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, 2008
[ ] 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 001-16653
EMPIRE PETROLEUM CORPORATION
(Exact name of registrant issuer as specified in its charter)
DELAWARE 73-1238709
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8801 S. Yale, Suite 120, Tulsa, Oklahoma 74137-3575
(Address of principal executive offices)
(918) 488-8068
(Registrant's telephone number including area code)
Not Applicable
__________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer,
an accerlerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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 Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
Plan confirmed by a court.
[ ] Yes [ ] No
The number of shares of the registrant's common stock, $0.001 par value,
Outstanding as of March 31, 2008 was 57,193,128.
EMPIRE PETROLEUM CORPORATION
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2008 and December 31, 2007 1
Consolidated Statements of Operations - Three months ended
March 31, 2008 and 2007 (Unaudited) 2
Consolidated Statements of Cash Flows - three months ended
March 31, 2008 and 2007 (Unaudited) 3
Notes to Consolidated Financial Statements 4-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-10
Item 3. Controls and Procedures 10
Part II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and use of Proceeds 10-11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EMPIRE PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
March 31, December 31,
2008 2007
$ $
(Unaudited)
ASSETS ____________ ____________
Current assets:
Cash $ 369,870 $ 384,630
Accounts receivable
(net of allowance of $3,750) 46,663 91,769
Prepaid expenses 7,740 11,058
___________ ____________
Total current assets 424,273 487,457
Property & equipment, net of accumulated
depreciation and depletion 986,770 973,317
___________ ____________
Total Assets $ 1,411,043 $ 1,460,774
___________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 37,837 25,290
Accounts payable to related party 0 274,682
___________ ___________
Total current liabilities 37,837 299,972
Long term liabilities:
Asset retirement obligation 52,200 52,200
___________ ____________
Total liabilities 90,037 352,172
___________ ____________
Stockholders' equity:
Common stock - $.001 par value,
authorized 100,000,000 shares,
issued 57,193,128 shares 57,193 55,080
Additional paid in capital 11,858,370 11,532,176
Accumulated deficit (10,594,557) (10,478,654)
___________ ___________
Total stockholders' equity 1,321,006 1,108,602
___________ ___________
Total liabilities and stockholders'
equity $ 1,411,043 $ 1,460,774
___________ ____________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - EXPRESSED IN U.S. DOLLARS)
Three Months Ended
March 31,
$
____________________________
2008 2007
_____________ _____________
Revenue:
Petroleum sales $ 0 $ 649
_____________ _____________
0 649
_____________ _____________
Costs and expenses:
Production & operating 17,334 4,071
General & administrative 98,570 43,783
Well abandonment expense 0 809,750
____________ _____________
115,904 857,604
____________ _____________
Operating (loss) (115,904) (856,955)
____________ _____________
Other (income) and expense:
Miscellaneous income ( 0) 0
Interest income 0 ( 71)
Interest expense 0 1,725
____________ _____________
Total other (income)
expense ( 0) 1,654
____________ _____________
Net loss $ (115,904) $ (858,609)
____________ _____________
Net loss
per common share $ .00 $ .02
____________ _____________
Weighted average number of
common shares
outstanding 56,042,751 50,080,190
____________ _____________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - EXPRESSED IN U.S. DOLLARS)
Three Months Ended
March 31, March 31,
2008 2007
$ $
_________ _________
Cash flows from operating activities:
Net loss $( 115,904) $(858,609)
Adjustments to reconcile net loss
to net cash used in operating activities:
Value of services contributed by employees 12,500 12,500
Well abandonment costs 0 809,750
Stock option plan expense 41,125 0
(Increase) decrease in assets:
Accounts receivable 45,107 71,080
Prepaid expenses 3,318 0
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 12,548 3,604
________ ________
Net cash (used in) provided by
operating activities ( 1,306) 38,325
________ ________
Cash flows from financing activities:
0 0
________ _________
Net cash provided by financing activities 0 0
________ _________
Cash flows from investing activities:
Well drilling and testing costs ( 13,453) ( 3,680)
________ __________
Net cash used in investing activities ( 13,453) ( 3,680)
________ ________
Net increase (decrease) in cash (14,759) 34,645
Cash - Beginning 384,629 60,786
________ ________
Cash -Ending $369,870 $ 95,431
________ ________
Conversion of Debt to Common Stock 274,682 0
See accompanying notes to financial statements.
-3-
EMPIRE PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
The accompanying unaudited consolidated financial statements of Empire
Petroleum Corporation (Empire, or the Company) have been prepared in
accordance with United States generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by
United States generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation of the Company's financial
position, the results of operations, and the cash flows for the interim
period are included. Operating results for the interim period are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2008.
The information contained in this Form 10-Q should be read in
conjunction with the audited consolidated financial statements and related
notes for the year ended December 31, 2007 which are contained in the
Company's Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission (the SEC) on March 31, 2008.
The Company has been incurring significant losses in recent years.
The continuation of the Company as a going concern is dependent upon the
ability of the Company to attain future profitable operations. These
financial statements have been prepared on the basis of United States
generally accepted accounting principles applicable to a company with
continuing operations, which assume that the Company will continue in
operation for the foreseeable future and will be able to realize its assets
and discharge its obligations in the normal course of operations. Management
believes the going concern assumption to be appropriate for these financial
statements. If the going concern assumption were not appropriate for these
financial statements, then adjustments might be necessary to adjust the
carrying value of assets and liabilities and reported expenses.
The Company continues to explore and develop its oil and gas interests.
The ultimate recoverability of the Company's investment in its oil and gas
interests is dependent upon the existence and discovery of economically
recoverable oil and gas reserves, confirmation of the Company's interest in
the oil and gas interests, the ability of the Company to obtain necessary
financing to further develop the interests, and upon the ability to attain
future profitable production.
In 2003, the Company engaged a partner to explore its Cheyenne River Prospect,
and signed an agreement to acquire a 10% interest in a block of acreage in the
Gabbs Valley Prospect of western Nevada. In June 2005, the Company completed
a private placement of 5,000,000 shares of its common stock along with
warrants to purchase 1,250,000 shares of its common stock for an aggregate
purchase price of $500,000. Subject to certain restrictions, the warrants may
be exercised until November 15, 2008 (extended from the previous date of May
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15, 2008) at exercise prices of $0.25 and $0.50 per share. Proceeds of the
private placement were allocated $67,875 to common stock warrants and $432,125
to common stock and paid-in capital. These funds were used for general
corporate purposes and to pay the Company's share of the costs associated with
its then 10% interest in the Gabbs Valley Oil Prospect in Nevada. By subsequent
agreement with Cortez Exploration, LLC (formerly O. F. Duffield) dated May 8,
2006, Empire acquired an additional 30% interest by agreeing to pay $675,000 in
land and related costs to Cortez and 45% of the drilling and completion costs
on a test well to be known as the Empire Cobble Cuesta 1-12-12-34E, Nye County,
Nevada. When combined with the original 10% working interest in the well and
lease block which was expanded to 75,806 gross acres by the acquisition of an
additional 30,917 acres from the U. S. Department of the Interior on June 14,
2006, the Company's working interest increased to 40%, after paying 55% of the
drilling and completion costs of the Empire Cobble Cuesta 1-12-12N-34E test
well. To fund this increased interest, the Company initiated a private
placement of common stock along with warrants to purchase common stock in June
2006. In connection with this private placement, the Company issued 7,250,000
shares of common stock and warrants to purchase 1,812,500 shares of its common
stock for an aggregate purchase price of $1,450,000. In April, 2007 the
Company raised $1,000,000 through a private placement of 5,000,000 shares of
its common stock along with warrants to purchase 1,250,000 shares of its
common stock. On August 2, 2007, Empire acquired a further 17% interest,
which increased its interest in the Gabbs Valley Prospect and leases to 57%
(See Note 3). The Company is planning to drill another well in the Gabbs
Valley Prospect. The Company is currently seeking an industry partner to
drill such well.
As of March 31, 2008, the Company had $369,870 of cash on hand. In order to
sustain the Company's operations on a long term basis, the Company intends to
continue to look for merger opportunities and consider public or private
financings. The Company anticipates that it has the funds necessary to
continue its operations through the next twelve months.
Compensation of Officers and Employees
The Company's only executive officer serves without pay or other compensation.
The fair value of these services is estimated by management and is recognized
as a capital contribution. For the three months ended March 31, 2008, the
Company recorded $12,500 as a capital contribution by its executive officer.
2. PROPERTY AND EQUIPMENT:
CHEYENNE RIVER PROSPECT
The Company owns a working interest in approximately 27,900 acres of oil and
gas leases located in Niobrara County, Wyoming (the "Cheyenne River Prospect")
and an overriding royalty interest of between 1.5% and 2% in 18,385 acres of
oil and gas leases located in or near the Cheyenne River Prospect. On March
31, 2004, a third party paid approximately $52,128 of the Company's lease
rentals on 32,643 acres in the Cheyenne River Prospect in exchange for an
option to drill a test well in order to earn an interest in the farmout block,
which option was subject to the third party first completing a seismic survey
covering 16 square miles in the Cheyenne River Prospect. This survey was
completed in September of 2003. The processing and interpreting of the data
from such survey was completed September 30, 2003, and earned the third party
a 25% interest in the Timber Draw #1-AH well and prospect acreage. This third
party commenced a test well in the NW/4NE/4 Section 15, Twp 39N, Rge 66W,
Niobrara County, Wyoming, known as the Empire Hooligan Draw Unit #1-AH, on
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August 6, 2004. The well was drilled horizontally to a measured drilling
depth of 9,332 feet. As a result of this earning well being drilled the
Company's working interest in the Hooligan Draw #1-AH well and prospect
acreage was reduced to 26.785% and to 17.5% of the Timber Draw #1-AH well.
As a result of the reduction in the Company's working interest as described
above, the Company recorded an impairment charge of $188,507 in 2005.
In 2007, the Company entered into a Farmout and Partial Sale Agreement with a
third party. The third party purchased a one-half interest in the Timber Draw
#1-AH and the Hooligan Draw #1-AH and agreed to drill three test wells at
locations of its choice on the farmout lands. In return for drilling the
three test wells the third party will earn a 100% interest in the 480 acres
associated with the three wells subject to a small overriding royalty retained
by the Company together with a 50% interest in the balance of the farmout
block, or the remaining 27,420 acres in the Cheyenne River Prospect. After
the drilling of the three test wells, the Company's remaining interest will
be its overriding royalty on the drill site 480 acres and a 13.39% working
interest in the balance of the farmout lands.
GABBS VALLEY PROSPECT
On May 8, 2003, the Company entered into an agreement (Duffield Agreement)
with O.F. Duffield (now Cortez Exploration, LLC) to acquire a ten percent
(10%) working interest in a block of acreage in the Gabbs Valley Prospect by
agreeing to issue 2,000,000 shares of the Company's Common Stock to Mr.
Duffield for such 10% interest. The shares were issued in July 2003. This
block of acreage in the Gabbs Valley Prospect consists of federal leases
covering 44,604 acres in Nye and Mineral Counties, Nevada in which Mr.
Duffield had a 100% working interest. The shares were valued at $.10 per
share based on the closing price of the Company's common stock on the date of
issuance.
During September 2005, surveyors laid out a 19.5 mile seismic program on the
Gabbs Valley Prospect, and a seismic survey was commenced in October 2005.
Field work was carried out and final interpretation of the data was completed
in November 2005. Based on the results of the seismic survey, the Company
increased its working interest in the prospect to 40% (See Note 1) and
contracted a drilling rig which commenced drilling the Empire Cobble Cuesta
1-12-12N-34E, Nye County, Nevada on September 14, 2006. Drilling operations
were suspended October 23, 2006 in order to give the Company time to evaluate
the drilling results. The total gross acres in this prospect was increased to
75,806 acres by the acquisition of 30,917 acres from the U. S. Department of
the Interior on June 14, 2006.
Coastal Energy Company Nevada (CECN)(formerly PetroWorld Nevada Corp.) was a
participant in the Gabbs Valley Prospect with a seismic option under which it
elected to drill a well and earn a 30% interest from Cortez Exploration, Inc.
At such time, the Company's Chief Executive Officer was a member of the Board
of Directors of both CECN and its parent company Coastal Energy Company
(formerly PetroWorld Corporation) and he currently owns approximately 1.53%
of the parent Company (CEN) which is traded on the AIM Exchange in London and
the Toronto Venture Exchange in Toronto. The Coastal interest was acquired on
August 2, 2007 by Empire (17%) and Cortez (13%), resulting in Empire's interest
(Duffield Agreement) being increased to 57%. To acquire the interest, Empire
and Cortez agreed to pay Coastal's share of the remaining costs related to
abandonment of the Cobble Cuesta test well. Empire's share of these costs are
estimated to be approximately $34,200. Mr. Whitehead retired from his position
as Chairman/Director of Coastal Energy Company on February 6, 2008.
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On May 1, 2007 the Company announced it had re-entered and completed testing
on the Empire Cobble Cuesta 1-12-12N-34E, Nye County, Nevada well. As no
hydrocarbons were recovered, the Company has taken steps to partially plug and
abandon the well. The Company and its consultants have analyzed the data
obtained from the Cobble Cuesta 1-12 and have concluded another well should be
drilled on the prospect.
On March 3, 2008 the Company entered into a Farmout with another company
whereby it agreed to re-enter the Empire Cobble Cuesta 1-12-12N-34E located in
the Gabbs Valley Prospect, Nye and Mineral Counties, Nevada and deepen the
well to 200 feet into the Triassic Formation or 8,000 feet, whichever first
occurs. Unfortunately, the third party was unable to fulfill the contract
commitment, therefore the agreement terminated by its own terms.
Empire intends to attempt to find an industry partner to drill a new test well
about one-half mile north of the original 1-12 test well. We will propose the
well be drilled with air which has been successful in other volcanic oil
fields.
NORTH BOGGY CREEK DAKOTA PROSPECT
In October, 2007 the Company entered into a Participation Agreement with its
Chief Executive Officer whereby it invested $41,305 to receive a 6.25% interest
in the Gaskill #1 well located in the North Boggy Creek Dakota Prospect,
Niobrara County, Wyoming. In 2007, the well was re-entered and no oil and gas
reserves were determined to be present; consequently the initial investment
was written off in 2007.
In the first quarter of 2008, the well operator and partners re-evaluated the
Gaskill #1 well and it was then determined the Company and its partners should
re-enter the well in April, 2008. Empire's estimated cost for the re-entry
and deepening of the well is $26,637. In the first quarter of 2008, Empire
paid $13,453 related to additional costs of the 2008 re-entry. These costs
have been capitalized in the Company's financial statements.
3. EQUITY
On February 19, 2008 the Company's Board of Directors approved the conversion
to stock of the Company's liability to its Chief Executive Officer, A. E.
Whitehead. The liability of $274,682 was converted to 2,112,938 shares of
common stock at a price of $0.13 per share.
On February 19, 2008 the Company's Board of Directors approved granting
options to purchase 350,000 shares of the Company's common stock to
directors and employee at $0.13 per share. The options are immediately
vested and expire after ten years. The Company recorded an expense of
$41,125 for the fair market value of the options. Fair values were estimated
at the date of grant of the options, using the Black-Scholes Option Valuation
Model with the following weighted average assumptions: risk free interest
rate of 3.76%, volatility factor of the expected market price of the
Company's common stock of 147%, no dividend yield, and a weighted average
expected life of the options of 5 years. For the purpose of determining the
expected life of the options, the Company utilizes the Simplified Method as
defined in Staff Accounting Bulletin No. 107 issued by the Securities and
Exchange Commission.
Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period. The computation of diluted EPS does not assume conversion,
exercise or contingent exercise of securities that would have an anti-dilutive
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effect on losses. As a result, if there is a loss from continuing operations,
Diluted EPS is computed in the same manner as Basic EPS is computed. At
December 31, 2007 the Company has 5,067,500 and 3,817,500 options and warrants
outstanding, respectively, that were not included in the calculation of
earnings per share for the years then ended. Such financial instruments may
become dilutive and would then need to be included in future calculations of
Diluted EPS.
On April 16, 2008 the Company extended all of its outstanding warrants to
November 15, 2008.
4. SUBSEQUENT EVENTS
In April, 2008 the Company agreed to participate in re-entering and deepening
Of the Gaskill #1 well in the North Boggy Creek Dakota Prospect. The
Company's expected cost for its 6.25% interest is expected to be approximately
$27,000.
On April 16, 2008 the Company's Board of Directors agreed to extend all of the
existing warrants to purchase common stock until November 15, 2008.
On April 4, 2008 the Company sold a portion of it's ORR interest on the
Cheyenne River Prospect. The Company's portion of the proceeds were $16,500.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL TO ALL PERIODS
The Company's primary business is the exploration and development of oil and
gas interests. The Company has incurred significant losses from operations,
and there is no assurance that it will achieve profitability or obtain funds
necessary to finance its operations. Sales revenue for all periods presented
is attributable to the production of oil from the Company's Timber Draw #1-AH
and the Hooligan Draw #1-AH wells located in the Eastern Powder River Basin
in the State of Wyoming, otherwise known as the Cheyenne River Prospect.
For all periods presented, the Company's effective tax rate is 0%. The
Company has generated net operating losses since inception, which would
normally reflect a tax benefit in the statement of operations and a deferred
asset on the balance sheet. However, because of the current uncertainty as
to the Company's ability to achieve profitability, a valuation reserve has
been established that offsets the amount of any tax benefit available
for each period presented in the statements of operations.
THREE MONTH PERIOD ENDED MARCH 31, 2008, COMPARED TO THREE MONTH PERIOD
ENDED MARCH 31, 2007.
For the three months ended March 31, 2008, sales revenue decreased $649
to $0 compared to $649 for the same period during 2007. The decrease
in sales revenue was the result of no oil sales in 2008.
Well abandonment expenses decreased to $0 for the three months
ended March 31, 2008 from $809,750 in 2007.
Production and operating expenses increased $13,263 to $17,334 for the
three months ended March 31, 2008, from $4,071 for the same period in
2007. The increase was primarily due to higher consulting expenses in 2008
and lease expenses.
-8-
General and administrative expenses increased by $54,786 to $98,570 for the
three months ended March 31, 2008, from $43,784 for the same period in
2007. The increase was primarily due to stock options issued in 2008 and an
increase in professional fees.
Interest expense decreased to $0 for the three months ended March 31, 2008
from $1,725 for the same period in 2007. The decrease is due to the
settlement of the Weatherford note payable in 2007.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
As of March 31, 2008, the Company had $369,870 of cash on hand. The Company
believes that its cash on hand will allow it to finance its operations for the
next twelve months, and to participate in further exploration of the Gabbs
Valley Prospect. In order to sustain the Company's operations on a long term
basis, the Company intends to continue to look for merger opportunities and
consider public or private financings. The Company does not plan to undertake
further exploration of the Gabbs Valley or Cheyenne River Prospects without an
industry partner or additional equity placement.
OUTLOOK
In 2007, the Company entered into a Farmout and Partial Sale Agreement with a
third party. The third party purchased a one-half interest in the Timber Draw
#1-AH and the Hooligan Draw #1-AH and agreed to drill three test wells at
locations of its choice on the farmout lands. In return for drilling the
three test wells the third party will earn a 100% interest in the 480 acres
associated with the three wells subject to a small overriding royalty retained
by the Company together with a 50% interest in the balance of the farmout
block, or the remaining 27,420 acres in the Cheyenne River Prospect. After
the drilling of the three test wells, the Company's remaining interest will
be its overriding royalty on the drill site 480 acres and a 13.39% working
interest in the balance of the farmout lands.
As stated elsewhere in this Form 10-Q, on May 1, 2007, after further
testing of the Company's only well in the Gabbs Valley Prospect, the
Company decided to partially plug and abandon the well since no hydrocarbons
were recovered. However, the Company was encouraged by the data it acquired
in connection with the drilling, logging and testing of the well and
additional studies of such data, with the assistance of geological and
engineering consultants, determined that further drilling is warranted.
It is possible that excessive mud exposure in the hole for over five months
seriously impeded the process of recovering hydrocarbons. It was
determined that a new test well should be drilled using a different
method of drilling. In March, 2008 the Company entered into a farmout
agreement with a third party who has agreed to re-enter the Cobble Cuesta 1-12
well. By re-entering the Cobble Cuesta 1-12, the farmee earn's an option
to drill up to five additional wells in the Gabbs Valley Prospect.
Unfortunately, the third party was unable to fulfill the contract commitment,
Therefore, the agreement terminated by its own terms. The Company intends to
attempt to find an industry partner to drill a new test well about one-half
mile north of the Cobble Cuesta 1-12.
ADVANCES FROM RELATED PARTY
Through March 31, 2005, the Company financed its operations primarily through
advances made to the Company by the Albert E. Whitehead Living Trust, of which
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the Company's Chairman of the Board and Chief Executive Officer, Mr. Whitehead,
is the trustee. At the end of 2007 the Company was indebted to the Albert E.
Whitehead Living Trust in the amount of $274,682. This loan was converted, on
February 16, 2008, into 2,112,938 shares of the Company's common stock at
$0.13 per share.
MATERIAL RISKS
The Company has incurred significant losses from operations and there is no
assurance that it will achieve profitability or obtain funds necessary to
finance continued operations. For other material risks, see the Company's
form 10-KSB for the period ended December 31, 2007, which was filed March 31,
2008.
FORWARD-LOOKING INFORMATION
This quarterly report on Form 10-Q, including this section, includes certain
statements that may be deemed "forward-looking statements" within the meaning
of federal securities laws. All statements, other than statements of
historical facts, that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the future,
including future sources of financing and other possible business
developments, are forward-looking statements. Such statements are subject
to a number of assumptions, risks and uncertainties and could be affected by
a number of different factors, including the Company's failure to secure short
and long term financing necessary to sustain and grow its operations, increased
competition, changes in the markets in which the Company participates and the
technology utilized by the Company and new legislation regarding environmental
matters. These risks and other risks that could affect the Company's business
are more fully described in reports it files with the Securities and Exchange
Commission, including its Form 10-KSB for the fiscal year ended December 31,
2007. Actual results may vary materially from the forward-looking statements.
The Company undertakes no duty to update any of the forward-looking statements
in this Form 10-Q.
Item 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company carried out an
evaluation under the supervision of the Company's Chief Executive Officer (and
principal financial officer) of the effectiveness of the design and operation
of the Company's disclosure controls and procedures pursuant to Securities
Exchange Act Rules 13a- 15(e) and 15d-15(e). Based on this evaluation, the
Company's Chief Executive Officer (and principal financial officer) has
concluded that the disclosure controls and procedures as of the end of the
period covered by this report are effective. During the period covered by this
report, there was no change in the Company's internal controls over financial
reporting that has materially affected or that is reasonably likely to
materially affect the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 19, 2008, the Company issued 2,112,938 shares of its common
stock without registering such common stock under the Securities Act of
1933, as amended, to the Company's Chief Executive Officer, A. E. Whitehead,
in exchange for the cancellation of indebtedness of the Company owed to Mr.
Whitehead in the amount of $274,682. The indebtedness was converted using
a price per share of $0.13 per share.
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The Company relied on the exemption set forth in Section 4(2) of the
Securities Act in connection with the issuance of the securities
described above. Mr. Whitehead is a sophisticated person, there was no
underwriting in connection with the issuances of these securities and
no commissions were paid to any party upon such issuance.
Item 6. Exhibits
a) Exhibits
31 Certification of Chief Executive Officer (and principal
financial officer) pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended, and Item 601(b)(31) of Regulation S-B, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(submitted herewith).
32 Certification of Chief Executive Officer (and principal
financial officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (submitted herewith).
EMPIRE PETROLEUM CORPORATION
SIGNATURES
In accordance with the requirements of the Exchange Act, the small
business issuer caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMPIRE PETROLEUM CORPORATION
Date: May 15, 2008 By: /s/ Albert E. Whitehead
___________________
Albert E. Whitehead
Chairman/CEO
EXHIBIT INDEX
NO. DESCRIPTION
31 Certification of Chief Executive Officer (and principal
financial officer) pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended, and Item 601(b)(31) of Regulation S-B, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(submitted herewith).
32 Certification of Chief Executive Officer (and principal
financial officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (submitted herewith).
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EXHIBIT 31
CERTIFICATION
I, Albert E. Whitehead, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire
Petroleum Corporation;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and
I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the small business issuer and have;
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
small business issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business
issuer's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the controls
and procedures, as of the end of the period covered by this report
based on such evaluation; and
(c) Disclosed in this report any change in the small business
issuer's internal control over financial reporting that
occurred during the small business issuer's most recent
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the small business issuer's
internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business
issuer's ability to record, process, summarize and report financial
information; and
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(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
small business issuer's internal control over financial
reporting.
May 15, 2008 /s/ Albert E. Whitehead
Albert E. Whitehead,
Chief Executive Officer and
Principal Financial Officer
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Empire Petroleum Corporation
(the "Company") on Form 10-Q for the period ending March 31, 2008 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Albert E. Whitehead, Chief Executive Officer (and principal
financial officer) of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
May 15, 2008 /s/ Albert E. Whitehead
Albert E. Whitehead
Chief Executive Officer and
Principal Financial Officer
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