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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 March 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________  to ______
 
ALLIANCE PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
 
333-172114
 
33-1219511
(State or other jurisdiction
 
(Commission File Number)
 
(IRS Employer
of Incorporation)
     
Identification Number)
 
Suite 230 – 1130 West Pender Street
Vancouver BC V6E 4A4
(Address of principal executive offices)
 
(604) 638-1598
(Registrant’s Telephone Number)
 
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 o

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 o No x
 
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.  (Check one):
 
Large accelerated filer o Accelerated filer o
Non-accelerated filer  o Smaller reporting company x
(Do not check if a smaller reporting company)      
 
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act):  Yes ¨ No x
 
As of May 9, 2012, there were 14,112,500 shares of the registrant’s $0.001 par value common stock issued and outstanding.
 


 
 

 
TABLE OF CONTENTS

Part I.
Financial Information
     
         
 
Item 1.
Financial Statements
    4  
             
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    14  
             
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    19  
             
 
Item 4.
Controls and Procedures
    19  
             
Part II.
Other Information
       
           
 
Item 1.
Legal Proceedings
    20  
             
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    20  
             
 
Item 3.
Defaults Upon Senior Securities
    20  
             
 
Item 4.
(Removed and Reserved)
    20  
             
 
Item 5.
Other Information
    20  
             
 
Item 6.
Exhibits
    21  
             
Signatures
    22  
 
 
2

 
 
FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Alliance Petroleum Corporation, a Nevada corporation, contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995.  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology.  These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results.  Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, and other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

All references in this Form 10-Q to the  “Company”, “Alliance”, “we”, “us,” or “our” are to Alliance Petroleum Corporation.
 
 
3

 
 
PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS.

Our unaudited interim financial statements for the three month’s period ended March 31, 2012 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.
 
ALLIANCE PETROLEUM CORPORATION

(An Exploration Stage Company)

Financial Statements

(Expressed in US dollars)

March 31, 2012

(Unaudited)
 
Balance Sheets
    5  
         
Statements of Operations
    6  
         
Statements of Cash Flows
    7  
         
Notes to the Financial Statements
    8  
 
 
4

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
BALANCE SHEETS
 
   
March 31,
   
December 31,
 
ASSETS
 
2012
   
2011
 
   
(unaudited)
       
Current Assets
           
Cash
  $ 5,681     $ 7  
                 
Total current assets
    5,681       7  
                 
Total Assets
  $ 5,681     $ 7  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
Current Liabilities
               
Accounts payable
  $ 10,000     $ -  
Due to related party
    25,396       10,070  
Notes payable
    11,000       -  
Total Current Liabilities
    46,396       10,070  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
               
Common stock
               
Authorized:
               
75,000,000 shares of common stock,
               
par value $0.001 per share
               
Issued and outstanding:
    14,093       14,050  
Common Shares: 14,092,500 as of March 31, 2012 and 14,050,000 as of December 31, 2011
               
Additional paid in capital
    12,014       3,557  
                 
Deficit accumulated during exploration stage
    (66,822 )     (27,670 )
                 
Total Stockholders' equity (deficit)
    (40,715 )     (10,063 )
                 
Total liabilities and stockholders' equity (deficit)
  $ 5,681     $ 7  
 
The accompanying notes are an integral part of these financial statements
 
 
5

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
 
               
September 17,
 
               
2010
 
   
3 months ended
   
3 months ended
   
(Inception) to
 
   
March 31,
   
March 31,
   
March 31,
 
   
2012
   
2011
   
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
Revenue
                 
Revenue
  $ -     $ -     $ -  
      -       -       -  
                         
Expenses
                       
Accounting & legal
    3,000       1,575       11,250  
Legal fee
    10,500       -       15,500  
Management salaries
    15,000       -       19,000  
Impairment of mineral option
    -       -       4,000  
General and administrative
    652       19       7,072  
Rental
    10,000       -       10,000  
 
                       
Total operating expenses
    39,152       1,594       66,822  
                         
Net income/loss
  $ (39,152 )   $ (1,594 )   $ (66,822 )
                         
Loss per share - basic and fully diluted
  $ (0.00 )   $ (0.00 )        
                         
Weighted average shares outstanding -
    14,065,110       14,050,000          
basic and fully diluted
                       
 
The accompanying notes are an integral part of these financial statements
 
 
6

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
 
               
September 17,
 
               
2010
 
   
3 months ended
   
3 months ended
   
(Inception) to
 
   
March 31,
   
March 31,
   
March 31,
 
   
2012
   
2011
   
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
CASH USED FOR OPERATIONS
                 
                   
Net loss
  $ (39,152 )   $ (1,594 )   $ (66,822 )
                         
Adjustment to reconcile net loss to net cash
                       
provided by (used for) operating activities
                       
Impairment of mineral option
    -       -       4,000  
                         
Changes in operating assets and liabilities
                       
Accounts payable
    10,000       -       10,000  
Accounts receivable
    -       4,000       -  
Due to related party
    15,326       -       25,396  
Cash provided by (used for) operating activities
    (13,826 )     2,406       (27,426 )
                         
Cash used for investing activities
                       
Mineral lease option
    -       (4,000 )     (4,000 )
Cash used for investing activities
    -       (4,000 )     (4,000 )
                         
Cash flow from financing activities
                       
                         
Common stock sold for cash
    8,500       -       26,107  
Borrowings on debt
    11,000       -       11,000  
Cash provided by financing
    19,500       -       37,107  
                         
Increase/(Decrease) in cash
    5,674       (1,594 )     5,681  
                         
Cash at the beginning of the period
    7       1,595       -  
CASH AT THE END OF THE PERIOD
  $ 5,681     $ 1     $ 5,681  
 
The accompanying notes are an integral part of these financial statements
 
 
7

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
March 31, 2012
(Unaudited)

Note 1 – Nature of business and basis of presentation

Alliance Petroleum Corporation (the Company) was incorporated on September 17, 2010, under the laws of the State of Nevada, for the purpose of conducting oil and gas exploration activities.
 
We are currently in the exploration stage as an oil and gas exploration company and presently engaged in limited oil and gas activities in Saskatchewan, Canada.  We intend to commence operations in oil & gas exploration and production industry.  We plan to develop properties and any other prospects that we may acquire an interest in and we do not currently offer any products or services for sale.  During the exploration and drilling process, if we determine that there are commercial quantities of oil and natural gas on our properties, we plan to produce the oil and natural gas and sell it at the wellhead. 

Note 2 – Going concern

These financial statements for the period ended March 31, 2012 were prepared assuming the Company will continue as a going concern.   This means that there is substantial doubt that we can continue as an ongoing business.  During our recent period ended March 31, 2012 we incurred a net loss of $39,152.  We will need to generate significant revenue in order to achieve profitability and we may never become profitable.  The going concern paragraph in the independent auditor’s report emphasizes the uncertainty related to our business as well as the level of risk associated with an investment in our common stock.  

The Company has not begun principal operations and as is common with an exploration stage company, the Company has had recurring losses during its exploration stage. The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses

Note 3 – Summary of Significant Accounting Policies

Basis of presentation

The Company reports revenues and expenses using the accrual method of accounting for financial and tax reporting purposes. These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.

Use of estimates
 
Management uses estimates and assumption in preparing these financial statements in accordance with generally accepted accounting principles.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
 
 
8

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statement
March 31, 2012
(Unaudited)

Note 3 – Summary of Significant Accounting Policies (continued)
 
Fair value of financial instruments
 
Pursuant to ASC No. 820. "Fair Value Measurement and Disclosures," the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of March 31, 2012 and December 31, 2011. The Company's financial instruments consist of cash. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Income taxes

The Company accounts for income taxes under ASC 740 “Income Taxes” which codified SFAS 109, “Accounting for Income Taxes” and FIN 48 “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

During 2011 fiscal year the company incurred net losses, and therefore had no tax liability. The net deferred tax asset generated by the loss carry forward has been fully reserved. The cumulative net loss carry forward is approximately $62,823 for the period ended March 31, 2012, and will expire in the year 2035.

At March 31, 2012 the net deferred tax asset consisted of the following:

Net operating loss
$21,988
 
 
9

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statement
March 31, 2012
(Unaudited)

Note 3 – Summary of Significant Accounting Policies (continued)

Less: Valuation allowance
($21,988)
 
Net deferred tax asset
$0
 
Per share information

The Company computes net loss per share accordance with FASB ASC 205 “Earnings per Share”.  FASB ASC 205 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic  EPS  is  computed   by  dividing  net  loss  available  to   common shareholders  (numerator)  by  the  weighted  average  number  of  shares outstanding (denominator) during the period.  Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.  As of March 31, 2012, there were no potentially dilutive shares.

Stock-based compensation

The Company has not adopted a stock option plan and therefore has not granted any stock options. Accordingly, no stock-based compensation has been recorded to date.

Foreign currency translation

Foreign denominated monetary assets and liabilities are translated to their United States dollar equivalent using foreign exchange rates which prevailed at the balance sheet date. Expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency tractions are included in results of operations.
 
The Company's functional currency and its reporting currency is the United States dollar.

Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

 
10

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statement
March 31, 2012
(Unaudited)

Note 3 – Summary of Significant Accounting Policies (continued)
 
In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.
 
 
11

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statement
March 31, 2012
(Unaudited)

Note 3 – Summary of Significant Accounting Policies (continued)

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

Impairment Policy

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group.  Oil and gas producing assets are evaluated for impairment at least annually at the end of every year.  If, upon review, the sum of undiscounted pretax cash flows are less than the carrying value of the asset group, the carrying value is written down to the estimated fair value.  Individual assets are grouped for impairment purposes at the lowest level of which these are identifiable cash flows that are largely independent of the cash flows of other groups of assets – generally on a field-by-field basis.  The fair value of impaired assets is determined based on quoted market prices in active markets, if available, or upon the present values of the expected future cash flows using discount rates commensurate with the risks involved in the asset g group.  Long-lived assets committed by management for disposal are accounted for at the lower of amortized cost of fair value less cost to sell.

Oil and Gas Accounting Policy

The Company utilizes the full-cost method of accounting for oil and gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs whether the projects are successful or unsuccessful. The capitalized cost is then amortized into expense as the total reserves are produced. Capitalized costs, less accumulated amortization and related deferred income taxes, should be expensed when they exceed the cost center ceiling.

Reclassification Policy

Certain prior period amounts have been reclassified to conform to current period presentation.
 
Note 4 – Mineral Lease Option

On January 14, 2011 we entered into a lease option agreement pursuant to which we have the right, until April 30, 2012, to exercise an option to enter into a separate contract, titled Petroleum Natural Gas Lease. Pursuant to the terms and conditions of the lease option agreement, we paid $4,000 on January 17, 2011 to the grantors of the option as consideration for the exercise right granted to us there under.  The Petroleum Natural Gas Lease requires that we pay US $24,000 in exchange for the right, for a term of 3 years, to explore for, and if warranted and feasible, commercialize mineralized materials covering approximately 320 acres of land located near Calder, Saskatchewan (the “Property”), approximately 124 miles northeast of Regina, Saskatchewan.  The other material terms and conditions of the Petroleum Natural Gas Lease provide that we pay a royalty of 16% to the lessor of the Property for any mineralized material produced, saved and sold by the Company.  As of December 31, 2011 the Company has impaired the mineral option due to the lack of exploration and due to not exercising the option as of yet. As of April 30, 2012, the Company has abandoned the mineral option lease because of not exercising the Petroleum Natural Gas lease.
 
 
12

 
 
ALLIANCE PETROLEUM CORPORATION
(An Exploration Stage Company)
Notes to Financial Statement
March 31, 2012
(Unaudited)
 
Note 5 – Related Party Transactions
 
During the period ended December 31, 2010, the Company issued 10,000,000 common shares at (CDN) $0.001 per share to the Company's President for cash proceeds of $9,704.  At March 31, 2012, the Company owed $10,396 to the president and the director of the Company for funds advanced and $15,000 for management fees. These amounts are unsecured, bear no interest and are payable on demand. Related party transactions are measured at the exchange amount which is the amount agreed upon by the related parties.

Note 6 – Notes Payable

During the quarter ended March 31, 2012 the Company received $11,000 cash from Mcc Meridian Capital Corp. Also as of March 31, 2012 the Company owed $10,000 to Mcc Meridian Capital Corp for office rent fees due by the company. These amounts are unsecured, bear no interest and are payable on demand. Imputed interest was considered and found to be immaterial.

Note 7 – Share Capital

We are authorized to issue 75,000,000 shares of common stock, par value $0.001 per share.  In October 2010, we issued 10,000,000 shares of common stock to our director.  Mr. Ijaz purchased such 10,000,000 shares at a purchase price of (CDN) $0.001 per share, for an aggregate purchase price of $9,704.  After the sale of 10,000,000 shares to Mr. Ijaz, the Company, in October 2010, sold an aggregate of 4,050,000 shares of common stock to 9 individual purchasers, each of whom paid (CDN) $0.002 per share, for an aggregate purchase price of $7,903. In February 2012, the Company sold 42,500 shares to 3 individual purchasers at $0.20 for proceeds of $8,500.

Note 8 – Subsequent Events
 
As of between May 7, 2012 to May 8, 2012, the Company sold 20,000 shares at $0.20 for proceeds of $4,000.
 
 
13

 
 
FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Corporate History

We were incorporated in the State of Nevada on September 17, 2010 under the name Alliance Petroleum Corporation.  We are an exploration stage company engaged in the acquisition of interests and leases in developing and producing oil and natural gas wells.  

Description of Business

We are currently in the exploration stage as an oil and gas exploration company and presently engaged in oil and gas activities in Saskatchewan, Canada. We intend to commence operations in oil & gas exploration and production industry. We plan to develop properties and any other prospects that we may acquire an interest in and we do not currently offer any products or services for sale. During the exploration and drilling process, if we determine that there are commercial quantities of oil and natural gas on our properties, we plan to produce the oil and natural gas and sell it at the wellhead. To date, we have not realized any revenues from our operations.

On January 14, 2011 we entered into a Lease Option Agreement, pursuant to which we have the right, until April 30, 2012, to exercise an option to enter into a separate contract, titled Petroleum Natural Gas Lease. Pursuant to the terms and conditions of the Lease Option Agreement, we paid US $10 on January 14, 2011, and US $4,000 on January 17, 2011, to the grantors of the option as consideration for the exercise right granted to us thereunder.  We intend to exercise our rights under the Lease Option Agreement to enter into the Petroleum Natural Gas Lease. The Petroleum Natural Gas Lease requires that we pay US $24,000 in exchange for the right, for a term of 3 years, to explore for, and if warranted and feasible, commercialize mineralized materials covering approximately 320 acres of land located near Calder, Saskatchewan (the “Property”), approximately 124 miles northeast of Regina, Saskatchewan. The other material terms and conditions of the Petroleum Natural Gas Lease provide that we pay a royalty of 16% to the lessor of the Property for any mineralized material produced, saved and sold by the Company. As of December 31, 2011 the company has impaired the mineral option due to the lack of exploration and due to not exercising the option as of yet. As of April 30, 2012, the Company has abandoned the mineral option lease because of not exercising the Petroleum Natural Gas lease.

We intend to build our business through the acquisition of exploration and producing oil and natural gas wells, interests and leases. Our business strategy is to keep acquiring interests in exploration and producing oil and gas properties with steady income and upside exploration potential.

 
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RESULTS OF OPERATIONS

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Three Month Period Ended March 31, 2012 Compared to the Three Month Period Ended March 31, 2011

Our net loss for the three month period ended March 31, 2012 was $39,152 compared to a net loss of $1,594 during the three month period ended March 31, 2011.  During the three month period ended March 31, 2012 and 2011, we did not generate any revenue.  

During the three month period ended March 31, 2012, we incurred general and administrative expenses of $652 and professional fee of $13,500 and compared to $1,594 incurred during the three month period ended March 31, 2011. General and administrative and professional fee expenses incurred during the three month period ended March 31, 2012 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses.

The weighted average number of shares outstanding was 14,065,110 for the three month period ended March 31, 2012.

Working Capital

  
 
March 31,
2012
$
   
December 31,
2011
$
 
Current Assets
    5,681       7  
Current Liabilities
    46,396       10,070  
Working Capital (Deficit)
    (66,822 )     (27,670 )

Cash Flows

  
 
Three months ended March 31,
2012
$
   
Three months ended March 31,
2011
$
 
Cash Flows from (used in) Operating Activities
    (13,826 )     2,406  
Cash Flows from (used in) Investing Activities
    -       (4,000 )
Cash Flows from (used in) Financing Activities
    19,500       -  
Net Increase (decrease) in Cash During Period
    5,674       (1,594 )

 
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Operating Revenues

From the Company’s inception on September 17, 2010 to March 31, 2012, the Company did not earn any operating revenues.  

Operating Expenses and Net Loss

During the three months ended March 31, 2012, the Company incurred operating expenses of $39,152 compared with $1,594 for the three months ended March 31, 2011.   

For the three months ended March 31, 2012, the Company incurred a net loss of $39,152 compared to a net loss of $1,594 for the three months ended March 31, 2011.

Liquidity and Capital Resources

At March 31, 2012, the Company had cash of $5,681 and total assets of $5,681 compared with $7 at December 31, 2011 

At March 31, 2012, the Company had total liabilities of $46,396 compared with $10,070 at December 31, 2011.  

The Company had a working capital deficit of $40,715 at March 31, 2012 compared with $10,063 at December 31, 2011.  The increase in working capital deficit is due to increases in day-to-day operating expenses.

Cash flow from Operating Activities

During the period ended March 31, 2012, the Company used $13,826 of cash for operating activities compared with $2,406 of cash provided for operating activities during the period ended March 31, 2011.    

Cash flow from Investing Activities

During the period ended March 31, 2012, the Company did not have any investing activities compared with the period ended March 31, 2011 where the Company incurred $4,000 for acquisition of an option on a Petroleum and Natural gas lease.   

Cash flow from Financing Activities

During the period ended March 31, 2012, the Company received $19,500 in financing activities, compared with $nil received during the period ended March 31, 2011.  

 
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Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
 
Future Financings
 
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
 
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 that are material to stockholders.

 
17

 
 
Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires 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.
 
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.
 
 
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In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
No report required.

ITEM 4. CONTROLS AND PROCEDURES.

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2012. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
19

 
 
Changes in Controls and Procedures:
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
 
ITEM 1A. RISK FACTORS
 
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

No report required.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

No report required.

ITEM 4. (Removed and Reserved).

No report required.

ITEM 5.  OTHER INFORMATION.

No report required.

 
20

 

ITEM 6.  EXHIBITS.
 
(a)  Exhibits required by Item 601 of Regulation SK. 
 
Number
 
Description
     
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
21

 
 
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.
 

 
ALLIANCE PETROLEUM CORPORATION
 
(Name of Registrant)
   
Date:  May 9, 2012
By:
/s/ Khurram Ijaz
 
    Name: Khurram Ijaz  
    Title: President, Chief Executive Officer and Chief Financial Officer  
 

 
 
 
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