Attached files
file | filename |
---|---|
8-K/A - CROSS BORDER RESOURCES, INC. | v210877_8k.htm |
EX-23.1 - CROSS BORDER RESOURCES, INC. | v210877_ex23-1.htm |
EX-99.1 - CROSS BORDER RESOURCES, INC. | v210877_ex99-1.htm |
EX-99.3 - CROSS BORDER RESOURCES, INC. | v210877_ex99-3.htm |
PURE
GAS PARTNERS, L.P.
Consolidated
Financial Statements
September
30, 2010 and December 31, 2009
and
For
the Periods Ended September 30, 2010 and 2009
PURE GAS
PARTNERS, L.P.
Consolidated
Financial Statements
September
30, 2010 and December 31, 2009
and For
the Periods Ended September 30, 2010 and 2009
Table
of Contents
|
Page
|
Consolidated
Balance Sheets
|
2
|
Consolidated
Statements of Income (Unaudited)
|
4
|
Consolidated
Statements of Cash Flows (Unaudited)
|
6
|
Notes
to the Consolidated Financial Statements
|
7
|
PURE GAS
PARTNERS, L.P.
Consolidated
Balance Sheets
September
30, 2010 and December 31, 2009
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 439,185 | $ | 757,119 | ||||
Accounts
Receivable - Production
|
970,932 | 790,219 | ||||||
Accounts
Receivable - Doral Energy
|
250,000 | - | ||||||
Prepaid
Well Expenses
|
9,301 | 18,101 | ||||||
Total
Current Assets
|
1,669,418 | 1,565,439 | ||||||
Oil
and Gas Properties
|
16,441,699 | 15,185,090 | ||||||
Less:
Accumulated Depletion
|
(6,547,778 | ) | (5,924,789 | ) | ||||
Net
Oil and Gas Properties
|
9,893,921 | 9,260,301 | ||||||
Other
Assets
|
||||||||
Other
Property and Equipment, net of accumulated depreciation
|
132,243 | 154,635 | ||||||
Deferred
Bond Costs, net of accumulated amortization
|
222,536 | 260,325 | ||||||
Deferred
Bond Discount, net of accumulated amortization
|
82,396 | 96,389 | ||||||
Other
Assets
|
112,125 | 112,477 | ||||||
Goodwill
|
2,266,470 | 2,266,470 | ||||||
Total
Other Assets
|
2,815,770 | 2,890,296 | ||||||
TOTAL
ASSETS
|
$ | 14,379,109 | $ | 13,716,036 |
The
Accompanying Notes are an Integral Part of These Financial
Statements.
2
PURE GAS
PARTNERS, L.P.
Consolidated
Balance Sheets (Continued)
September
30, 2010 and December 31, 2009
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
LIABILITIES
AND PARTNERS' CAPITAL
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable - Trade
|
$ | 306,404 | $ | 219,454 | ||||
Accounts
Payable - Revenue Distribution
|
143,492 | 101,601 | ||||||
Interest
Payable
|
29,374 | 121,500 | ||||||
Deferred
Revenue
|
194,873 | - | ||||||
Accrued
Expenses
|
31,156 | 27,331 | ||||||
Lines
of Credit
|
1,582,426 | 1,582,426 | ||||||
Bonds
Payable - Current Portion
|
660,000 | 545,000 | ||||||
Creditors
Payable - Current Portion
|
114,605 | 162,500 | ||||||
Total
Current Liabilities
|
3,062,330 | 2,759,812 | ||||||
Non-Current
Liabilities
|
||||||||
Bonds
Payable, net of Current Portion
|
3,555,000 | 4,160,000 | ||||||
Creditors
Payable, net of Current Portion
|
1,681,305 | 1,766,700 | ||||||
Total
Non-Current Liabilities
|
5,236,305 | 5,926,700 | ||||||
Total
Liabilities
|
8,298,635 | 8,686,512 | ||||||
Partners'
Capital (Deficit)
|
||||||||
Noncontrolling
Interest
|
944,187 | 913,841 | ||||||
Pure
Gas Partners, L.P. Partners' Capital (Deficit)
|
||||||||
Class
A Limited Partner (3,141.6 units authorized and issued)
|
72,141 | (534,941 | ) | |||||
Class
B Limited Partners (1,171 units authorized and issued)
|
5,007,194 | 4,802,838 | ||||||
Class
C Limited Partners (1,056 units authorized and issued)
|
24,166 | (179,898 | ) | |||||
General
Partner (26.4 units authorized and issued)
|
32,786 | 27,684 | ||||||
Total
Pure Gas Partners, L.P. Partners' Capital
|
5,136,287 | 4,115,683 | ||||||
Total
Partners' Capital
|
6,080,474 | 5,029,524 | ||||||
TOTAL
LIABILITIES AND PARTNERS' CAPITAL
|
$ | 14,379,109 | $ | 13,716,036 |
The
Accompanying Notes are an Integral Part of These Financial
Statements.
3
PURE GAS
PARTNERS, L.P.
Consolidated
Statements of Income
(Unaudited)
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
Revenues
and Gains
|
||||||||
Oil
and Gas Sales
|
$ | 3,296,612 | $ | 2,321,104 | ||||
Gain
on Sale of Oil and Gas Properties
|
38,540 | 13,727 | ||||||
Other
|
3,720 | 25,061 | ||||||
Total
Revenues and Gains
|
3,338,872 | 2,359,892 | ||||||
Expenses
and Losses
|
||||||||
Lease
Operating
|
327,828 | 258,215 | ||||||
Production
Tax
|
271,337 | 211,609 | ||||||
Depreciation,
Depletion, and Amortization
|
645,381 | 1,649,990 | ||||||
Professional
Fees - Oil and Gas Exploration
|
263,261 | 280,034 | ||||||
General
and Administrative
|
422,362 | 415,312 | ||||||
Oil
and Gas Lease Expense
|
1,811 | 29,475 | ||||||
Bond
Issuance Amortization
|
37,789 | 37,789 | ||||||
Interest
Expense
|
318,153 | 340,777 | ||||||
Other
|
- | 107 | ||||||
Total
Expenses & Losses
|
2,287,922 | 3,223,308 | ||||||
Net
Income (Loss)
|
1,050,950 | (863,416 | ) | |||||
Net
Income (Loss) Attributable to the Noncontrolling Interest
|
30,346 | (44,113 | ) | |||||
Net
Income (loss)
|
$ | 1,020,604 | $ | (819,303 | ) |
The
Accompanying Notes are an Integral Part of These Financial
Statements.
4
PURE GAS
PARTNERS, L.P.
Consolidated
Statements of Income
(Unaudited)
Three Months Ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
Revenues
and Gains
|
||||||||
Oil
and Gas Sales
|
$ | 1,171,853 | $ | 840,088 | ||||
Gain
on Sale of Oil and Gas Properties
|
34,353 | 7,690 | ||||||
Other
|
547 | (2,717 | ) | |||||
Total
Revenues and Gains
|
1,206,753 | 845,061 | ||||||
Expenses
and Losses
|
||||||||
Lease
Operating
|
86,737 | 99,993 | ||||||
Production
Tax
|
85,051 | 81,740 | ||||||
Depreciation,
Depletion, and Amortization
|
215,127 | 549,955 | ||||||
Professional
Fees - Oil and Gas Exploration
|
93,296 | 72,823 | ||||||
General
and Administrative
|
141,083 | 110,028 | ||||||
Oil
and Gas Lease Expense
|
1,122 | 15,908 | ||||||
Bond
Issuance Amortization
|
12,596 | 12,596 | ||||||
Interest
Expense
|
100,344 | 104,273 | ||||||
Total
Expenses & Losses
|
735,356 | 1,047,316 | ||||||
Net
Income (Loss)
|
471,397 | (202,255 | ) | |||||
Net
Income (Loss) Attributable to the Noncontrolling Interest
|
15,105 | (11,165 | ) | |||||
Net
Income (loss)
|
$ | 456,292 | $ | (191,090 | ) |
The
Accompanying Notes are an Integral Part of These Financial
Statements.
5
PURE GAS
PARTNERS, L.P.
Consolidated
Statements of Cash Flow
(Unaudited)
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
Cash
Flows from Operating Activities
|
||||||||
Net
Income
|
$ | 1,050,950 | $ | (863,416 | ) | |||
Adjustments
to Reconcile Net Income to Net Cash Provided by Operating
Activities
|
||||||||
Depreciation,
Depletion, and Amortization
|
645,381 | 1,665,215 | ||||||
Bond
Issuance Amortization
|
37,789 | 37,789 | ||||||
Bond
Discount Amortization - Interest Expense
|
13,993 | 13,993 | ||||||
(Increase)
Decrease in:
|
||||||||
Receivables
|
(430,713 | ) | 477,021 | |||||
Prepaids
|
8,800 | 184,098 | ||||||
Other
Assets
|
352 | 31,502 | ||||||
Increase
(Decrease) in:
|
||||||||
Accounts
Payable - Trade
|
86,950 | (167,078 | ) | |||||
Accounts
Payable - Revenue Distributions
|
41,891 | (88,400 | ) | |||||
Interest
Payable
|
(92,126 | ) | (102,930 | ) | ||||
Deferred
Revenues
|
194,873 | - | ||||||
Accrued
Expenses
|
3,825 | (4,802 | ) | |||||
Net
Cash Provided (Used) by Operating Activities
|
1,561,965 | 1,182,992 | ||||||
Cash
Flows from Investing Activities
|
||||||||
Capital
Expenditures - Oil and Gas Properties
|
(1,256,609 | ) | (1,090,946 | ) | ||||
Capital
Expenditures - Other
|
- | (59,047 | ) | |||||
Net
Cash Provided (Used) by Investing Activities
|
(1,256,609 | ) | (1,149,993 | ) | ||||
Cash
Flows from Financing Activities
|
||||||||
Net
Borrowings (Payments) on Line of Credit
|
- | 100,444 | ||||||
Payments
to Bonds Payable
|
(490,000 | ) | (345,000 | ) | ||||
Payments
to Reduce Creditors Payable
|
(133,290 | ) | (330,133 | ) | ||||
Distributions
to Minority Interest Holders
|
- | (26,838 | ) | |||||
Net
Cash Provided (Used) by Financing Activities
|
(623,290 | ) | (601,527 | ) | ||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(317,934 | ) | (568,528 | ) | ||||
Cash
and Cash Equivalents at Beginning of Year
|
757,119 | 1,189,328 | ||||||
Cash
and Cash Equivalents at End of Year
|
$ | 439,185 | $ | 620,800 | ||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
Cash
paid during the year for interest
|
$ | 341,324 | $ | 429,715 |
The
Accompanying Notes are an Integral Part of These Financial
Statements.
6
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note A – Partnership
Organization and Nature of Operations
Pure Gas
Partners, L.P., (the Partnership) is a Texas limited partnership that was formed
in 2002 to acquire all of the issued and outstanding common stock of Pure Energy
Group, Inc., a Texas corporation, and to continue to acquire, develop, manage,
lease and operate oil and gas properties. The Partnership owns a
94.456% limited partner interest in Pure Gas Partners II, L.P. (PGP II), a Texas
limited partnership formed in 2004, with .01% general partner interest owned by
Pure Energy Group, Inc. The remaining 5.534% interest is owned by
various others, including Armendaris Holdings, who owns 3.617%.
The
Partnership is an independent natural gas and oil company engaged in the
exploration, development, exploitation, and acquisition of natural gas and oil
reserves in North America. The Partnership’s primary area of focus is
the State of New Mexico, particularly southeastern New Mexico.
Interim
Financial Statements
The
unaudited financial information furnished herein reflects all adjustments, which
in the opinion of management are necessary to fairly state the Partnership’s
financial position and the results of its operations for the periods
presented. The financial information does not represent complete
financial statements and should be read in conjunction with the Partnership’s
latest annual audited financial statements and notes thereto for the year ended
December 31, 2009. The Partnership assumes that the users of the
interim financial information herein have read or have access to the audited
financial statements for the preceding fiscal year and that the adequacy of
additional disclosure needed for a fair presentation may be determined in that
context. Accordingly, footnote disclosures which would substantially
duplicate the disclosure contained in the Partnership’s audited financial
statements for the fiscal period ended December 31, 2009 have been
omitted.
Note B – Summary of
Significant Accounting Policies
Basis
of Accounting
The
consolidated financial statements are prepared in conformity with accounting
principals generally accepted in the United States of America
(GAAP).
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Partnership, Pure
Energy Group, Inc., and Pure Gas Partners II, L.P. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
7
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note B – Summary of
Significant Accounting Policies (Continued)
Oil
and Gas Properties
The
Partnership uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and
gas properties, to drill and equip exploratory wells that find proved reserves,
to drill and equip development wells and related asset retirement costs are
capitalized. Costs to drill exploratory wells that do not find proved
reserves, geological and geophysical costs, and costs of carrying and retaining
unproved properties are expensed.
Unproved
oil and gas properties that are individually significant are periodically
assessed for impairment of value, and a loss is recognized at the time of
impairment by providing an impairment allowance. Capitalized costs of
producing oil and gas properties, after considering estimated residual salvage
values, are depreciated and depleted by the unit-of-production
method.
Cash
and Cash Equivalents
The
Partnership considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Accounts
Receivable - Production
Accounts
receivable consist of amounts due from customers for oil and gas sales and are
considered fully collectible by the Partnership as of September 30, 2010 and
December 31, 2009. The Partnership determines when receivables are
past due based on how recently payments have been received.
Revenue
Recognition
The
Partnership recognizes oil and natural gas revenue from its interests in
producing wells as oil and natural gas is produced and sold from those
wells.
Property,
Plant and Equipment
Property,
plant, and equipment are stated at cost. Depreciation of office
furniture and equipment is provided using the straight-line method and the
Modified Accelerated Cost Recovery System (MACRS) based on estimated useful
lives ranging from three to 15 years. These methods do not materially
differ from GAAP. Depreciation expense was $22,392 and $25,489 for
the nine months ended September 30, 2010 and 2009, respectively. Depreciation
expense was $7,464 and $8,496 for the three months ended September 30, 2010 and
2009, respectively.
8
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note B – Summary of
Significant Accounting Policies (Continued)
Long-Lived
Assets
Long-lived
assets to be held and used or disposed of other than by sale are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used or disposed of other than by sale are
recognized based on the fair value of the asset. Long-lived assets to
be disposed of by sale are reported at the lower of the asset’s carrying amount
or fair value less cost to sell.
Asset
Retirement Obligations
The
Partnership accounts for asset retirement obligations under the provisions of
ASC 410, Asset Retirement and
Environmental Obligations, which provides for an asset and liability
approach to accounting for Asset Retirement Obligations (ARO). Under
this method, when legal obligations for dismantlement and abandonment costs,
excluding salvage values, are incurred, a liability is recorded at fair value
and the carrying amount of the related oil and gas properties is
increased. Accretion of liability is recognized each period using the
interest method of allocation and the capitalized cost is depleted over the
useful life of the related asset. The Partnership had no asset
retirement obligations as of September 30, 2010 and December 31,
2009.
Income
Taxes
The
Partnership is not a taxable entity for federal or state income tax
purposes. Accordingly, no income tax provision has been included in
the financial statements related to the income of the partnership.
The
Partnership’s subsidiary, Pure Energy Group, Inc., is a taxable corporation for
which an income tax provision has been made in the accompanying financial
statements. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities (See Note H).
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, expenses and
related disclosures. Actual results could differ from those estimates
and assumptions. Significant estimates include volumes of oil and gas
reserves used in calculating depletion of proved oil and natural gas
properties.
9
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note C – Long-Term
Debt
At
September 30, 2010 and December 31, 2009, long-term debt consisted of the
following items:
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
7½%
Debentures, Series 2005
|
$ | 4,215,000 | $ | 4,705,000 | ||||
Operating
Lines of Credit
|
1,582,426 | 1,582,426 | ||||||
Total
Long-term Debt
|
$ | 5,797,426 | $ | 6,287,426 |
The
balance of long-term debt as of September 30, 2010 and December 31, 2009
approximates fair value.
Operating
Lines of Credit
As of
September 30, 2010 and December 31, 2009, the borrowing base on the line of
credit was $2,500,000. Effective October 1, 2010, the Partnership
amended the line of credit agreement with Texas Capital Bank to reduce the
borrowing base from $2,500,000 to $2,450,000. In addition, the interest rate is
calculated at the greater of the Wall Street Prime Rate or
4.0%. The line of credit is collateralized by producing
wells. As of September 30, 2010 and December 31, 2009, the
outstanding balance on the line of credit was $1,582,426.
7½%
Debentures, Series 2005
On March
1, 2005, Pure Gas Partners, II, L.P. issued 7½% Debentures, Series 2005, in the
principal amount of $5,500,000. The Debentures mature on March 1,
2015, with principal and interest payable semi-annually on March 1 and September
1. As of September 30, 2010 and December 31, 2009, the outstanding
balance on the bond was $4,215,000 and $4,705,000, respectively.
Aggregate
long-term debt, consisting of the 7½% Debentures, Series 2005, is estimated to
be repayable annually as follows:
2010
|
$ | 85,000 | ||
2011
|
660,000 | |||
2012
|
830,000 | |||
2013
|
1,020,000 | |||
2014
|
1,175,000 | |||
Thereafter
|
630,000 | |||
Total
|
$ | 4,400,000 |
10
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note C – Long-Term Debt
(Continued)
7½%
Debentures, Series 2005 (Continued)
As
permitted by the bond debt agreement, the Partnership can purchase these bonds
back on the open market. Bonds held by the Partnership at September
30, 2010 and December 31, 2009 totaled $185,000 and $155,000, respectively.
These bonds were purchased at a discount of $169,855 and $140,212 during 2010
and 2009, respectively. The bonds held by the Partnership are shown
as a reduction of bonds payable on the balance sheet as follows:
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Bonds
Payable
|
$ | 4,400,000 | $ | 4,860,000 | ||||
Less:
Bonds held by the Partnership
|
(185,000 | ) | (155,000 | ) | ||||
Total
|
$ | 4,215,000 | $ | 4,705,000 |
Note D – Creditors
Payable
In 2002,
the prior owner of Pure Energy Group, Inc. filed a petition for reorganization
with the United States Bankruptcy Court. According to the Plan of
Reorganization, three other creditors are to receive a combined amount of
approximately $3,000,000 for their claims out of future net revenues of Pure
Energy Group, Inc. During 2003, two of these creditors reduced the amount of
debt owed to them by $150,000 each since Pure Energy Group, Inc., at the
creditors’ requests, paid a third party in the amount of $300,000 on their
behalf. The net revenue distribution due to creditors in 2011 based
on 2010 net revenues is $114,605 as of September 30, 2010. The net revenue
distribution due to creditors in 2010 based on 2009 net revenues is $162,500 as
of December 31, 2009. These amounts are presented as a current
liability on the balance sheets. As of September 30, 2010 and
December 31, 2009, the total creditors’ payable balance was $1,795,910 and
$1,929,200, respectively.
Note E – Operating
Leases
As of
September 30, 2010, the Partnership had a non-cancelable operating lease for
office space expiring in June 2014. The remaining future minimum
lease payments under the existing lease are as follows:
Year Ending December 31,
|
Operating Lease
|
|||
2010
|
$ | 11,875 | ||
2011
|
48,750 | |||
2012
|
50,000 | |||
2013
|
51,250 | |||
2014
|
26,250 | |||
Total
Minimum Lease Payments
|
$ | 188,125 |
11
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note F – Commitments and
Contingencies
The
Partnership is subject to federal and state laws and regulations relating to the
protection of the environment. Environmental risk is inherent to oil
and natural gas operations and the Partnership could be subject to environmental
cleanup and enforcement actions. The Partnership manages this
environmental risk through appropriate environmental policies and practices to
minimize the impact to the Partnership.
From time
to time, the Partnership is a party to various legal proceedings arising in the
ordinary course of business. The Partnership is not currently a party
to any proceeding that it believes could have a material adverse effect on the
Partnership’s financial condition, results of operation or cash
flows.
Note G – Series B
Convertible Preferred Partnership Interest
In
October 2006, PGP II, a subsidiary of the Partnership, issued Series B
Convertible Preferred Partnership Interests (the Interests) to Armendaris
Holdings, LLC (Armendaris) for a 3.617% ownership interest in PGP
II. The Interests have a preferential right for return of the
invested principal from cash flow of PGP II and also a preferential right in the
case of liquidation or dissolution of PGP II. The Interests do not
have any dividend preference or any preferential stated return, interest rate,
or dividend that accrues or is payable with respect to the units
purchased. The Interests are callable, at the option of PGP II, at
anytime between 90 days following drilling completion of a core test well on the
Armendaris Ranch and September 30, 2010, at 100% of the face value of the
funding.
Any time
after September 30, 2010, Armendaris has the option to either (1) convert the
Interests into Series A Limited Partnership Interest of PGP II at a valuation of
$30,000,000 or (2) cause PGP II to redeem the Interests in exchange for the
twenty-five (25%) undivided interest in 88,000 acres of mineral rights in New
Mexico, known as the Armendaris Ranch.
In
addition to the conversion options noted above, the units also have an
anti-dilution protection provision built in to the conversion price in the event
PGP II issues additional equity units at a valuation of less than
$30,000,000.
12
PURE GAS
PARTNERS, L.P.
Notes to
the Consolidated Financial Statements
Note H – Federal Income
Tax
The
accompanying financial statements include a provision for federal income tax
related to the Partnership’s taxable subsidiary, Pure Energy Group,
Inc.
The
provision for income tax consists of the following:
2010
|
2009
|
|||||||
Current:
|
||||||||
Consolidated
Income (Loss)
|
$ | 1,020,604 | $ | (819,303 | ) | |||
Pass-Through
(Income) Loss – PGP II
|
(548,362 | ) | 767,136 | |||||
Pure
Energy Group, Inc. Income (Loss)
|
472,242 | (52,167 | ) | |||||
Federal
Statutory Rate
|
15 | % | 15 | % | ||||
Current
Tax Expense (Benefit)
|
70,836 | (7,825 | ) | |||||
Deferred:
|
||||||||
Utilization
of Loss Carryforwards
|
(70,836 | ) | ||||||
Increase
(Decrease) in Valuation Allowance
|
7,825 | |||||||
Deferred
Tax Expense (Benefit)
|
(70,836 | ) | 7,825 | |||||
Net
Tax (Benefit) Expense
|
$ | - | $ | - |
Deferred
tax assets consist of NOL carryforwards fully allowed due to the continued
uncertainty of whether the tax benefits will be realized.
As of
September 30, 2010, Pure Energy Group, Inc. had net operating loss (NOL)
carryforwards totaling $46,745 that may be used to offset future taxable
income. These NOL carryforwards expire in 2029.
Note I – Subsequent
Events
The
Partnership evaluated subsequent events through February 9, 2011, the date which
the financial statements were available to be issued.
Effective
January 3, 2011 (the “Closing Date”), Pure Energy Group, Inc. (“Pure Sub”) was
acquired by Doral Energy Corp. as contemplated pursuant to the Agreement and
Plan of Merger dated December 2, 2010 (the “Pure Merger Agreement”) among the
Doral Energy Corp., Doral Acquisition Corp (“Doral Sub”), PGP II and Pure
Sub. Pursuant to the provisions of the Pure Merger Agreement, all of
PGP II’s oil and gas assets were transferred to Pure Sub. Pure Sub was then
merged with and into Doral Sub, with Pure Sub continuing as the surviving
corporation (the “Pure Merger”). Upon completion of the Pure Merger, the
outstanding shares of Pure Sub were converted into an aggregate of 9,981,536
shares of Doral Sub common stock. As a result of the Pure Merger, the
Partnership owns approximately 80% of Doral Sub’s total outstanding shares on a
fully diluted basis, with Doral Sub’s previous stockholders owning the remaining
20%.
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