form8kgoldenaria.htm
UNITED
STATES SECURITIES AND
EXCHANGE
COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported) October 15, 2007
GOLDEN
ARIA CORP.
(Exact
name of registrant as specified in its charter)
333-130934
(Commission
File Number)
|
|
Nevada
(State
or other jurisdiction of incorporation)
|
20-1970188
(IRS
Employer Identification No.)
|
|
604
- 700
West Pender Street, Vancouver, British Columbia V6C
1G8
(Address
of principal executive offices and Zip Code)
(604)
602-1633
Registrant's
telephone number, including area code
N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
FORWARD
LOOKING STATEMENTS
This
current report contains forward-looking statements as that term is defined
in
section 27A of the United States Securities Act of 1933, as amended, and
section
21E of the United States Securities Exchange Act of 1934, as amended. These
statements relate to future events or our future results of operation or
future
financial performance, including, but not limited to, the following: any
information regarding Golden Aria Corp., a Nevada corporation described
herein,
and any statements relating to our ability to raise sufficient capital
to
finance our planned operations, our ability to identify any recoverable
oil or
gas resource or reserve of any kind, our ability to enforce or perform
under our
farm out agreements, our ability to hire the necessary personnel, and estimates
of our cash expenditures for the next 12 months. In some cases, you can
identify
forward-looking statements by terminology such as "may", "should", "intends",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential", or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and
unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" on page 4, which may cause our or our industry's
actual
results, levels of activity or performance to be materially different from
any
future results, levels of activity or performance expressed or implied
by these
forward-looking statements.
Although
we believe that the expectations reflected in the forward-looking statements
are
reasonable, we cannot guarantee future results, levels of activity or
performance. You should not place undue reliance on these statements, which
speak only as of the date that they were made. These cautionary statements
should be considered with any written or oral forward-looking statements
that we
may issue in the future. Except as required by applicable law, including
the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to reflect actual
results, later events or circumstances or to reflect the occurrence of
unanticipated events.
In
this
report, unless otherwise specified, all dollar amounts are expressed in United
States dollars and all references to “common shares” refer to the shares of
common stock in our capital stock.
As
used
in this current report and unless otherwise indicated, the terms “we”, “us” and
“our company” refer to Golden Aria Corp.
Item
1.01 Entry into a Material
Definitive Agreement.
On
October 15, 2007, we entered into a share exchange agreement with Target
Energy,
Inc., a private Nevada corporation (“Target Energy”), and the former
shareholders of Target Energy. The closing of the transactions contemplated
in
the share exchange agreement and the acquisition of all of the issued and
outstanding common stock in the capital of Target Energy occurred on November
30, 2007. Please refer to the information provided under Item 2.01 of this
current report for information related to the share exchange agreement and
our
business as a result of the acquisition.
Item
2.01 Completion of
Acquisition or Disposition of Assets.
On
November 30, 2007, we completed the acquisition of all the issued and
outstanding common stock of Target Energy pursuant to a share exchange agreement
dated October 15, 2007 among our company, as purchaser, and all of the
shareholders of Target Energy, as vendors. In exchange for all of the issued
and
outstanding shares of Target Energy, we issued to the shareholders of Target
Energy an aggregate of 13,810,000 shares of our common stock. As a result,
the
shareholders of Target Energy now own approximately 47% of our issued and
outstanding common stock.
After
giving effect to the share exchange agreement, including the issuance of
13,810,000 shares of our common stock to the shareholder of Target Energy,
we
now have 29,305,480 shares of common stock issued and outstanding.
Target
Energy, Inc. has three properties all in Southern Saskatchewan,
Canada.
The
Wordsworth property has one producing oil well which was drilled in May,
2006,
and in which Target has a 3.75% net interest. This is a horizontal
well called the Wordsworth East HZ 2A2-23/3A11-14-7-3 W2, and was considered
a
new pool discovery. A second well on this property, the Wordsworth E. HZ
3B9-23/3A11-23-7-3 W2 located on the north side of the Wordsworth prospect
area,
was deemed not commercially viable as a producing oil well. This well will
be
converted to a water injection well for the disposition of salt water from
the
first well and from future producers in the field. The injection well should
provide cost savings versus salt water trucking costs.
A
second
property also has one producing oil well on it. This is the West Queensdale
producing well named the Queensdale West HZ 4A9-25 / 3A15-25-6-2 W2. It was
drilled in February, 2007 and was placed on production on May 15, 2007.
Target has an 8.00% Gross Interest before payout (BPO) and 4% net interest
after
payout in this well.
A
third
property is an exploration property and we have no producing oil or gas wells
on
this property at this time. This is our Coteau Lake exploration project which
covers 1,280 acres of land. Target’s gross and net interest in this project is
50%. There has been historic oil production on the Coteau Lake project
lands. Our internal geological and geophysical work to date indicate
our lands could be prospective for oil & gas accumulations to have taken
place with early estimates of up to 300,000 barrels being
recoverable.
Other
properties are in varying stages of negotiation and/or evaluation and Target
will decide whether to proceed or abandon some property possibilities by
December 31, 2007. Target expects to evaluate additional properties on an
ongoing basis and will acquire interests when believed to be in the company
interest.
RISK
FACTORS
Shares
of
our common stock are speculative, especially since we are in the
exploration-stage of our new business. We operate in a volatile sector of
business that involves numerous risks and uncertainties. The risks and
uncertainties described below are not the only ones we face. Other risks
and
uncertainties, including those that we do not currently consider material,
may
impair our business. If any of the risks discussed below actually occur,
our
business, financial condition, operating results or cash flows could be
materially adversely affected. This could cause the trading price of our
securities to decline, and you may lose all or part of your investment.
Prospective investors should consider carefully the risk factors set out
below.
Risks
Related to Our Business
Because
we may never earn revenues from our operations, our business may fail and
then
investors may lose all of their investment in our
company.
We
have
no history of revenues from operations. We have never had significant operations
and have no significant assets. We have yet to generate positive earnings
and
there can be no assurance that we will ever operate profitably. Our company
has
a limited operating history. If our business plan is not successful and we
are
not able to operate profitably, then our stock may become worthless and
investors may lose all of their investment in our company.
We
expect
to incur significant losses into the foreseeable future. We recognize that
if we
are unable to generate significant revenues from future acquisitions, we
will
not be able to earn profits or continue operations. There is no history upon
which to base any assumption as to the likelihood that we will prove successful,
and we can provide no assurance that we will generate any revenues or ever
achieve profitability. If we are unsuccessful in addressing these risks,
our
business will fail and investors may lose all of their investment in our
company.
We
have a history of losses and have negative cash flows from operations, which
raises substantial doubt about our ability to continue as a going
concern.
We
have
not generated any revenues since our incorporation and we will continue to
incur
operating expenses without revenues until we are in commercial deployment.
To
date we have had negative cash flows from operations and we have been dependent
on sales of our equity securities and debt financing to meet our cash
requirements and have incurred net losses from inception to August 31, 2007
of
approximately $975,171. As of August 31, 2007 we had working capital surplus
of
$93,505. We do not expect positive cash flow from operations in the near
term.
There is no assurance that actual cash requirements will not exceed our
estimates. In particular, additional capital may be required in the event
that
drilling and completion costs increase beyond our expectations; or we encounter
greater costs associated with general and administrative expenses or offering
costs. The occurrence of any of the aforementioned events could adversely
affect
our ability to meet our business plans. We cannot provide assurances that
we
will be able to successfully execute our business plan. These circumstances
raise substantial doubt about our ability to continue as a going concern.
If we
are unable to continue as a going concern, investors will likely lose all
of
their investments in our company.
There
is
no assurance that we will operate profitably or will generate positive cash
flow
in the future. In addition, our operating results in the future may be subject
to significant fluctuations due to many factors not within our control, such
as
the unpredictability of when customers will purchase our services, the size
of
customers’ purchases, the demand for our services, and the level of competition
and general economic conditions. If we cannot generate positive cash flows
in
the future, or raise sufficient financing to continue our normal operations,
then we may be forced to scale down or even close our operations.
We
will
depend almost exclusively on outside capital to pay for the continued
exploration and development of our properties. Such outside capital may include
the sale of additional stock and/or commercial borrowing. There is no guarantee
that sufficient capital will continue to be available to meet these continuing
development costs or that it will be on terms acceptable to us. The issuance
of
additional equity securities by us would result in a significant dilution
in the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
If
we are
unable to obtain financing in the amounts and on terms deemed acceptable
to us,
we may be unable to continue our business and as a result may be required
to
scale back or cease operations for our business, the result of which would
be
that our stockholders would lose some or all of their investment.
A
decline in the price of our common stock could affect our ability to raise
further working capital and adversely impact our
operations.
A
prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because our operations have been and will be primarily financed
through
the sale of equity securities, a decline in the price of our common stock
could
be especially detrimental to our liquidity and our continued operations.
Any
reduction in our ability to raise equity capital in the future would force
us to
reallocate funds from other planned uses and would have a significant negative
effect on our business plans and operations, including our ability to develop
new products and continue our current operations. If our stock price declines,
we may not be able to raise additional capital or generate funds from operations
sufficient to meet our obligations.
We
have a limited operating history and if we are not successful in continuing
to
grow our business, then we may have to scale back or even cease our ongoing
business operations.
We
have
no history of material revenues from operations and have no significant tangible
assets. We have yet to generate positive earnings and there can be no assurance
that we will ever operate profitably. We were in the business of mineral
exploration before our acquisition of Target Energy. We have only recently
decided to shift our focus of our exploration activities from mineral to
oil and
gas. The acquisition of Target Energy is one of our earlier oil and gas related
transactions. Our company has no significant operating history in exploration
of
oil and gas at this time and must be considered in the very early development
stage. The success of our company is significantly dependent on a successful
acquisition, drilling, completion and production program. Our company’s
operations will be subject to all the risks inherent in the establishment
of a
developing enterprise and the uncertainties arising from the absence of a
significant operating history. We may be unable to locate recoverable reserves
or operate on a profitable basis. We are in the development stage and potential
investors should be aware of the difficulties normally encountered by
enterprises in the development stage. If our business plan is not successful,
and we are not able to operate profitably, investors may lose some or all
of
their investment in our company.
Because
of the early stage of development and the nature of our business, our securities
are considered highly speculative.
Our
securities must be considered highly speculative, generally because of the
nature of our business and the early stage of our development. We are engaged
in
the business of exploring and, if warranted, developing commercial reserves
of
oil and gas. Both of our properties are in the exploration stage. Accordingly,
we have not generated any revenues nor have we realized a profit from our
operations to date and there is little likelihood that we will generate any
revenues or realize any profits in the short term. Any profitability in the
future from our business will be dependent upon locating and developing economic
reserves of oil and gas, which itself is subject to numerous risk factors
as set
forth herein. Since we have not generated any revenues, we will have to raise
additional monies through the sale of our equity securities or debt in order
to
continue our business operations.
Nature
of Oil and Gas Exploration and Development involves many risks that we may
not
be able to overcome.
Oil
and
gas exploration and development is very competitive and involves many risks
that
even a combination of experience, knowledge and careful evaluation may not
be
able to overcome. As with any petroleum property, there can be no assurance
that
oil or gas will be extracted from any of the properties subject to our
exploration and production contracts. Furthermore, the marketability of any
discovered resource will be affected by numerous factors beyond our control.
These factors include, but are not limited to, market fluctuations of prices,
proximity and capacity of pipelines and processing equipment, equipment
availability and government regulations (including, without limitation,
regulations relating to prices, taxes, royalties, land tenure, allowable
production, importing and exporting of oil and gas and environmental
protection). The extent of these factors cannot be accurately predicted,
but the
combination of these factors may result in us not receiving an adequate return
on invested capital.
The
marketability of natural resources will be affected by numerous factors beyond
our control which may result in us not receiving an adequate return on invested
capital to be profitable or viable.
The
marketability of natural resources which may be acquired or discovered by
us
will be affected by numerous factors beyond our control. These factors include
market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment, governmental
regulations, land tenure, land use, regulation concerning the importing and
exporting of oil and gas and environmental protection regulations. The exact
effect of these factors cannot be accurately predicted, but the combination
of
these factors may result in us not receiving an adequate return on invested
capital to be profitable or viable.
Oil
and gas operations are subject to comprehensive regulation which may cause
substantial delays or require capital outlays in excess of those anticipated
causing an adverse effect on our company.
Oil
and
gas operations are subject to federal, state, and local laws relating to
the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations are also subject to federal, state, and local laws
and
regulations which seek to maintain health and safety standards by regulating
the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. Environmental
standards imposed by federal, provincial, or local authorities may be changed
and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us. Additionally, we may be subject to liability for pollution or other
environmental damages which we may elect not to insure against due to
prohibitive premium costs and other reasons. To date we have not been required
to spend any material amount on compliance with environmental regulations.
However, we may be required to do so in future and this may affect our ability
to expand or maintain our operations.
Exploratory
drilling involves many risks and we may become liable for pollution or other
liabilities which may have an adverse effect on our financial
position.
Drilling
operations generally involve a high degree of risk. Hazards such as unusual
or
unexpected geological formations, power outages, labour disruptions, blow-outs,
sour gas leakage, fire, inability to obtain suitable or adequate machinery,
equipment or labour, and other risks are involved. We may become subject
to
liability for pollution or hazards against which it cannot adequately insure
or
which it may elect not to insure. Incurring any such liability may have a
material adverse effect on our financial position and operations.
Any
change to government regulation/administrative practices may have a negative
impact on our ability to operate and our
profitability.
The
business of resource exploration and development is subject to regulation
relating to the exploration for, and the development, upgrading, marketing,
pricing, taxation, and transportation of oil and gas and related products
and
other matters. Amendments to current laws and regulations governing operations
and activities of oil and gas exploration and development operations could
have
a material adverse impact on our business. In addition, there can be no
assurance that income tax laws, royalty regulations and government incentive
programs related to the properties subject to our exploration and production
contracts and the oil and gas industry generally, will not be changed in
a
manner which may adversely affect our progress and cause delays, inability
to
explore and develop or abandonment of these interests.
Permits,
leases, licenses, and approvals are required from a variety of regulatory
authorities at various stages of exploration and development. There can be
no
assurance that the various government permits, leases, licenses and approvals
sought will be granted in respect of our activities or, if granted, will
not be
cancelled or will be renewed upon expiry. There is no assurance that such
permits, leases, licenses, and approvals will not contain terms and provisions
which may adversely affect our exploration and development
activities.
We
will require substantial funds to enable us to decide whether our non-producing
properties contain commercial oil and gas deposits and whether they should
be
brought into production, and if we cannot raise the necessary funds we may
never
be able to realize the potential of these properties.
Our
decision as to whether our non-producing properties contain commercial oil
and
gas deposits and should be brought into production will require substantial
funds and depend upon the results of exploration programs and feasibility
studies and the recommendations of duly qualified engineers, geologists,
or
both. This decision will involve consideration and evaluation of several
significant factors including but not limited to: (1) costs of bringing a
property into production, including exploration and development work,
preparation of production feasibility studies, and construction of production
facilities; (2) availability and costs of financing; (3) ongoing costs of
production; (4) market prices for the oil and gas to be produced; (5)
environmental compliance regulations and restraints; and (6) political climate,
governmental regulation and control. If we are unable to raise the funds
necessary to properly evaluate our non-producing properties, then we may
not be
able to realize any potential of these properties.
Oil
and gas operations are subject to comprehensive regulation which may cause
substantial delays or require capital outlays in excess of those anticipated
causing an adverse effect on our company. Further, exploration and production
activities are subject to certain environmental regulations which may prevent
or
delay the commencement or continuance of our
operations.
Oil
and
gas operations in Canada are subject to federal and local laws relating to
the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations in Canada are also subject to federal and local laws
and
regulations which seek to maintain health and safety standards by regulating
the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. No assurance can
be
given that environmental standards imposed by federal or local authorities
will
not be changed or that any such changes would not have material adverse effects
on our activities. Moreover, compliance with such laws may cause substantial
delays or require capital outlays in excess of those anticipated, thus causing
an adverse effect on us. Additionally, we may be subject to liability for
pollution or other environmental damages which we may elect not to insure
against due to prohibitive premium costs and other reasons. Our current
exploration and drilling activities are subject to the aforementioned
environment regulations.
Compliance
with these laws and regulations has not had a material effect on our operations
or financial condition to date. Specifically, we are subject to legislation
regarding emissions into the environment, water discharges and storage and
disposition of hazardous wastes. In addition, legislation has been enacted
which
requires well and facility sites to be abandoned and reclaimed to the
satisfaction of state authorities. However, such laws and regulations are
frequently changed and we are unable to predict the ultimate cost of compliance.
Generally, environmental requirements do not appear to affect us any differently
or to any greater or lesser extent than other companies in the
industry.
Based
upon our review of the environmental regulations that we are currently subject
to, we believe that our operations comply, in all material respects, with
all
applicable environmental regulations.
Exploratory
drilling involves many risks and we may become liable for pollution or other
liabilities which may have an adverse effect on our financial
position.
Drilling
operations generally involve a high degree of risk. Hazards such as unusual
or
unexpected geological formations, power outages, labor disruptions, blow-outs,
sour gas leakage, fire, inability to obtain suitable or adequate machinery,
equipment or labour, and other risks are involved. We may become subject
to
liability for pollution or hazards against which we cannot adequately insure
or
which we may elect not to insure. Incurring any such liability may have a
material adverse effect on our financial position and operations.
As
some of our properties are in the exploration stage there can be no assurance
that we will establish commercial discoveries on our
properties.
Exploration
for economic reserves of oil and gas is subject to a number of risk factors.
Few
of the properties that are explored are ultimately developed into producing
oil
and/or gas wells. One of our properties is in the exploration stage only
and is
without proven reserves of oil and gas. Our other properties are primarily
in
the exploration stage and have one productive well each. There can be no
assurances that we will establish commercial discoveries on any of our
properties or maintain current production at our productive wells.
The
potential profitability of oil and gas ventures depends upon factors beyond
the
control of our company.
The
potential profitability of oil and gas properties is dependent upon many
factors
beyond our control. For instance, world prices and markets for oil and gas
are
unpredictable, highly volatile, potentially subject to governmental fixing,
pegging, controls, or any combination of these and other factors, and respond
to
changes in domestic, international, political, social, and economic
environments. Additionally, due to world-wide economic uncertainty, the
availability and cost of funds for production and other expenses have become
increasingly difficult, if not impossible, to project. These changes and
events
may materially affect our financial performance.
Adverse
weather conditions can also hinder drilling operations. A productive well
may
become uneconomic in the event water or other deleterious substances are
encountered which impair or prevent the production of oil and/or gas from
the
well. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. The marketability
of oil
and gas which may be acquired or discovered will be affected by numerous
factors
beyond our control. These factors include the proximity and capacity of oil
and
gas pipelines and processing equipment, market fluctuations of prices, taxes,
royalties, land tenure, allowable production and environmental protection.
The
extent of these factors cannot be accurately predicted but the combination
of
these factors may result in our company not receiving an adequate return
on
invested capital.
Competition
in the oil and gas industry is highly competitive and there is no assurance
that
we will be successful in acquiring the licenses.
The
oil
and gas industry is intensely competitive. We compete with numerous individuals
and companies, including many major oil and gas companies, which have
substantially greater technical, financial and operational resources and
staffs.
Accordingly, there is a high degree of competition for desirable oil and
gas
properties for drilling operations and necessary drilling equipment, as well
as
for access to funds. There can be no assurance that the necessary funds can
be
raised or that any projected work will be completed. There are other competitors
that have operations in the properties in Colombia and the presence of these
competitors could adversely affect our ability to acquire additional property
interests.
Any
change to government regulation/administrative practices in regards to
conducting business generally in Canada may have a negative impact on our
ability to operate and our profitability.
There
is
no assurance that the laws, regulations, policies or current administrative
practices of any government body, organization or regulatory agency in Canada
or
any other jurisdiction, will not be changed, applied or interpreted in a
manner
which will fundamentally alter the ability of our company to carry on our
business in Canada.
The
actions, policies or regulations, or changes thereto, of any government body
or
regulatory agency, or other special interest groups, may have a detrimental
effect on us. Any or all of these situations may have a negative impact on
our
ability to operate and/or our profitability in Canada.
Item
3.02 Unregistered
Sales
On
November 29, 2007, we issued 13,810,000 shares of our common stock to the
shareholders of Target Energy, in exchange for all of the issued and outstanding
common shares of Target Energy.
The
13,810,000 shares of our common stock were issued to the Target Energy
shareholders pursuant to exemptions from registration as set out under Rule
903
of Regulation S promulgated under the Securities Act of 1933, as amended.
No
advertising or general solicitation was employed in offering the securities.
None of the former shareholders of Target Energy were U.S. persons or were
acquiring the securities for the account or benefit of any U.S. person. The
share certificates issued by our company to the former shareholders of Target
Energy contain a legend stating that transfer is prohibited except in accordance
with the provisions of Regulation S, pursuant to registration under the
Securities Act of 1933, or pursuant to an available exemption from
registration.
Item
5.02
|
Departure
Of Directors Or Certain Officers; Election Of Directors; Appointment
Of
Certain Officers; Compensatory Arrangements Of Certain
Officers
|
In
connection with the closing of the share exchange agreement on November 30,
2007
Gerard Carlson resigned as our President, but remained as a
director. Robert McAllister was appointed as
President. Hugh Reid and James Letourneau were appointed as members
of our board of directors.
For
clarity, our executive officers now consist of Robert McAllister, President
and
Principal Executive Officer and Chris Bunka, Principal Financial
Officer, CEO, Secretary and Treasurer. Our board of directors
now consists of Gerard Carlson, Chris Bunka, Hugh Reid and James
Letourneau.
Robert
McAllister, President: Mr. McAllister
is a resource investment entrepreneur with over 20 years experience in resource
sector evaluations and commodity cycle analysis. He brings extensive
knowledge and expertise in building a successful company.
Hugh
Reid, Director: Mr. Hugh Reid,
petroleum geologist with over 35 years experience in the oil patch in North
America & overseas, 7 years with Mobil Oil & 28 years as an independent
consultant in Calgary. He specializes in Drill Stem Testing (DST)
interpretation & identifying wells which have "missed Pay" (bypassed
production).
James
Letourneau, Director: Mr. James Letourneau, is a
petroleum geologist with expertise in petroleum hydrogeology and geochemistry.
He is a well regarded independent commentator and conference speaker. Jim
is a
member of the Association of Professional Engineers, Geologists, and
Geophysicists of Alberta; American Association of Petroleum Geologists; Canadian
Association of Petroleum Geologists; and, the Canadian Society for
Unconventional Gas.
In
addition to the above, we consider that the following consultants/advisors
will
be significant consultants for our operations going forward:
Ms.
Jennifer Wells, petroleum geologist with over 25 years of oil industry
experience. She is the chief geologist with Seven Energy (Canada) Inc. Based
in
Calgary. She has specialized in shallow gas plays such as the Edmonton Formation
and manages here own consulting company Jennifer Wells & Associates
Ltd.
Mr.
Alex
DeGreeve, B.Sc. Degree in Geological Engineering with over 45 years of
diversified experience in the oil & gas industry mainly in Western Canada;
35 years with a major oil company and the remainder as an independent oil
&
gas consultant.
Mr.
Richard Mayers is a petroleum geophysicist. and petroleum geologist with
over 35
years of exploration and development experience working in the O & G
industry in Western and Frontier Canada, the USA, and
Internationally. He has worked for ExxonMobil, Suncor, PanCanadian
(Encana). He is an E & D Consultant and has served as a
consultant and advisor to the GSC, Petro-Canada/RECOPE, OMV, Technika/AGOCO,
Boyd Petrosearch, PEMEX, Schlumberger/SONANGOL and other companies.
Mr.
Kristian Ross, President of Coyote Copper, Inc. was the former President
of
Redhawk Resources, Inc. and Erickson Gold Mines Limited. His years of operating
resource companies in the public arena adds depth to the Company's management
expertise, including forward-looking strategic corporate planning, mergers
and
acquisitions.
Dr.
John
Andrichuk has over 50 years of very successful oil industry
experience. He is an owner of the firm of Andrichuk and Edie,
Independent Geologists; and has been the co-discoverer of more than 10, Western
Canadian Sedimentary Basin oil and gas fields; including the Morinville Leduc
D-3B pinnacle reef that has produced over 10 million barrels of barrels of
light
oil, to date. He is an extensively published authority on
stratigraphy with emphasis on the Devonian time period, and his primary focus
for Target is in the search for new oil pools from that period.
Item
9.01 Financial
Statements and Exhibits.
The
financial statements included herein are stated in United States dollars
(US$)
and are prepared in accordance with United States Generally Accepted Accounting
Principles.
The
following financial statements are included in this current report:
Financial
Statements for Target Energy Inc. (Audited) for the period from February
2, 2006
(inception) to August 31, 2007
Pro
forma
Financial Statements for Target Energy Inc. and Golden Aria Corp.
(Unaudited).
Pro
Forma
Combined Condensed Consolidated Balance Sheet as at August 31,
2007.
Pro
Forma
Combined Condensed Consolidated Statement of Operations for the twelve-month
period ended August 31, 2007.
Notes
to
the Pro Forma Combined Condensed Consolidated Financial Information
Copies
of
the following documents are included as exhibits to this current report pursuant
to Item 601 of Regulation S-B:
Exhibit
Number
|
Description
|
(2)
|
Plan
of Purchase, Sale, Reorganization, Arrangement, Liquidation or
Succession
|
2.1
|
Share
exchange agreement dated October 15, 2007 between our company,
Target
Energy Corp. and the shareholders of Target Energy
Corp.
|
(21)
|
Subsidiaries
of the Small Business Issuer
|
21.1
|
Target
Energy Corp., a Nevada company
|
TARGET
ENERGY INC.
(AN
EXPLORATION STAGE COMPANY)
FINANCIAL
STATEMENTS
AUGUST
31, 2007
Vellmer
& Chang
|
505
– 815 Hornby Street
Vancouver,
B.C, V6Z 2E6
Tel: 604-687-3776
Fax:
604-687-3778
*
denotes a firm of incorporated
professionals
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
TARGET
ENERGY INC.
(An
exploration stage company)
We
have
audited the balance sheet of TARGET ENERGY INC. (“the Company”)
(an exploration stage company) as at August 31, 2007 and
the related statements of stockholders’ equity, operations and cash flows for
the fourteen months ended August 31, 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as at August 31, 2007
and the results of their operations and their cash flows for the fourteen ended
August 31, 2007 in conformity with generally accepted accounting principles
in
the United States of America.
The
accompanying financial statements refer to above have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company has incurred losses from
inception and further losses are anticipated. These factors raise
substantial doubt about its ability to continue as a going
concern. Management’s plans in regard to these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Vancouver,
Canada
|
“VELLMER
& CHANG”
|
November
7, 2007
|
Chartered
Accountants
|
TARGET
ENERGY INC.
|
|
(An
Exploration Stage Company)
|
|
BALANCE
SHEET
|
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
AUGUST
31,
|
|
|
|
2007
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
Cash
and cash equivalents
|
|
$ |
347,456
|
|
Accounts
receivable
|
|
|
7,223
|
|
Prepaid
expenses and deposit
|
|
|
23,664
|
|
|
|
|
|
|
Total
current assets
|
|
|
378,343
|
|
|
|
|
|
|
Oil
and gas properties (Note 3)
|
|
|
383,325
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
761,668
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$ |
74,211
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
74,211
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
|
Authorized:
|
|
|
|
|
75,000,000
common shares with a par value of $0.001 per share
|
|
|
|
|
|
|
|
|
|
Issued and outstanding:
|
|
|
|
|
13,810,000
common shares at August 31, 2007
|
|
|
13,810
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
836,790
|
|
|
|
|
|
|
Deficit
accumulated during the exploration stage
|
|
|
(163,143 |
) |
|
|
|
|
|
Total
Stockholders' Equity
|
|
|
687,457
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$ |
761,668
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
|
|
Approved
by the Board of Directors: |
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Director
|
TARGET
ENERGY INC.
|
|
(An
Exploration Stage Company)
|
|
STATEMENTS
OF STOCKHOLDERS' EQUITY
|
|
FEBRUARY
2, 2006 (inception) TO AUGUST 31, 2007
|
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
COMMON
STOCK
|
|
|
ADDITIONAL
|
|
|
DURING
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
PAID-IN
|
|
|
EXPLORATION
|
|
|
STOCKHOLDERS'
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
CAPITAL
|
|
|
STAGE
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
February 2, 2006 (Inception)
|
|
|
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash
|
|
|
1,025,000
|
|
|
|
1,025
|
|
|
|
9,225
|
|
|
|
-
|
|
|
|
10,250
|
|
at $0.01 per share on June 30, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(360 |
) |
|
|
(360 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2006
|
|
|
1,025,000
|
|
|
|
1,025
|
|
|
|
9,225
|
|
|
|
(360 |
) |
|
|
9,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash
|
|
|
14,135,000
|
|
|
|
14,135
|
|
|
|
127,215
|
|
|
|
-
|
|
|
|
141,350
|
|
at $0.01 per share on December 5, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
repurchased and cancelled
|
|
|
(100,000 |
) |
|
|
(100 |
) |
|
|
(900 |
) |
|
|
-
|
|
|
|
(1,000 |
) |
at $0.01 per share on February 27, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
repurchased and cancelled
|
|
|
(5,000,000 |
) |
|
|
(5,000 |
) |
|
|
(45,000 |
) |
|
|
-
|
|
|
|
(50,000 |
) |
at $0.01 per share on August 29, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash
|
|
|
3,750,000
|
|
|
|
3,750
|
|
|
|
746,250
|
|
|
|
-
|
|
|
|
750,000
|
|
at $0.20 per share on August 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(162,783 |
) |
|
|
(162,783 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
August 31, 2007
|
|
|
13,810,000
|
|
|
$ |
13,810
|
|
|
$ |
836,790
|
|
|
$ |
(163,143 |
) |
|
$ |
687,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
|
|
TARGET
ENERGY INC.
|
|
(An
Exploration Stage Company)
|
|
STATEMENTS
OF OPERATIONS
|
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
CUMULATIVE
|
|
|
|
|
|
|
|
|
|
PERIOD
FROM
|
|
|
|
FOURTEEN
|
|
|
TWELVE
|
|
|
INCEPTION
|
|
|
|
MONTHS
|
|
|
MONTHS
|
|
|
FEBRUARY
2
|
|
|
|
ENDED
|
|
|
ENDED
|
|
|
2006
TO
|
|
|
|
AUGUST
31
|
|
|
JUNE
30
|
|
|
AUGUST
31
|
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
Natural
gas and oil revenue
|
|
$ |
87,994
|
|
|
$ |
70,785
|
|
|
$ |
87,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural
gas and oil operating costs and royalties
|
|
|
29,782
|
|
|
|
20,741
|
|
|
|
29,782
|
|
Depletion
|
|
|
102,249
|
|
|
|
82,252
|
|
|
|
102,249
|
|
Write
down in carrying value of oil and gas property
|
|
|
119,916
|
|
|
|
96,465
|
|
|
|
119,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251,947
|
|
|
|
199,458
|
|
|
|
251,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
(163,953 |
) |
|
|
(128,673 |
) |
|
|
(163,953 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
|
|
|
8,000
|
|
|
|
5,000
|
|
|
|
8,000
|
|
Bank
charges and interest expense
|
|
|
361
|
|
|
|
291
|
|
|
|
361
|
|
Consulting
|
|
|
2,665
|
|
|
|
292
|
|
|
|
2,665
|
|
Fees
and dues
|
|
|
2,780
|
|
|
|
2,780
|
|
|
|
2,780
|
|
Legal
|
|
|
2,797
|
|
|
|
2,200
|
|
|
|
2,797
|
|
Office
and miscellaneous
|
|
|
3,103
|
|
|
|
2,565
|
|
|
|
3,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
|
19,706
|
|
|
|
13,128
|
|
|
|
20,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
for the period before other income
|
|
|
(183,659 |
) |
|
|
(141,801 |
) |
|
|
(184,019 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
4,412
|
|
|
|
3,175
|
|
|
|
4,412
|
|
Foreign
exchange gain
|
|
|
16,464
|
|
|
|
16,710
|
|
|
|
16,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
$ |
(162,783 |
) |
|
$ |
(121,916 |
) |
|
$ |
(163,143 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
- basic and diluted
|
|
|
9,892,916
|
|
|
|
9,046,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
|
|
TARGET
ENERGY INC.
|
|
(An
Exploration Stage Company)
|
|
STATEMENTS
OF CASH FLOWS
|
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CUMULATIVE
|
|
|
|
|
|
|
|
|
|
PERIOD
FROM
|
|
|
|
FOURTEEN
|
|
|
TWELVE
|
|
|
INCEPTION
|
|
|
|
MONTHS
|
|
|
MONTHS
|
|
|
FEBRUARY
2
|
|
|
|
ENDED
|
|
|
ENDED
|
|
|
2006
TO
|
|
|
|
AUGUST
31
|
|
|
JUNE
30
|
|
|
AUGUST
31
|
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
$ |
(162,783 |
) |
|
$ |
(121,916 |
) |
|
$ |
(163,143 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
to reconcile net loss to net cash
used
in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depletion
|
|
|
102,249
|
|
|
|
82,252
|
|
|
|
102,249
|
|
Write
down in carrying value of oil and gas properties
|
|
|
119,916
|
|
|
|
96,465
|
|
|
|
119,916
|
|
Adjusted
cash flows used in operating activities
|
|
|
59,382
|
|
|
|
56,801
|
|
|
|
59,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(7,223 |
) |
|
|
(7,171 |
) |
|
|
(7,223 |
) |
Prepaid
expenses and deposit
|
|
|
(23,664 |
) |
|
|
(24,706 |
) |
|
|
(23,664 |
) |
Accounts
payable and accrued liabilities
|
|
|
24,211
|
|
|
|
5,000
|
|
|
|
24,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
52,706
|
|
|
|
29,924
|
|
|
|
52,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows used in investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas properties acquisition
|
|
|
(605,490 |
) |
|
|
(552,301 |
) |
|
|
(605,490 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(605,490 |
) |
|
|
(552,301 |
) |
|
|
(605,490 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
890,350
|
|
|
|
785,350
|
|
|
|
900,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash from financing activities
|
|
|
890,350
|
|
|
|
785,350
|
|
|
|
900,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in cash and cash equivalents
|
|
|
337,566
|
|
|
|
262,973
|
|
|
|
347,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
|
9,890
|
|
|
|
9,890
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
$ |
347,456
|
|
|
$ |
272,863
|
|
|
$ |
347,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
|
|
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
1. Incorporation
The
Company was formed of February 6, 2006 under the laws of the State of Nevada
and
commenced its principal operations on July 1, 2006. The Company’s
principal business is in identification, acquisition and exploration of oil
and
gas properties. During the fourteen months ended August 31, 2007, the
Company acquired and participated certain oil and gas working interests and
venture projects and commenced the revenue generation. The Company is
considered to be an exploration stage company as the revenue generated from
the
oil and gas properties were not substantial in terms of the Company’s intended
overall operations.
The
Company has an office in Kelowna, B.C. Canada. During the year, the
Company changed its year end from June 30 to August 31. The
accompanying financial statements have been presented with balance sheet as
at
August 31, 2007 and statements of operations and cash flows for fourteen months
ended August 31, 2007 and twelve months ended June 30, 2007.
These
financial statements have been prepared in conformity with generally accepted
accounting principles in the United States of America with the on-going
assumption that we will be able to realize our assets and discharge its
liabilities in the normal course of business. As shown in the
accompanying financial statements, we have incurred operating losses since
inception and further losses are anticipated in the development of our
business. These factors raise substantial doubt about our ability to
continue as a going concern. These financial statements do not
include any adjustments to the amounts and classifications of assets and
liabilities that might be necessary should we be unable to continue as a going
concern. Management plans to fund its future operations by obtaining
additional financing. However, there is no assurance that we will be
able to obtain additional financing from investors or private
lenders.
2. Significant
Accounting Policies
(a) Principles
of Accounting
These
financials statements are stated in U.S. dollars and have been prepared in
accordance with U.S. generally accepted accounting principles.
(b) Revenue
Recognition
The
Company uses the sales method of accounting for natural gas and oil
revenues. Under this method, revenues are recognized upon the passage
of title, net of royalties. Revenues from natural gas production are
recorded using the sales method. When sales volumes exceed the
Company’s entitled share, an overproduced imbalance occurs. To the
extent the overproduced imbalance exceeds the Company’s share of the remaining
estimated proved natural oil and gas reserves for a given property, the Company
records a liability. At August 31, 2007 the Company had no
overproduced imbalances.
(c) Cash
and Cash Equivalents
Cash
equivalents comprise certain highly liquid instruments with a maturity of three
months or less when purchased. As of August 31, 2007, cash and cash
equivalents consist of cash only.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
(d) Oil
and Gas Properties
The
Company utilizes the full cost method to account for its investment in oil
and
gas properties. Accordingly, all costs associated with acquisition,
exploration and development of oil and gas reserves, including such costs as
leasehold acquisition costs, capitalized interest costs relating to unproved
properties, geological expenditures, tangible and intangible development costs
including direct internal costs are capitalized to the full cost
pool. When the Company obtains proven oil and gas reserves,
capitalized costs, including estimated future costs to develop the reserves
and
estimated abandonment costs, net of salvage, will be depleted on the
units-of-production method using estimates of proved
reserves. Investments in unproved properties and major development
projects including capitalized interest, if any, are not amortized until proved
reserves associated with the projects can be determined. If the
future exploration of unproved properties are determined uneconomical the amount
of such properties are added to the capitalized cost to be
amortized.
The
capitalized costs included in the full cost pool are subject to a “ceiling
test”, which limits such costs to the aggregate of the estimated present value,
using a ten percent discount rate of the future net revenues from proved
reserves, based on current economic and operating conditions.
Sales
of
proved and unproved properties are accounted for as adjustments of capitalized
costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in the
statement of operations.
Exploration
activities conducted jointly with others are reflected at the Company’s
proportionate interest in such activities.
Cost
related to site restoration programs are accrued over the life of the
project.
(e) Accounting
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates and
assumptions.
(f) Loss
Per Share
Loss
per
share is computed using the weighted average number of shares outstanding during
the period. The Company has adopted SFAS No.128 “Earnings Per
Share”. Diluted loss per share is equivalent to basic loss per share
because there was no other equity-based financial instruments outstanding as
at
August 31, 2007.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
(g) Foreign
Currency Translations
The
Company’s operations are located in the United States of America and Canada, and
it has an office in Canada. The Company maintains its accounting
records in U.S. Dollars, as follows:
At
the
transaction date, each asset, liability, revenue and expense that was acquired
or incurred in a foreign currency is translated into U.S. dollars by the using
of the exchange rate in effect at that date. At the period end,
monetary assets and liabilities are translated at the exchange rate in effect
at
that date. The resulting foreign exchange gains and losses are
included in operations.
(h) Fair
Value of Financial Instruments
Fair
value estimates of financial instruments are made at a specific point in time,
based on relevant information about financial markets and specific financial
instruments. As these estimates are subjective in nature, involving
uncertainties and matters of significant judgment, they cannot be determined
with precision. Changes in assumptions can significantly affect
estimated fair values.
The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair value. These financial instruments include
cash and cash equivalents, accounts receivable, accounts payable, accrued
liabilities and due to related parties. Fair values were assumed to
approximate carry values for these financial instruments, since they are short
term in nature and their carrying amounts approximate fair values or they are
receivable or payable on demand. Management is of the opinion that
the Company is not exposed to significant interest or credit risks arising
from
these financial instruments. The Company may operate outside the
United States of America and thus may have significant exposure to foreign
currency risk in the future due to the fluctuation of the currency in which
the
Company operates and the U.S. dollars.
(i) Income
Taxes
The
Company has adopted statement of Financial Accounting Standards No. 109 (SFAS
109), Accounting for Income Taxes, which requires the Company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in the Company’s financial
statements or tax returns using the liability method. Under this
method, deferred tax liabilities and assets are determined based on the
temporary differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the year in which the
differences are expected to reverse.
(j) Long-Lived
Assets Impairment
Long-term
assets of the Company are reviewed for impairment when circumstances indicate
the carrying value may not be recoverable in accordance with the guidance
established in Statement of Financial Accounting Standards No. 144 (SFAS 144),
Accounting for the impairment or Disposal of Long-Lived
Assets. For assets that are to be held and used, an impairment
loss is recognized when the estimated undiscounted cash flows associated with
the asset or group of assets is less than their carrying value. If
impairment exists, an adjustment is made to write the asset down to its fair
value, Fair values are determined based on discounted cash flows or internal
and
external appraisals, as applicable. Assets to be disposed of are
carried at the lower of carrying value or estimated net realizable
value.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
(k) Asset
Retirement Obligations
The
Company accounts for asset retirement obligations in accordance with the
provisions of SFAS 143 “Accounting for Asset Retirement
Obligations”. SFAS 143 requires the Company to record the fair
value of an asset retirement obligation as a liability in the period in which
it
incurs a legal obligation associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development and/or normal
use of the assets. The management of the Company had estimated the
asset retirement obligation to be immaterial and therefore was not reflected
on
the financial statements as of August 31, 2007.
(l) Comprehensive
Income
The
Company has adopted Statement of Financial Accounting Standards No. 130 (SFAS
130), Reporting Comprehensive Income, which establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. The Company is disclosing this information on its Statement
of Stockholders’ Equity. Comprehensive income comprises equity except
those transactions resulting from investments by owners and distributions to
owners.
(m) Concentration
of credit risk
The
Company places its cash and cash equivalent with high credit quality financial
institution. As of August 31, 2007, the Company had approximately
$253,198 in a bank beyond insured.
(n) Other
recent Accounting Pronouncements
|
(i)
|
In
June 2006, FASB issued FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement
No.
109”, which prescribes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax
position
taken or expected to be taken in a tax return. FIN 48 also provides
guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48
is
effective for fiscal years beginning after December 15, 2006.
The Company does not expect the
adoption
of FIN 48 to have a material effect on its financial condition or
results
of operations.
|
|
(ii)
|
In
September 2006, FASB issued SFAS No. 157, “Fair Value Measurements” which
defines fair value, establishes a framework for measuring fair value
in
generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. Where applicable, SFAS No. 157 simplifies
and codifies related guidance within GAAP and does not require any
new
fair value measurements. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007,
and
interim periods within those fiscal years. Earlier adoption is encouraged.
The Company does not expect the adoption of SFAS No. 157 to have
a
material effect on its financial condition or results of
operations.
|
|
(iii)
|
In
September 2006, FASB issued SFAS No. 158, “Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans, an amendment
of
FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158 requires, among
other things, that a company (1) recognize a net liability or asset
to
report the funded status of their defined benefit pensions and other
postretirement plans on its balance sheet and (2) measure benefit
plan
assets and benefit obligations as of the company's balance sheet
date.
Calendar year-end companies with publicly traded equity securities
are
required to adopt the recognition and disclosure provisions of SFAS
158 as
of December 31, 2006. The Company does not expect the adoption of
SFAS No.
158 to have a material effect on its financial condition or results
of
operations.
|
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
|
(iv)
|
In
September 2006, the SEC announced Staff Accounting Bulletin No. 108
(“SAB
108”). SAB 108 addresses how to quantify financial statement errors that
arose in prior periods for purposes of assessing their materiality
in the
current period. It requires analysis of misstatements using both
an income
statement (rollover) approach and a balance sheet (iron curtain)
approach
in assessing materiality. It clarifies that immaterial financial
statement
errors in a prior SEC filing can be corrected in subsequent filings
without the need to amend the prior filing. In addition, SAB 108
provides
transitional relief for correcting errors that would have been considered
immaterial before its issuance. The Company does not expect the adoption
of SAB 108 to have a material effect on its financial condition or
results
of operations.
|
|
(v)
|
In
February 2007, the FASB issued SFAS No. 159, “The fair value Option for
Financial Assets and Financial Liabilities – Including an Amendment of
FASB Statement No. 115”. This statements objective is to improve
financial reporting by providing the Company with the opportunity
to
mitigate volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply complex
hedge
accounting provisions. This statement is expected to expand the use
of
fair value measurement, which is consistent with the FASB’s long-term
measurement objective for accounting for financial instruments. The
adoption of SFAS 159 did not have an impact on the Company’s financial
statements. The Company presently comments on significant accounting
policies (including fair value of financial instruments) in Note
2 to the
financial statements.
|
(p) Stock-Based
Compensation
The
Company adopted SFAS No. 123(revised), "Share-Based Payment", to
account for its stock options and similar equity instruments
issued. Accordingly, compensation costs attributable to stock options
or similar equity instruments granted are measured at the fair value at the
grant date, and expensed over the expected vesting period. SFAS No.
123(revised) requires excess tax benefits be reported as a financing cash inflow
rather than as a reduction of taxes paid.
The
Company did not grant any stock options during the fourteen months ended August
31, 2007.
3.
Oil and Gas Properties
West
Queensdale, Saskatchewan
On
February 13, 2007, the Company entered into a Participation and Trust Agreement
(the “Agreement”) with Odin Capital Inc. (“Odin”), whereas
On
September 1, 2006, Odin entered into a farmout, option and participation letter
agreement (“Head Agreement”) between Texalta Petroleum Ltd., Petrex energy Ltd.,
Jonpol Investments Ltd., AJohn A. Pollock, Shewan Energy Corporation, and Lomax
Energy Ltd. (collectively, the “Farmors”) with respect to, inter alia,
the north east quarter (NE ¼) of Section twenty five (25), Township six (6),
Range two (2) West of the second meridian (W2M) in the West Queensdale,
Saskatchewan area (“Farmout Land”). Pursuant to the Head Agreement,
Odin as farmee has the right to earn:
·
|
a
net 60% before payout (“BPO”) and net 30% after payout (“APO”) working
interest in the test well on the Farmout Land subject to a 5% gross
overriding royalty (the “GORR”) to Farmors which will terminate at payout;
and
|
·
|
a
net 30% working interest in the balance of farmout lands.;
and
|
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
The
Company wishes to participate with Odin in the Head Agreement by paying a 8%
of
the costs (8.0% of original 100%) associated with the test well to be paid
by
Odin pursuant to Article 4.03 of the Head Agreement (the “Drilling Cost
Interests”).
Pursuant
to the Agreement and in connection with the above Head Agreement, upon receipt
by Odin from the operator of an Authority for Expenditure (“AFE”) with respect
to its 60% share of the Drilling Cost Interest, the Company will pay Odin its
proportionate share of such amount. Upon test well being drilled and completed
or abandoned, and providing that the Company is not in default under the
Agreement, the Company will earn an net 8.0% BPO and net 4.0% APO net working
interest in such test well and a net 4.0% net working interest in the balance
of
the Farmout Land in accordance with Article 6 of the Head
Agreement.
As
at
August 31, 2007, the Company had made CAD$116,762 to Odin, represented as the
Company’s share cost in connection with the above noted Agreement.
Wordsworth,
Saskatchewan
On
October 1, 2006, the Company entered into a Purchase and Sale Agreement (the
“Transfer Agreement”) with 0743608 B.C. Ltd. (“Vendor” or “Assignor”), a
corporation organized and existing under the laws of British Columbia, Canada,
for certain oil and gas working interest in Wordsworth Area, Saskatchewan;
whereas
On
April
10, 2006, 0743608 B.C. Ltd., Odin Capital Inc., Delta Oil and Gas (Canada)
Inc.,
Last Mountain Investments Inc., 264646 Alberta Ltd. and LL & S Holding Ltd.
(collectively, the “Farmees”) entered into a Farmout, Option and Participation
Letter Agreement (“Master Agreement”) with Petrex Energy Ltd., (the “Farmor”)
with respect of oil and gas working interest in Wordsworth Area,
Saskatchewan. Farmor has a 42.5% working interest in Petroleum and
Natural Gas leases as described in Schedule “A” of the Master
Agreement. Texalta Petroleum Ltd. (“Texlta”) has the remaining 57.50%
working interest in these leases. Texalta as operator proposes to
commence drilling the Texalta et al Wordsworth East HZ 2A2-23-4B11-14-7-3 W2M
well prior to July 1, 2006. Texalta intends to participate in the
test well as to its 57.50% working interest. Farmor proposes to
farmout its 42.50% working interest in the test well and Farmount and Option
Land to Farmees on following terms and conditions:
·
|
Farmees
to pay 100% of the Farmor’s 42.5% cost of drilling, completing and
equipping the test well to earn a 42.5% before payout (“BPO”) and 21.25%
working interest after payout (“APO”) in the test well subject to a 5%
Gross Overriding Royalty to Farmor until payout and a 21.25% working
interest in the farmout lands.
|
·
|
Upon
completion or abandonment of the test well, Farmees will have a three
month period to elect to participate in a vertical test well on the
option
lands to earn the same working interest in the test well and balance
of
the Option Lands as set forth in the Master
Agreement.
|
·
|
Pursuant
to the Master Agreement, 0743608 B.C. Ltd as a farmee has the
right to earn:
|
|
1.
|
a
net 7.5% before payout (“BPO”) and net 3.75% after payout
(“APO”) working interest in the test well on the Farmout Land subject to
a
5% gross overriding royalty (the “GORR”) to the Farmor which will
terminate at payout; and
|
|
2.
|
a
net 3.75% working interest in the balance of Farmout and Option
Lands.
|
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
Pursuant
to the Transfer Agreement and in connection with the above noted Master
Agreement, the Assignor
assigned its interest covers 100% of Assignor’s entire undivided, title and
interest in the Master
Agreement but shall not include rights of the Assignor as
operator. The consideration payable by
the
Company to the Vendor or Assignor is CAD$129,206, and shall be allocated among
the Assets as follows:
· To
Petroleum and Natural Gas Rights
|
(80%)
|
$103,365
|
|
· To
Tangibles ( exclusive of GST)
|
(20%)
|
25,841
|
|
|
|
|
|
|
$129,206
|
(paid)
|
|
|
|
|
Coteau
Lake, Saskatchewan
On
November 7, 2007, the Company entered into a Letter of Intent (the “LOI”) with
Primrose Drilling Ventures Ltd. (“Promrose”), a body corporate, having an office
in the city of Calgary, in the Province of Alberta. Pursuant to the
LOI, the Company is the interest title holder of Saskatchewan Crown Land parcels
124, 125 and 126.
Primrose
elected to proceed with a 50/50 joint venture with the Company by reimbursing
Target for 50% of its land cost on parcels 124, 125 and 126 for CDN$ 26,590
which is payable on signing within 15 days of the LOI. Primrose would
become operator of the project upon its acceptance of such appointment and
agreement to assume the duties, obligations and rights of the
operator. A formal Participation Agreement (“Agreement”) will include
the provisions of LOI and will be drawn up and concluded with 15 days of the
above noted payment by Primrose to Target. Included in the
Participation Agreement would be the Area of Mutual Interest (AMI) which would
govern future land acquisitions and timeline set out in the LOI.
Subsequent
to August 31, 2007, the Company had received CDN$26,590 from Primrose and is
in
the process of forming the above noted formal Participation
Agreement.
A
summary
of the oil and gas properties and its related depletions as
follows:
The
total
cost capitalized cost incurred for the oil and gas property was $305,114 which
was attributed to the acquisition cost and exploration expenditures of the
oil
and gas property. The Company applied the full cost method to account
for these properties.
Properties
in Canada
|
|
Cost
|
|
Accumulated
Depletion
|
|
Write
down in
Carrying
Value
|
|
August
31
2007
|
Proved
property
|
$
|
305,114
|
$
|
(102,249)
|
$
|
(119,916)
|
$
|
82,949
|
|
|
|
|
|
|
|
|
|
Unproved
property
|
|
300,376
|
|
-
|
|
-
|
|
300,376
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
605,490
|
$
|
(102,249)
|
$
|
(119,916)
|
$
|
383,325
|
4. Related
Parties Transaction
During
the fourteen and twelve months ended August 31, 2007 and June 30, 2007, the
Company paid $901 to a director of the Company for certain oil and gas related
course.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
5. Common
Stock
The
Company entered into following equity transactions since inception of the
Company:
During
the period ended June 30, 2006, the Company issued total of 1,025,000 stocks
at
$0.01 per share for a total proceeds of $10,250.
On
December 5, 2006, the Company issued 14,135,000 common stocks at $0.01 per
share
for total proceeds of $141,350.
On
February 27, 2007, the Company repurchased and cancelled 100,000 common stocks
at its cost of $0.01 per share for a total payment of $1,000.
On
August
29, 2007, the Company’s Board of Director approved to repurchase and cancel
5,000,000 common stocks at its cost of $0.01 per share. The payment
for the repurchased common stocks was made subsequent to August 31,
2007.
On
August
31, 2007, the Company issued 3,750,000 common stocks at $0.20 per share for
total proceeds of $750,000.
6. Deferred
Income Taxes
Potential
benefits of income tax losses are not recognized in the accounts until
realization is more likely than not. The Company has net operating losses of
approximately $163,100, which commence expiring in 2026 through
2027. Pursuant to SFAS No. 109 the Company is required to compute tax
asset benefits for net operating losses carried forward. Potential benefit
of
net operating losses have not been recognized in these financial statements
because the Company cannot be assured it is more likely than not it will utilize
the net operating losses carried forward in future years. For the period ended
August 31, 2007, the valuation allowance established against the deferred tax
assets increased by $57,100.
The
components of the net deferred tax asset at August 31, 2007, and the statutory
tax rate, the effective tax rate and the elected amount of the valuation
allowance are scheduled below:
|
August
31, 2007
|
|
$
|
Net
Operating Losses
|
163,100
|
Statutory
Tax Rate
|
35%
|
Effective
Tax Rate
|
–
|
Deferred
Tax Asset
|
57,100
|
Valuation
Allowance
|
(57,100)
|
Net
Deferred Tax Asset
|
–
|
7. Commitments
- Other
Please
refer to Note 3.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
8. Segmented
Information
The
Company’s business is considered as operating in one segment (North America)
based upon the Company’s organizational structure, the way in which the
operation is managed and evaluated, the availability of separate financial
results and materiality considerations. All operating activities are
in Canada and all the assets of the Company are located in Canada
9. Subsequent
Events
Subsequent
to the year end, the Company entered into a non-binding Letter Of Intent (LOI)
to be acquired by Golden Aria Corp. (“Golden”), a public company incorporated
under the laws of the State of Nevada and traded on the OTC
BB. Golden is an exploration stage company that holds several oil and
gas properties in Canada. Pursuant to the LOI, Golden is entitled to
perform due diligence on the Company and its oil and gas properties prior to
enter the definite acquisition agreement. Upon the completion of due
diligence and entering the definite acquisition agreement, the Company will
be
exchanging its 13,810,000 common stocks outstanding as at August 31, 2007 with
13,810,000 common stocks of Golden to effect the acquisition.
See
Note
3 and Note 5.
10.
|
Supplemental
Information on Natural Gas and Oil Exploration, Development and Production
Activities (UNAUDITED):
|
Standardized
measure of discounted future net cash flows relating to proved oil and gas
reserve quantities:
The
following summarizes the policies we used in the preparation of the accompanying
natural gas and oil reserve disclosures, standardized measures of discounted
future net cash flows from proved natural gas and oil reserves and the
reconciliations of standardized measures from year to year. The information
disclosed, as prescribed by the Statement of Financial Accounting Standards
No. 69, is an attempt to present the information in a manner comparable
with industry peers.
The
information is based on estimates of proved reserves attributable to our
interest in natural gas and oil properties as of August 31, 2007. These
estimates were prepared by independent petroleum consultants. Proved reserves
are estimated quantities of natural gas and crude oil which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions.
The
standardized measure of discounted future net cash flows from production of
proved reserves was developed as follows:
|
1.
|
Estimates
are made of quantities of proved reserves and future periods during
which
they are expected to be produced based on year-end economic
conditions.
|
|
2.
|
The
estimated future cash flows are compiled by applying year-end prices
of
natural gas and oil relating to our proved reserves to the year-end
quantities of those reserves.
|
|
3.
|
The
future cash flows are reduced by estimated production costs, costs
to
develop and produce the proved reserves and abandonment costs, all
based
on year-end economic conditions.
|
|
4.
|
Future
net cash flows are discounted to present value by applying a discount
rate
of 10%.
|
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
The
standardized measure of discounted future net cash flows does not purport,
nor
should it be interpreted, to present the fair value of our natural gas and
oil
reserves. An estimate of fair value would also take into account, among other
things, the recovery of reserves not presently classified as proved, anticipated
future changes in prices and costs, and a discount factor more representative
of
the time value of money and the risks inherent in reserve
estimates.
The
standardized measure of discounted future net cash flows relating to proved
natural gas and oil reserves is as follows:
|
USD$
|
Future
cash inflows
|
152,701
|
Future
production costs
|
(51,843)
|
Future
development costs
|
(3,771)
|
Future
net cash flows
|
97,087
|
10%
annual discount for estimated timing of cash flows
|
(14,139)
|
Standardized
measure of discounted future net cash flows
|
82,948
|
Year-end
price per Mcf of natural gas used in making standardized measure determinations
as of August 31, 2007 was $3.72. Year-end price per Bbl of oil used
in making these same calculations was $65.34.
Estimated
Net quantities of Natural Gas and Oil Reserves:
The
following table sets forth our proved reserves, including changes, and proved
developed reserves at the end of August 31, 2007.
TARGET
ENERGY INC.
(An
Exploration Stage Company)
Notes
to Financial Statements
August
31, 2007
(Expressed
in U.S. Dollars)
|
Crude
Oil (MBbls)
|
Natural
Gas (MMcf)
|
Crude
Oil Equivalents (MBbls)
|
Proved
reserves:
|
|
|
|
Beginning
of the period reserve
|
-
|
-
|
-
|
Purchases
of reserves in place
|
4.70
|
0.91
|
4.81
|
Productions
|
(1.60)
|
(0.11)
|
(1.61)
|
End
of period reserves
|
3.10
|
0.80
|
3.20
|
|
|
|
|
Proved
developed reserves:
|
|
|
|
Beginning
of the period reserve
|
-
|
-
|
-
|
End
of period reserves
|
3.10
|
0.80
|
3.20
|
|
(An
Exploration Stage Company)
|
PROFORMA
CONSOLIDATED BALANCE SHEET
|
AS
AT AUGUST 31, 2007
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
Proforma
|
|
Proforma
|
|
|
Golden
Aria
|
|
Energy
|
|
Consolidated
|
|
Consolidated
|
|
|
Corp.
|
|
Inc.
|
|
Adjustments
|
|
Balance
Sheet
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
301,579
|
$
|
347,456
|
|
|
|
649,035
|
|
Accounts
receivable
|
|
14,860
|
|
7,223
|
|
|
|
22,083
|
|
Prepaid
expenses and deposit
|
|
-
|
|
23,664
|
|
|
|
23,664
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
316,439
|
|
378,343
|
|
-
|
|
694,783
|
|
|
|
|
|
|
|
|
|
|
Goodwill
on acquisition
|
|
|
|
|
|
1,212,643
|
d
|
1,212,643
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas properties (Note 4)
|
|
203,658
|
|
383,325
|
|
1,000,000
|
e
|
1,586,983
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
520,097
|
$
|
761,668
|
|
2,212,643
|
|
3,494,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
12,688
|
$
|
74,211
|
|
|
|
86,899
|
|
Accrued
liabilities
|
|
3,375
|
|
-
|
|
|
|
3,375
|
|
Due
to related parties (Note 5)
|
|
206,871
|
|
-
|
|
|
|
206,871
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
222,934
|
|
74,211
|
|
-
|
|
297,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
|
|
|
|
|
|
Authorized:
|
|
|
|
|
|
|
|
|
|
|
75,000,000
common shares with a par
|
|
|
|
|
|
|
|
|
|
|
value
of $0.001 per share
|
|
|
|
|
|
|
|
|
|
Issued
and outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
|
|
15,495
|
|
13,810
|
|
(13,810)
|
a
|
15,495
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued upon Acquisition
|
|
|
|
|
|
13,810
|
b
|
13,810
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
|
|
|
|
|
|
|
Additional
Paid up capital on issuance of
|
|
1,256,839
|
|
836,790
|
|
(836,790)
|
a
|
1,256,839
|
|
Acquisition
shares
|
|
|
|
|
|
2,886,290
|
b
|
2,886,290
|
|
|
|
|
|
|
|
|
|
|
Deficit
accumulated during the
|
|
|
|
|
|
|
|
|
exploration
stage
|
|
(975,171)
|
|
(163,143)
|
|
163,143
|
c
|
(975,171)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
|
297,163
|
|
687,457
|
|
2,212,643
|
|
3,197,264
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$
|
520,097
|
|
761,668
|
|
2,212,643
|
|
3,494,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
To
eliminate Target Energy's par value shares and additional paid
up
capital
|
|
|
b
|
To
record the par value and additional paid up capital upon the
issuance of
shares on acquisition. Amounting to 13,810,000 at $0.21c per
share.
|
|
|
c
|
To
eliminate Target's accumulated deficit and prior results before
acquisition
|
|
|
d
|
To
record the excess of amounts paid to Net Assets
received
|
|
|
e
|
To
record the fair value of Coteau
Lake
|
GOLDEN
ARIA CORP.
|
(An
Exploration Stage Company)
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
For
the year ended August 31, 2007
|
(Expressed
in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
Proforma
|
|
|
|
|
|
|
Consolidated
|
|
|
Golden
Aria
|
|
Target
Energy
|
|
Statement
of
|
|
|
Corp.
|
|
Inc.
|
|
Operations
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
Natural
gas and oil revenue
|
$
|
82,206
|
$
|
87,994
|
$
|
170,200
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
|
|
|
|
|
Natural
gas and oil operating costs and royalties
|
|
27,945
|
|
29,782
|
|
57,727
|
|
Depletion
|
|
76,092
|
|
102,249
|
|
178,341
|
|
Writedown
in carrying value of oil and gas property
|
|
216,299
|
|
119,916
|
|
336,215
|
|
|
|
|
|
|
|
|
|
|
|
320,336
|
|
251,947
|
|
572,283
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
(238,130)
|
|
(163,953)
|
|
(402,084)
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Accounting
and audit
|
|
50,456
|
|
8,000
|
|
58,456
|
|
Bank
charges and interest expense
|
|
4,063
|
|
361
|
|
4,424
|
|
Consulting
(Note 6)
|
|
142,399
|
|
2,665
|
|
145,064
|
|
Exploration
costs and option payment
|
|
119,342
|
|
-
|
|
119,342
|
|
Fees
and dues
|
|
4,055
|
|
2,780
|
|
6,835
|
|
Investor
relations
|
|
2,953
|
|
-
|
|
2,953
|
|
Legal
|
|
17,023
|
|
2,797
|
|
19,820
|
|
Office
and miscellaneous
|
|
11,393
|
|
3,103
|
|
14,496
|
|
Rent
|
|
17,750
|
|
-
|
|
17,750
|
|
Travel
|
|
2,381
|
|
-
|
|
2,381
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
371,815
|
|
19,706
|
|
391,521
|
|
|
|
|
|
|
|
|
(Loss)
for the period before other income
|
|
(609,945)
|
|
(183,659)
|
|
(793,604)
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
Interest
income
|
|
2,549
|
|
4,412
|
|
6,961
|
|
Foreign
Exchange Gain
|
|
-
|
|
16,464
|
|
16,464
|
|
Write
off of mineral property
|
|
(1)
|
|
-
|
|
(1)
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
$
|
(607,397)
|
$
|
(162,783)
|
$
|
(770,181)
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
$
|
(0.02)
|
$
|
(0.01)
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
|
|
|
|
outstanding
- basic and diluted
|
|
29,305,480
|
|
29,305,480
|
|
29,305,480
|
|
Golden
Aria Corp.
Notes
to the Pro-Forma Consolidated Financial Statements
(Unaudited)
1. BASIS
OF PRESENTATION
These
Pro-Forma unaudited consolidated financial statements have been prepared from
the audited financial statements of Golden Aria Corp. as of August 31, 2007,
and
the audited financial statements of Target Energy Inc.,(“Target”) as of August
31, 2007, giving effect to the Plan of Merger entered into on October 15, 2007
and closed on November 30, 2007.
In
the
opinion of management of Golden Aria, these unaudited pro forma consolidated
statements include the adjustments necessary for fair presentation of the
acquisition of Target by Golden Aria as described below.
The
unaudited Pro-Forma consolidated financial statements should be read in
conjunction with the historical financial statements and notes thereto of Golden
Aria and Target referred to above and included elsewhere in this proxy
statement.
These
unaudited financial statements are not necessarily indicative of the financial
position or results of operations, which would have resulted if the combination
and related transactions had actually occurred on November 30,
2007.
2. AGREEMENT
AND PLAN OF MERGER
On
October 15, 2007, Golden Aria entered into a share exchange agreement with
Target, a private Nevada corporation, and the former shareholders of Target.
The
closing of the transactions contemplated in the share exchange agreement and
the
acquisition of all of the issued and outstanding common stock in the capital
of
Target occurred on November 30, 2007. Golden Aria issued to the
shareholders of Target 13,810,000 shares of common stock, which represented
100%
of the outstanding shares of Target. After giving effect to the share
exchange agreement, including the issuance of 13,810,000 of common shares in
Golden Aria, the total number of shares issued and outstanding in Golden Aria
is
29,305,480.
3. PRO-FORMA
ADJUSTMENTS
The
unaudited Pro-Forma consolidated financial statements include the following
adjustments.
|
(a)
|
To
eliminate Target Energy's par value shares and additional paid up
capital
|
|
(b)
|
To
record the par value and additional paid up capital upon the issuance
of
shares on acquisition. Amounting to 13,810,000 at $0.40c per
share.
|
|
(c)
|
To
eliminate Target's accumulated deficit and prior results before
acquisition
|
|
(d)
|
To
record the excess of amounts paid to Net Assets
received
|
|
(e)
|
To
record the fair value of Coteau
Lake.
|
4. PRO-FORMA
LOSS PER SHARE
Pro-Forma
loss per share has been calculated using the historical weighted average number
of shares previously reported and amended ass if the Pro-Forma common shares
of
Golden Aria issued pursuant to the proposed acquisition and merger had been
outstanding since the beginning of the periods.
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 hereunto
duly authorized.
GOLDEN
ARIA CORP.
By:
________________________
Robert
McAllister
President and Director
|