding arrangements for any third party to provide us additional financing and
we may not be able to obtain financing when required. Obtaining additional
financing would be subject to a number of factors that we do not control. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us.
RESULTS
OF OPERATIONS
Nine
Months and Three Months Summary
Nine Months Ended ,
|
Three Months Ended July 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Expenses
|
$
|
(306,513
|
)
|
$
|
(18,686
|
)
|
$
|
(220,988
|
)
|
$
|
(4,649
|
)
|
||||
Net
Loss
|
$
|
(306,513
|
)
|
$
|
(18,686
|
)
|
$
|
(220,988
|
)
|
$
|
(4,649
|
)
|
Revenue
We have
not earned any revenues to date. We do not anticipate earning revenues from our
activities in the foreseeable future.
Operating
Expenses
Our
operating expenses for the relevant periods consisted of the
following:
Nine Months Ended
July 31,
|
Three Months Ended
July 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
General
and Administrative Expenses
|
|
306,513
|
18,686
|
220,988
|
4,649
|
|||||||||||
Total
Operating Expenses
|
$ |
306,513
|
$
|
18,686 |
$
|
220,988
|
$
|
4,649
|
Accounting
and legal fees during the nine months and three months ended July 31, 2010
relate primarily to expenses incurred in connection with meeting our ongoing
reporting obligations under the Exchange Act. Rent on our virtual office in
Bakersfield, California is paid monthly. Rent on our virtual office in Dallas,
Texas is payable monthly under a one-year agreement.
LIQUIDITY
AND CAPITAL RESOURCES
Working Capital
|
||||||||
At July 31, 2010
|
At October
31, 2009
|
|||||||
Current Assets
|
$ | 184,010 | $ | 0 | ||||
Current Liabilities
|
(67,405 | ) | (1,882 | ) | ||||
Working
Capital (Deficit)
|
$ | 116,605 | $ | (1,882 | ) |
Cash Flows
|
||||
Nine Months Ended
July
31, 2010
|
||||
Cash
Flows Used In Operating Activities
|
$
|
(397,240
|
)
|
|
Cash
Flows Used In Investing Activities
|
$
|
(175,000
|
)
|
|
Cash
Flows Provided by Financing Activities
|
$
|
600,000
|
||
Net
Increase (Decrease) In Cash During Period
|
$
|
27,760
|
Working
capital increased from a deficit of $1,882 as of October 31, 2009 to $116,605
primarily as the result of private placements of our Common Stock and
the Units which resulted in proceeds of $600,000 to the
Company. Our cash balances increased during the period ended July 31,
2010 primarily as a result of $600,000 in proceeds from private placements of
our Common Stock and Units which more than offset cash used in operating
activities.
11
Future
Financings
As of the
date of this Quarterly Report, we do not have sufficient cash on hand to meet
our anticipated expenses for the next twelve months. We do not anticipate
earning revenue in the foreseeable future, and we do not expect sufficient debt
financing to be available to us at this stage of our development. As such, we
expect that we will need to rely on our ability to consummate new
equity financings in order to fund our future operations. Issuances of
additional shares of our capital stock (or securities that may be convertible
into or exercisable for those shares) will result in the dilution of the
interests of our existing stockholders.
There are
no assurances that we will be able to obtain sufficient financing if and when
required.
OFF-BALANCE
SHEET ARRANGEMENTS
We have
no significant off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.
CRITICAL
ACCOUNTING POLICIES
Our
significant accounting policies are disclosed in the notes to our audited
financial statements for the year ended October 31, 2009 included in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2009.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
A smaller
reporting company is not required to provide the information required by this
Item.
ITEM
4. CONTROLS AND PROCEDURES.
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we have evaluated
the effectiveness of our disclosure controls and procedures as required by
Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.
Based on that evaluation, our principal executive officer and principal
financial officer have concluded that these disclosure controls and procedures
are effective.
There
were no changes in our internal control over financial reporting during the last
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Limitations
on the Effectiveness of Controls
Our
management, including our President and Treasurer, does not expect that our
disclosure controls or our internal control over financial reporting will
prevent or detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that
the control system's objectives will be met. The design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur
because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Projections of any evaluation of
the effectiveness of controls to future periods are subject to risks. Over time,
controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.
12
PART
II - OTHER INFORMATION
We may be
involved from time to time in ordinary litigation, negotiation and settlement
matters that will not have a material effect on our operations or
finances. We are not aware of any pending or threatened litigation
against us or our officers and directors in their capacity as such that could
have a material impact on our operations or finances.
ITEM
1A. RISK FACTORS.
A smaller
reporting company is not required to provide the information required by this
Item.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May
25, 2010, the Company issued 2,187,500 shares of Common Stock to New World
Petroleum Corp. at a price of approximately $0.057 per share (as adjusted for
the Stock Split) as repayment of an $125,000 installment paid on behalf of
the Company as part of the Option Agreement.
On June
2, 2010, the Company completed a private placement of 3,500,000 Units, with each
Unit consisting of 1 share of Common Stock, and 1 warrant to buy a share of
Common Stock at an exercise price of $0.091 any time within 3 years after
issuance. The Units were sold to a single purchaser at a price of $0.057
per Unit (as adjusted for the Stock Split). The gross proceeds of the
offering were $200,000, which were used to make certain payments under
the Option Agreement. This private placement and the May 25, 2010 private
placement described above were reported on a Current Report on Form 8-K filed on
June 7, 2010.
On June
30, 2010, the Company issued 1,500,000 shares of Common Stock (the “Restricted
Shares”) to Desert Discoveries, and, on July 4, 2010, issued Warrants to
purchase 1,600,000 shares of Common Stock for $0.75 per share,
at any time until May 11, 2015. The Restricted Shares and Warrants were issued
as part of the consideration paid by the Company under the Option Agreement. The
number of Restricted Shares reflected the Stock Split, which the Company
completed on June 25, 2010. The Restricted Shares were not
registered under the Securities Act of 1933, as amended, or any state securities
laws, and are subject to all applicable restrictions on sale under such
laws. In addition, the Restricted Shares and Warrants are subject to the
following restrictions on transfer and exercise, respectively:
|
·
|
500,000
of the Restricted Shares became transferrable, and 500,000 of the Warrants
became exercisable, on July 4,
2010;
|
|
·
|
500,000
of the Restricted Shares will become transferrable, and 500,000 of the
Warrants will become exercisable, on January 4, 2011;
and
|
|
·
|
500,000
of the Restricted Shares will become transferrable, and 600,000 of the
Warrants will become exercisable, on July 4,
2011.
|
ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May
19, 2010, stockholders holding at least a majority of the issued and outstanding
shares of Common Stock, acting by written consent, approved resolutions
to:
|
1.
|
Change
the name of the Company from Oreon Rental Corporation to American Liberty
Petroleum Corp.;
|
|
2.
|
Effect the Stock
Split, by which each outstanding share of Common Stock was exchanged for
70 shares of Common Stock;
|
|
3.
|
In
connection with the Stock Split, increase the number of authorized shares
of Common Stock from 75,000,000 to 450,000,000;
and
|
|
4.
|
Approve
the Amended and Restated Articles of
Incorporation.
|
In
addition to changing the name of the Company and increasing the number of
authorized shares of Common Stock, as described above, the Amended and Restated
Articles of Incorporation amended the Company’s Articles of Incorporation to (a)
authorize the Board of Directors to adopt, alter, amend or repeal the Bylaws of
the Company, including any Bylaw adopted by the stockholders, and (b) allow the
Company to indemnify a director or officer of the Company to the fullest extent
allowed by Nevada law, and to indemnify any other person for whom
indemnification is allowed by Nevada law, and to purchase insurance for this
purpose. The text of the Amended and Restated Articles of
Incorporation is attached as an Exhibit to the Company’s Current Report on Form
8-K filed on May 24, 2010. The
Written Consent was executed by Alvaro Vollmers, who, on May 19, 2010, owned
approximately 59.4% of the issued and outstanding shares of Common
Stock.
13
ITEM
5. OTHER INFORMATION.
None.
ITEM
6.EXHIBITS.
Number
|
Description
of Exhibits
|
|
10.1
|
Option
Agreement dated May 11, 2010 by and between Oreon Rental Corporation and
Desert Discoveries, LLC (Incorporated by reference to Exhibit 10.1 to
Oreon Rental Corporation’s Current Report on Form 8-K filed on May 17,
2010, Commission file number 333-156077).
|
|
31.1
|
Certification
of Chief Executive Officer as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
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 thereunto
duly authorized.
AMERICAN
LIBERTY PETROLEUM CORP.
|
||||
Date:
|
September
20, 2010
|
By:
|
/s/
Alvaro Vollmers
|
|
ALVARO VOLLMERS
President, Secretary and Treasurer
(Principal Executive Officer
and Principal Accounting Officer)
|
14