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| MENV.OB > SEC Filings for MENV.OB > Form 10-K on 31-Mar-2009 | All Recent SEC Filings |
31-Mar-2009
Annual Report
The following information specifies forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology such as "may", "will", "could", "expect", "estimate", "anticipate", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. Actual results may differ materially from those contemplated by the forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Liquidity and Capital Resources.
As of December 31, 2008, we had current assets of $26,433 and current
liabilities of $171,922 as compared to current assets of $11,355 and current
liabilities of $499,966 as of December 31, 2007. As such, as of December 31,
2008, we had a working capital deficit of $145,489 as compared to a working
capital deficit of $488,611 as of December 31, 2007. The decrease in the
working capital deficit between the two periods is primarily due to a decrease
in accounts payable and accrued liabilities of $101,124 and a decrease of
$209,755 in related party payables. Our total assets decreased from $269,741 at
December 31, 2007 to $242,593 at December 31, 2008, mainly due to dropping our
interest in seven oil sands leases and writing off the related costs of $67,152.
However, our unproved oil & gas properties increased from $118,259 at December
31, 2007 to $191,066 at December 31, 2008, due to our $138,809 investment in the
joint venture being re-classified to unproved oil & gas properties from December
31, 2007 to December 31, 2008. Our total liabilities decreased from $499,966 at
December 31, 2007 to $171,922 at December 31, 2008, mainly due to a decrease in
accounts payable and accrued liabilities of $101,124 and a decrease of $209,755
in related party payables. Our current liabilities for the year ended December
31, 2008, consisted of related party payables of $40,000 and accounts payable
and accrued liabilities of $131,922.
During the year ended December 31, 2008, our operating activities used cash of $139,750, the majority of which consisted of our net loss of $392,809, partially offset by stock and stock options granted for consulting fees of $143,724 and the impairment of unproved oil and gas properties of $67,152, as well as other items. During the year ended December 31, 2007, our operating activities used cash of $298,626, the majority of which consisted of our net loss of $1,493,032, partially offset by stock and
stock options granted for consulting fees of $1,025,598 and decrease in accounts payable of $206,927, as well as other items.
During the year ended December 31, 2008, our investing activities used cash of $35,590, which was mainly due to our coal property permit applications. During the year ended December 31, 2007, our investing activities used cash of $118,259, which was due entirely to our purchase of working interest in oil and gas properties.
During the year ended December 31, 2008, our financing activities provided us $182,835, which consisted of $200,000 in connection with a private placement partially offset by a payment on a short term note payable of $17,165 and other items. During the year ended December 31, 2007, our financing activities provided us $338,965, which mainly consisted of $196,300 paid to us in connection with the exercise of stock options and $125,500 from payment on subscriptions receivable.
We expect total cash commitments for the year ended December 31, 2009 to be approximately $135,000 to fund our general and administrative expenses and cash commitments on oil and gas properties. Currently, we are aware of $1,165 in Canadian Dollars due to the Alberta Crown for our portion of the annual payment on three of our oil sands for the year ending December 31, 2009. The majority of the $135,000 cash commitments for the year are what we estimate our general and administrative expenses to be, which would include approximately $15,000 for legal fees, $40,000 for accounting fees, $60,000 for management fees and the remainder in general working capital.
We do not have sufficient resources at the present time to fund such cash commitments and we will require further funding in order to pay these cash commitments for 2009. We plan to pay our expenses with the limited cash reserves that we currently have, from private placements of our common stock and from loans, however such funds may be insufficient to pay all of our expenses.
Additionally, during the year ending December 31, 2009, we may have cash commitments in connection with Muskwa Leases and the Leismer Oil Sands Prospect, though we do not currently expect to have commitments on either prospect. These projects may call for additional sizable cash calls. The timing and amount of the cash calls are at the discretion of the operator on each prospect and we can not determine the dollar amount of potential future cash calls.
We plan to raise additional funds in order conduct work programs and participate in the drilling on our various oil sands prospects and on our coal leases, and to generally meet our future corporate obligations. We plan to raise funds through the sale of our common stock or through loans. There is no guarantee that we will be successful in arranging the required financing. Unless we raise funds through the sale of our common stock or through loans, we cannot conduct work programs on our existing properties, nor can we acquire new properties or leases. There is no assurance that we will be able to raise adequate capital.
Our future success will be materially dependent upon our ability to satisfy additional financing requirements. We are reviewing our options to raise equity capital. We cannot estimate when we will begin to realize revenue. In order to satisfy our requisite budget, we have held and will continue to conduct negotiations with various investors. We cannot predict whether these negotiations will result in additional investment income for us.
Funding for our operations may not be available under favorable terms, if at all. If adequate funds are not available, we may be required to further curtail operations significantly or to obtain funds by
entering into arrangements with collaborative partners or others that may require us to relinquish rights that we would not otherwise relinquish.
Results of Operations.
Our Statement of Operations for the year ended December 31, 2008 indicated a net loss of $392,809 ($0.00 per common share), compared to a net loss of $1,493,032 for the fiscal year ended December 31, 2007 ($0.00 per common share). We did not realize any revenue from operations for the year ended December 31, 2008 compared to $10,901 for the year ended December 31, 2007. We did not generating any revenue from the Martex Prospect or the Kerrobert Prospect during the 2008 fiscal year, as we sold both of those properties in 2007.
For the year ended December 31, 2007, we had total expenses of $1,500,782. For the year ended December 31, 2008, we had total expenses of $407,232. The decrease of $1,093,550 resulted primarily from a decrease in consulting expenses, and general and administrative expenses. Consulting expenses for the year ended December 31, 2008 were $203,724 compared to $1,283,583 for the year ended December 31, 2007 due to no stock options granted as compensation to consultants, though the term of some stock options were extended, and due to a decrease is cash payments made for consulting services. General and administrative expense for the year ended December 31, 2008 were $16,063 compared to $116,631 for the year ended December 31, 2007. The consulting expenses for the years ended December 31, 2008 and 2007 were incurred for services provided to us. The services included but were not limited to the following: (a) advising and providing recommendations regarding our existing properties and leases; (b) corresponding with accountants, transfer agent and legal counsel; and (c) performing accounting and other administrative tasks. A large amount of these consulting fees, precisely $143,724 and $1,025,598, were not paid in cash but were instead paid in stock options in the years ended December 31, 2008 and December 31, 2007, respectively, the remaining consulting fees were paid in cash.
In connection with our properties, exploration expenses decreased from $21,849 for the year ended December 31, 2007 to $Nil for the year ended December 31, 2008. This is partly attributable to us being less active in exploration of our oil and gas properties in fiscal 2008 due to a lack of funds and due to our selling off all our producing oil and gas properties during fiscal 2007.
Off Balance Sheet Arrangements. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital reserves except for the following:
On November 27, 2007, we sold our interests in all of our non-oil sand projects to a related party for $250,000. As payment, the related party signed a promissory note for $250,000 payable to us, with interest accruing at 5% per annum on the unpaid balance. The non oil sands properties are the properties listed in the impaired and abandoned properties section listed above, namely the Green Ranch Prospect, the Kerrobert Prospect and the Martex Prospect.
No gain from the sale or accrued interest income on the promissory note has been recorded in the financial statements because the sale may not meet all the conditions required for revenue recognition. The sale is to a related party in a non-arms length transaction, no cash was involved in the consideration, and collectability is not reasonably assured.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances. These policies require that we make estimates in the preparation of our financial statements as of a given date.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Going Concern
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ended December 31, 2008, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Loans, assuming loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations or for our entry into the petroleum exploration and development industry. We are pursuing various financing alternatives to meet our financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on reasonable terms.
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