UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
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o
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended ____________
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x
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from June 1, 2008 to December 31, 2008
333-145569
Commission
file number
PREMIER ENERGY
CORP.
(Name
registrant as specified in its charter)
Florida
20-8724818
(State or
other jurisdiction of incorporation or organization)
(I.R.S.
Employer Identification No.)
14785 Preston Road, Suite
550, Dallas, Texas 75254
(Address
of principal executive
offices)
(Zip Code)
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Registrant’s
telephone number, including area code:
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972-789-5151
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Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class
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Name
of each exchange on which registered
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None
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None
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Securities
registered under Section 12(g) of the Exchange Act:
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Common
Stock, par value $.001
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(Title
of class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act Yes
o
No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
o
No
þ
Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes
þ
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes
o
No
þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
(Do not check if a
smaller reporting company)
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Smaller
reporting company
þ
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes
o
No
þ
The
aggregate market value of the 2,700,000 shares of Common Stock held by
non-affiliates of the registrant on June 30, 2008 was $1,890,000. This
calculation was made using a price per share of Common Stock of $0.70, the
closing price of the Common Stock on the Over-the-Counter Bulletin Board on June
30, 2008, the last business day of the registrant’s most recently completed
second quarter.
As of
April 28, 2009, there are 210,600,000 shares of the Company’s common stock
issued and outstanding.
ON
JANUARY 30, 2009, THE COMPANY CHANGED ITS FISCAL YEAR END FROM MAY 31 TO
DECEMBER 31 TO CONFORM TO THE FISCAL YEAR END OF OUR KARBON, CJSC, THE COMPANY’S
MAJORITY OWNED SUBSIDIARY, WHICH THE COMPANY ACQUIRED ON JANUARY 30,
2009.
THIS
TRANSITION FORM 10-K IS BEING FILED AS PART OF THE IMPLEMENTATION OF THAT
CHANGE. TO PROVIDE USERS OF THE COMPANY'S FINANCIAL INFORMATION WITH COMPLETE,
COMPARABLE HISTORICAL CALENDAR YEAR INFORMATION, THIS FORM 10-K INCLUDES
INFORMATION FOR THE SEVEN-MONTH TRANSITIONAL PERIOD ENDED DECEMBER 31, 2008,
YEAR ENDED MAY 31, 2008 AND FOR THE PERIOD SINCE INCEPTION (DECEMBER 26, 2006)
TO MAY 31, 2007. PREMIER ENERGY CORP. (FKA PREMIER NURSING PRODUCTS CORP.) WAS
INCORPORATED ON DECEMBER 26, 2006 UNDER THE LAWS OF THE STATE OF
FLORIDA.
TO
MAKE THE TRANSITION FROM THE COMPANY'S PRIOR MAY 31 FISCAL YEAR END TO A
DECEMBER 31 CALENDAR YEAR, IT IS NECESSARY TO HAVE A SEVEN-MONTH TRANSITION
FINANCIAL REPORTING PERIOD ENDING ON DECEMBER 31. THE COMPANY SELECTED THE
SEVEN-MONTH PERIOD FROM JUNE 1, 2008 THROUGH DECEMBER 31, 2008 AS THE TRANSITION
PERIOD IN ORDER TO ALLOW THIS FILING TO INCORPORATE AUDITED RESULTS FOR THE TWO
MOST RECENT YEARS ON A FISCAL YEAR BASIS.
TABLE
OF CONTENTS
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Part
I
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Page
No
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Item
1.
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Description
of Business.
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4
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Item
1A.
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Risk
Factors
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7
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Item
1B.
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Unresolved
Staff Comments
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12
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Item
2.
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Description
of Property.
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12
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Item
3.
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Legal
Proceedings.
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16
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Item
4.
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Submission
of Matters to a Vote of Security Holders.
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16
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Part
II
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Item
5.
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Market
for Common Equity and Related Stockholder Matters.
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16
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Item
6.
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Selected
Financial Data
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17
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Item
7.
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Management’s
Discussion and Analysis or Plan of Operations.
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17
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Item
7A.
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Quantitative
and Qualitative Disclosures about Market Risk
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20
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Item
8
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Financial
Statements.
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20
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Item
9.
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Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.
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21
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Item
9A.
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Controls
and Procedures.
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22
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Item
9B.
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Other
Information.
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22
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Part
III
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Item
10.
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Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act.
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24
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Item
11.
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Executive
Compensation.
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26
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
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26
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Item
13.
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Certain
Relationships and Related Transactions.
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27
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Item
14.
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Principal
Accountant Fees and Services.
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27
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Item
15.
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Exhibits.
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28
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Signatures
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29
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FORWARD-LOOKING
STATEMENTS
Certain
statements made in this Annual Report on Form 10-K are “forward-looking
statements” (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future operations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Premier Energy
Corp. (the “Company”) to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. The Company's plans
and objectives are based, in part, on assumptions involving the continued
expansion of business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance the forward-looking
statements included in this Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein particularly in view of the current state of our operations, the
inclusion of such information should not be regarded as a statement by us or any
other person that our objectives and plans will be achieved. Factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements include, but are not limited to, the factors set
forth herein under the headings “Description of Business,” “Plan of Operation”
and “Risk Factors”. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
Item 1.
Description of
Business.
General
Premier
Energy Corp. ( “we”, “us”, “our”, or the “Company”) was incorporated in the
State of Florida on December 26, 2006 under the name “Premier Nursing Products
Corp.” The Company changed its name from “Premier Nursing Products Corp.” to
“Premier Energy Corp.” Immediately prior to the acquisition of Karbon
(as described below) on January 30, 2009, we had nominal assets and revenues and
no business operations.
On
January 30, 2009, we entered into a Share Exchange Agreement with Auxerre
Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to which we
acquired 51% of the outstanding securities of Karbon in exchange for 107,406,000
shares of our common stock (the “Karbon Acquisition”). Considering that,
following the merger, Auxerre controls the majority of our outstanding voting
common stock and we effectively succeeded our otherwise minimal operations to
those that are theirs, Karbon is considered the accounting acquirer in this
reverse-merger transaction. A reverse-merger transaction is considered,
and accounted for as, a capital transaction in substance; it is equivalent to
the issuance of Karbon securities for our net monetary assets, which are
deminimus, accompanied by a recapitalization. Accordingly, we have not
recognized any goodwill or other intangible assets in connection with this
reverse merger transaction. Karbon is the surviving and continuing entities and
the historical financials following the reverse merger transaction will be those
of Karbon. We were a "shell company" (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior
to our acquisition of 51% of KARBON pursuant to the terms of the share exchange
agreement. As a result of such acquisition, our operations, in
addition to the acquisition, exploration and development, if warranted, of
prospective oil and gas properties, will include (i) consulting and working
together with KARBON to plan and execute any exploration and development
activities they conduct, (ii) reviewing annualized budgets from KARBON, and
(iii) approving costs in excess of certain prescribed amounts by KARBON.
Consequently, we believe that acquisition has caused us to cease to be a shell
company as we no longer have nominal operations.
On
January 30, 2009, prior to the Karbon Acquisition and the issuance of the
107,406,000, ZRV Consulting, Inc., the former majority shareholder of Premier,
returned 107,406,000 shares of common stock of Premier for
cancellation.
Overview and
Strategy
Through
our majority owned subsidiary, KARBON, which was organized on October 16, 2000
as a Closed Joint Stock Company under the Civil Code of the Russian Federation,
we are engaged in the business of producing oil and gas from the
North-Kopanskoye Oilfield, exploring and, if warranted, developing new
commercial reserves of oil and gas. Our principal products are crude oil and
natural gas that are marketed and sold by our majority owned subsidiary, KARBON,
primarily through the third party operators of the wells and a third party
marketing company. Typically, oil is sold at the wellhead at field-posted prices
and natural gas is burned or “flared” near wells.
Our
objective is to increase stockholder value by pursuing our corporate strategy
of:
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Economically
growing reserves and production, by acquiring under-valued properties with
reasonable risk-reward potential and by participating in, or actively
conducting, drilling operations in order to further exploit our existing
properties;
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Seeking
high-quality exploration and development projects with potential for
providing operated, long-term drilling inventories;
and
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Selectively
pursuing strategic acquisitions that may expand or complement our existing
operations.
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The
pursuit of our strategy includes the following key elements:
Pursue
Attractive Reserve and Leasehold Acquisitions
To date,
we have closed one acquisition, the acquisition of 51 % of KARBON. We
will seek to effect opportunistic acquisitions that can provide upside
potential, including long-term drilling inventories and undeveloped leasehold
positions with attractive return characteristics within the Russian
Federation.
Drive
Growth through Drilling
We plan
to supplement our long-term reserve and production growth through drilling
operations. In 2009, we plan (a) to do a major workover of three
existing wells to grow production to 380 barrels of crude oil per day; (b) to
use two drilling rigs to drill three new production wells to produce additional
690 barrels of crude oil per day; and (c) to perform a 3-D seismic survey to
learn more about the deposit structure to enable us to better designate future
development drilling locations and expected growth of reserve estimates. The
workover, drilling, completion and seismic work will be done using the presently
available local labor, equipment and materials.
Maximize
Operational Control
It is
strategically important to our future growth and maturation as an independent
exploration and production company to be able to serve as operator of our
properties when possible to exert greater control over costs and timing in and
the manner of our exploration, development and production
activities. In 2009, we acquired 51 % of KARBON with assets that
include 3,213 gross acres (1,639 net) with currently estimated total oil
reserves of around 30.9 MMBbl. Although the assets also include similar amount
of equivalent natural gas resources, we do not plan to start gas production
during the first three years of development for reasons of reservoir pressure
maintenance. We are the owner of 51% of the outstanding securities of
KARBON and consequently control the activities of KARBON.
Operate Efficiently and Effectively,
and Maximize Economies of Scale Where Practical
As we
manage our growth, we are actively focusing on reducing lease operating expenses
as well as finding and development costs. In addition, our acquisition efforts
are geared toward pursuing opportunities that fit well within existing
operations, in areas where we are establishing new operations or in areas where
we believe that a base of existing production will produce an adequate
foundation for economies of scale.
Distribution
Methods, Marketing and Major Customers
The
operated oilfield in the Volga-Urals basin has reasonably sufficient
infrastructure but may require some new infrastructure. A new oil discovery will
also require new infrastructure, such as oil tanks and pumps. Crude oil must be
moved from the production site to refineries. These movements can be made using
a number of different modes of transportation, including trucks and trains, and
also via an oil pipeline, which is available in close proximity with the
oilfield. We would not, on our own, be able to distribute any oil and gas we
currently produce and further discover, from our operations in Russia. We would
need to rely on third party contractors to distribute any such oil and gas or
sell any such oil and gas to third parties at the point of
production.
When
selling domestically, KARBON sells the crude oil to local refineries (on Ex
Works terms) or enters into processing agreements with local refineries (for
better bargains). Depending on terms and seasonal conditions, best
options are chosen at any particular period of time.
Once we
choose to sell crude oil for export, an existing long term contract of sale to
Trafigura Group (a global trading businesses, including the supply and offtake
of crude oil, petroleum products, liquefied petroleum gas (LPG), metals, ores
and concentrates) can be used. Crude oil can be made available for sale under
Contract No AUXTRAF-04/07 dated September 4, 2007, that provides KARBON the
right to sell to Trafigura during period of exploration up to 32 million barrels
of crude oil.
Competition
The oil
and gas industry is extremely competitive, particularly in the acquisition of
prospective oil and natural gas properties and oil and gas reserves. 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 interests, suitable properties for drilling
operations and necessary drilling equipment, as well as for access to funds. Our
competitive position also depends on our geological, geophysical and engineering
expertise, and our financial resources.
We
believe that the location of our leasehold acreage, our exploration, drilling
and production expertise and the experience and knowledge of our management and
industry partners enable us to compete effectively in our current operating
areas.
Seasonality
Generally,
but not always, the demand and price levels for natural gas increase during the
colder winter months and warmer summer months but decrease during the spring and
fall months (“shoulder months”). Pipelines, utilities, local distribution
companies and industrial users utilize natural gas storage facilities and
purchase some of their anticipated winter and summer requirements during the
shoulder months, which can lessen seasonal demand fluctuations.
In
the past, we have not entered into hedging contracts, but we are considering
entering various hedging contracts in the future for a portion of our production
to reduce our overall exposure to seasonal demand and resulting commodity price
fluctuations. The duration of our future hedging contracts will depend on our
view of market conditions, available contract prices and our operating strategy
at the time the contracts are initiated.
Regarding
natural gas, as a producer local to Russia, KARBON is obligated to approach FST
(Federalnaya Sluzba po Tarifam) to whom we must sell our gas under local
domestic prices that are generally much lower then export prices.
Since
December 31, 2007, KARBON has had sales delivery contracts in effect for
the entire daily production capacity.
Government
Approval and Regulation
We are
required to obtain licenses and permits from various governmental authorities.
We anticipate that we will be able to obtain all necessary licenses and permits
to carry on the activities which we intend to conduct, and that we intend to
comply in all material respects with the terms of such licenses and
permits.
KARBON
has been abiding by, and will continue to do so, all the Laws and Regulations of
the Russian Federation that are applicable to oil and gas exploration,
production and distribution activities. These include, but are not
limited to, the Russian Federation Tax Law for oil and gas production and
refining, including the following particular taxes: Minerals Extraction Tax
(MET: Russian acronym is NDPI), export tax if crude oil is shipped for export,
value-added tax (VAT) if crude oil is sold locally in Russia; profit and
property taxes, environmental protection taxes and payroll taxes.
Russian
joint stock companies are corporate entities with limited liability similar to
corporations formed under United States laws. Shareholders of Russian joint
stock companies generally are not liable for debts and obligations of the
company. However, shareholders of a bankrupt joint stock company may be held
liable for debts and obligations of the bankrupt company if they have exercised
their authority to undertake an action knowing that bankruptcy would be the
result of their actions. In closed joint stock companies, i.e. companies with a
limited number of shareholders, such as Karbon, any transfer of shares by a
shareholder to a third party is subject to the pre-emptive right of the other
shareholders to acquire such shares at the price offered to a third
party.
Under
Russian law, a simple majority of voting shares is sufficient to control
adoption of most resolutions. Resolutions concerning amendment of the company
charter, reorganizations (including mergers), liquidation, any increase in
authorized shares, or certain "large" transactions require the approval of the
shareholders holding in excess of 75% of the outstanding shares.
A Russian
joint stock company has no obligation to pay dividends to the holders of common
shares. Any dividends paid to shareholders must be recommended by the board of
directors and then approved by a majority vote at the general meeting of
shareholders. Dividends may be paid every quarter of a
year.
Environmental
Laws
The
government of the Russian Federations, Ministry of Natural Resources, and other
agencies establish special rules, restrictions and standards for enterprises
conducting activities affecting the environment. The general principle of
Russian environmental law is that any environmental damage must be fully
compensated. Under certain circumstances, top officers of the entity causing
substantial environmental damage may be subject to criminal
liability.
The law
of the Russian Federation on subsoil requires that all users of subsoil ensure
safety of works related to the use of subsoil and comply with existing rules and
standards of environment protection. Failure to comply with such rules and
standards may result in termination or withdrawal of the Karbon
license.
Employees
Other
than our directors and officers, presently we have no employees at the US
headquarters. We anticipate that we will be conducting most of our business
through our management and any consultants whom we may engage in the USA and
worldwide. KARBON has a staff of 35.
Item
1A. Risk
Factors
You
should carefully consider the following risk factors and all other information
contained herein as well as the information included in this Annual Report in
evaluating our business and prospects. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties, other
than those we describe below, that are not presently known to us or that we
currently believe are immaterial, may also impair our business operations. If
any of the following risks occur, our business and financial results could be
harmed. You should refer to the other information contained in this Annual
Report, including our consolidated financial statements and the related
notes.
Our limited operating history makes
it difficult for us to evaluate our future business prospects and make decisions
based on those estimates of our future performance
.
Although
our management team has been engaged in the oil and gas business for an extended
period of time, we did not begin operations of our current business concept
until our recent acquisition of Karbon in January 2009. We have a
limited operating history. As a consequence, it is difficult, if not
impossible, to forecast our future results based upon our historical data.
Reliance on the historical results of our acquisition targets may not be
representative of the results we will achieve, particularly in our combined
form. Because of the uncertainties related to our lack of historical
operations, we may be hindered in our ability to anticipate and timely adapt to
increases or decreases in revenues or expenses. If we make poor budgetary
decisions as a result of unreliable historical data, we could be less profitable
or incur losses, which may result in a decline in our stock
price.
Karbon’s
results of operations have not been consistent, and we may not be able to
achieve profitability going forward.
Karbon
incurred a net loss from our continuing operations amounting to ($1,107,791),
($557,470) and ($662,876) for the years ended December 31, 2008, 2007 and 2006,
respectively. In addition, as of December 31, 2008, Karbon has a
working capital deficiency of ($102,470). If we incur additional significant
operating losses, our stock price, may decline, perhaps
significantly.
Our
management is developing plans to alleviate the negative trends and conditions
described above. Our management believes that our current business
plan will be successful and that we believe we will be able to limit our losses;
however, our business plan is speculative and unproven. Although there is no
assurance that we will be successful in executing our business plan or that even
if we successfully implement our business plan, that we will be able to curtail
our losses now or in the future.
Our
business depends on the level of activity in the oil industry, which is
significantly affected by volatile oil prices.
Our
business depends on the level of activity in oil exploration, development and
production in markets worldwide. Oil prices, market expectations of potential
changes in these prices and a variety of political and economic factors
significantly affect this level of activity. Oil prices are extremely volatile
and are affected by numerous factors, including:
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worldwide
demand for oil and gas;
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the
ability of the Organization of Petroleum Exporting Countries, commonly
called "OPEC," to set and maintain production levels and
pricing;
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the
level of production in non-OPEC countries;
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the
policies of the various governments regarding exploration and development
of their oil and gas reserves;
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advances
in exploration and development technology; and
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the
political environment of oil-producing
regions.
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The
nature of oil and gas business exposes us to potential liability claims and
contract disputes which may reduce our profits.
We have
been and may in future be named as a defendant in legal proceedings where
parties may make a claim for damages or other remedies with respect to our
projects or other matters. These claims generally arise in the normal course of
our business.
We
are vulnerable to the cyclical nature of the oil and gas business.
The oil
and gas business involves many operating risks that can cause substantial
losses. Insurance may not be adequate to protect against all these risks. The
oil and gas business involves a variety of operating risks,
including:
-
fire;
-
explosion;
-
blow-out;
-
uncontrollable flows of oil, gas, or well fluids;
- natural
disasters;
- pipe
failure;
- casing
collapse;
- stuck
tools;
-
abnormally pressured formations; and
-
environmental hazards such as oil spills, gas leaks, pipeline ruptures and
discharges of toxic gases.
Our
business involves numerous operating hazards.
Our
operations are subject to the usual hazards inherent in drilling for oil, such
as blowouts, reservoir damage, loss of production, loss of well control,
punchthroughs, craterings or fires. The occurrence of these events could result
in the suspension of drilling operations, damage to or destruction of the
equipment involved and injury or death to rig personnel. Operations also may be
suspended because of machinery breakdowns, abnormal drilling conditions, failure
of subcontractors to perform or supply goods or services or personnel shortages.
Damage to the environment could also result from our operations, particularly
through oil spillage or extensive uncontrolled fires. We may also be subject to
damage claims by oil and gas companies.
Although
we maintain insurance in the areas in which we operate, pollution and
environmental risks generally are not fully insurable. Our insurance policies
and contractual rights to indemnity may not adequately cover our losses, and we
do not have insurance coverage or rights to indemnity for all risks. If a
significant accident or other event occurs and is not fully covered by insurance
or contractual indemnity, it could adversely affect our financial position and
results of operations.
If
oil and natural gas prices decrease, we may be required to take write-downs of
the carrying values of our oil and natural gas properties.
Accounting
rules require that we review periodically the carrying value of our oil and
natural gas properties for possible impairment. Based on specific market factors
and circumstances at the time of the prospective impairment reviews, and the
continuing evaluation of development plans, production data, economics and other
factors, we may be required to write down the carrying value of our oil and
natural gas properties. A write-down constitutes a non-cash charge to earnings.
We may incur impairment charges in the future, which could have material adverse
effect on our results of operations in the periods taken. Our international
operations involve additional risks not associated with domestic
operations.
We
primarily operate in Russia and any change in any law or policy by the
government could have a negative impact on our operations
While
there have been improvements in the Russian economic situation, such as an
increase in gross domestic product and a reduced rate of inflation, Russia
continues economic reforms and development of its legal, tax and regulatory
frameworks as required by a market economy. The future stability of the Russian
economy is largely dependent upon these reforms and developments and the
effectiveness of economic, financial and monetary measures undertaken by the
government. In addition, laws and regulations, including interpretations,
enforcement and judicial processes, continue to evolve in Russia. Other laws and
regulations and certain other restrictions have a significant effect on the
Company's industry, including, but not limited to the following issues:
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rights
to use subsurface resources,
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environmental
matters,
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site
restoration,
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transportation
and export,
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corporate
governance,
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taxation,
etc.
|
Any shift
in any policy or law by the Russian government or courts may negatively impact
our results of operations.
The
tax laws in Russia provide the government with flexibility in levying taxes
which could result in additional taxes having an adverse effect on the Company’s
financial condition and result of operations.
The
taxation system in the Russian Federation is relatively new and is characterized
by frequent changes in legislation, official pronouncements and court decisions,
which are often unclear, contradictory and subject to varying interpretation by
different tax authorities. Taxes are subject to review and investigation by a
number of authorities, which have the authority to impose severe fines,
penalties and interest charges. A tax year remains open for review by the tax
authorities during the three subsequent calendar years.
Russian
transfer pricing rules were introduced in 1999, giving Russian tax authorities
the right to make transfer pricing adjustments and impose additional tax
liabilities in respect of all “controlled” transactions, provided that the
transaction price deviates from the market price by more than 20%. Controlled
transactions include transactions between related entities and certain other
types of transactions between independent parties, such as foreign trade
transactions with significant (by more than 20%) price
fluctuations.
The
Russian transfer pricing rules are vaguely drafted, leaving wide scope for
interpretation by Russian tax authorities and courts. Due to the uncertainties
in interpretation of transfer pricing legislation, the tax authorities may
challenge the Company’s prices and propose an adjustment. If such price
adjustments are upheld by the Russian courts and implemented, the Company’s
future financial results could be adversely affected. In addition, the Company
could face significant losses associated with the assessment of prior tax
underpaid and related interest and penalties, which could have an adverse effect
on the Company’s financial condition and results of operations.
Fluctuations
in exchange rates could result in losses to us.
Another
risk inherent in our international operations is the possibility of currency
exchange losses where revenues are received and expenses are paid in
nonconvertible currencies. We may also incur losses as a result of an inability
to collect revenues because of a shortage of convertible currency available to
the country of operation.
We
depend upon key personnel and need additional personnel.
Our
success depends on the continuing services of Anton Prodanovic, Alexey Goleshev,
Bosko Popovic and Aslanbi Kodzokov, our Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and Secretary, respectively. The
loss of any of these individuals could have a material and adverse effect on our
business operations.
Additionally,
the success of the Company’s operations will largely depend upon its ability to
successfully attract and maintain competent and qualified key management
personnel. As with any company with limited resources, there can be no guaranty
that the Company will be able to attract such individuals or that the presence
of such individuals will necessarily translate into profitability for the
Company. Our inability to attract and retain key personnel may
materially and adversely affect our business operations.
We
may engage in acquisitions, which will consume resources and may be unsuccessful
or unprofitable.
We have
pursued, and we intend to continue to pursue, a strategy of other oil and gas
reserves that fit within our business model. However, acquisitions are not
always successful or profitable. Any future acquisitions could expose us
to risks, including risks associated with assimilating new operations and
personnel; diversion of resources from our existing businesses; inability to
generate revenues sufficient to offset associated acquisition costs; and risks
associated with the maintenance of uniform standards, controls, procedures and
policies. Acquisitions may also result in additional expenses from
amortizing acquired intangible assets. If we attempt an acquisition and
are unsuccessful in its completion, we will likely incur significant expenses
without any benefit to our company. If we are successful in completing an
acquisition, the risks and other problems we face may ultimately make the
acquisition unprofitable. Failed acquisition transactions and
underperforming completed acquisitions would burden us with significant costs
without any corresponding benefits to us, which could cause our stock price to
decrease, perhaps significantly.
We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our
common stock
We have
never paid cash dividends on our common stock and do not anticipate paying cash
dividends in the foreseeable future. The payment of dividends on our common
stock will depend on earnings, financial condition and other business and
economic factors affecting it at such time as the board of directors may
consider relevant. If we do not pay dividends, our common stock may be less
valuable because a return on your investment will only occur if its stock price
appreciates.
We
have not voluntary implemented various corporate governance measures, in the
absence of which, shareholders may have more limited protections against
interested director transactions, conflict of interest and similar
matters.
Recent
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in
the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or the NASDAQ Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges are those that address board of
directors' independence, audit committee oversight, and the adoption of a code
of ethics. While we intend to adopt certain corporate governance measures such
as a code of ethics and established an audit committee, Nominating and Corporate
Governance Committee, and Compensation Committee of our board of
directors, we presently do not have any independent
directors. We intend to expand our board membership in future periods to include
independent directors. It is possible that if we were to have independent
directors on our board, stockholders would benefit from somewhat greater
assurances that internal corporate decisions were being made by disinterested
directors and that policies had been implemented to define responsible conduct.
For example, in the absence of audit, nominating and compensation committees
comprised of at least a majority of independent directors, decisions concerning
matters such as compensation packages to our senior officers and recommendations
for director nominees may be made by our sole director who has an interest in
the outcome of the matters being decided. Prospective investors should bear in
mind our current lack of both corporate governance measures and independent
directors in formulating their investment decisions.
We
may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have those controls attested to by our
independent auditors.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the
Securities and Exchange Commission adopted rules requiring smaller reporting
companies, such as our company, to include a report of management on the
company's internal controls over financial reporting in their annual reports for
fiscal years ending on or after December 15, 2007. We did not include a
management report or an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting for the year
ended December 31, 2007 pursuant to temporary rules of the Securities and
Exchange Commission that do not require us to provide the management's report or
attestation report in that annual report. We will be required to include the
management report in the annual report for the year ending December 31, 2008. In
addition, for our fiscal year ending December 31, 2008 the independent
registered public accounting firm auditing our financial statements must also
attest to and report on management's assessment of the effectiveness of our
internal controls over financial reporting as well as the operating
effectiveness of our internal controls. In the event we are unable to receive a
positive attestation from our independent auditors with respect to our internal
controls, investors and others may lose confidence in the reliability of our
financial statements and our ability to obtain financing as needed could
suffer.
There
is no public market for our common stock and our shares of common stock are
subject to significant restrictions on their transferability.
There is
currently no developed public market for the shares of our common stock. While
we intend to seek a broker dealer who will file an application with the OTC
Bulletin Board and make a market in our securities, there is no assurance that a
broker dealer will be interested in making a market in our stock or that an
active market in our stock will ever develop. In addition, all the shares of
common stock have not been registered under the Securities Act or under the
securities laws of any state or other jurisdiction. As a result, such securities
can be transferred without registration under the Securities Act or, if
applicable, the securities laws of any state or other jurisdiction only if such
registration is not then required because of an applicable exemption therefrom.
Compliance with the criteria for securing exemptions under the Securities Act
and the securities laws of various states is extremely complex. While we have no
requirement to register the shares of our common stock under the Securities Act
so as to permit the public resale thereof, we intend to file a registration
statement under the Securities Act with the Securities and Exchange Commission
in order to register the resale of shares of our Common Stock. Accordingly, an
investment in our company is suitable only for persons who have no need for
liquidity in the investment, and can afford to hold unregistered securities for
an indefinite period of time.
If
a public market for our common stock develops, trading will be limited under the
SEC’s penny stock regulations, which will adversely affect the liquidity of our
common stock.
The
trading price of our common stock is less than $5.00 per share and, as a result,
our common stock is considered a "penny stock," and trading in our common stock
would be subject to the requirements of Rule 15g-9 under the Exchange Act. Under
this rule, broker/dealers who recommend low-priced securities to persons other
than established customers and accredited investors must satisfy special sales
practice requirements. Generally, the broker/dealer must make an individualized
written suitability determination for the purchaser and receive the purchaser's
written consent prior to the transaction.
SEC
regulations also require additional disclosure in connection with any trades
involving a "penny stock," including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and its
associated risks. These requirements severely limit the liquidity of securities
in the secondary market because few broker or dealers are likely to undertake
these compliance activities. In addition to the applicability of the
penny stock rules, other risks associated with
trading in penny stocks could also be price fluctuations and the lack of a
liquid market. An active and liquid market in our common stock may never develop
due to these factors.
Item
1B. Unresoloved
Staff Comments.
None.
Item
2.
Description of
Property.
Our
principal offices are located at 14785 Preston Road, Suite 550, Dallas,
TX 75254. We pay $2,500 per month in rent and our lease is
open-ended.
Pursuant
to a share exchange agreement among our Company and KARBON, we have acquired the
51 % controlling interest in KARBON.
KARBON
owns the license that contains the North-Kopanskoye Oilfield and operates the
field. As of September 30, 2008, through our ownership in the majority interest
of KARBON, we owned interests in a total of three producing wells and had an
interest in 3,213 gross acres (1,639 net) with over 26 prospective drilling
locations for oil production in the North-Kopanskoye Field (14 wells in the
Artinsky-1 Reservoir and 12 wells in the Bashkirian A-4 Reservoir, along with 3
injection wells). Concurrently, we have been evaluating other prospective
locations that we believe are hydrocarbon prone.
Acreage
The
following table sets forth the total gross and net acres of developed and
undeveloped oil and gas leases in which our company, through our subsidiary, had
working interests as of December 31, 2008:
|
|
|
Developed
Acres
|
|
|
Undeveloped
Acres
|
|
|
Total
Acres
|
|
|
|
|
Gross
|
|
|
Net
|
|
|
Gross
|
|
|
Net
|
|
|
Gross
|
|
|
Net
|
|
|
North-Kopanskoye
|
|
|
578
|
|
|
|
295
|
|
|
|
2,635
|
|
|
|
1,344
|
|
|
|
3,213
|
|
|
|
1,639
|
|
|
*
|
|
Represents
properties that are either currently operated by us or which are expected
to be operated by us when development commences on the
properties.
|
Title
to Properties
A title
opinion is usually obtained prior to the commencement of drilling operations on
properties. We have obtained title opinions or conducted a thorough title review
on substantially all of our producing properties and believe that we have
satisfactory title to such properties in accordance with standards generally
accepted in the oil and gas industry. We also perform a title investigation
before acquiring undeveloped leasehold interests.
Reserves
All our
reserves are presently located within the Russian Federation, in the
North-Kopanskoye Field. Over the last two years, 2007 and 2008, we
have produced over 45,000 barrels of crude oil (at an average rate of about 60
barrels per day).
The
independent petroleum engineering firm DeGolyer and MacNaughton of Dallas,
Texas, evaluated 100% of the properties and issued an appraisal report dated
November 27, 2007 on oil and gas reserve estimates as of December 31, 2006,
included in the table below. No new reserves were added since then;
thus the proved developed reserves for 2008 and 2007 shown in the table reflect
the yearly oil and gas production, as reserve depletion, equal to 27 and 17 MBbl
of oil and 26 and 17 MMcf of gas per year, respectively.
|
|
|
As
of
As
of December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
developed oil reserves (MBls)
|
|
|
15
|
|
|
|
37
|
|
|
|
64
|
|
|
Proved
undeveloped oil reserves (MBls)
|
|
|
8,029
|
|
|
|
8,029
|
|
|
|
8,029
|
|
|
Total
proved oil reserves (MBls)
|
|
|
8,044
|
|
|
|
8,066
|
|
|
|
8,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
developed gas reserves (MMcf)
|
|
|
129
|
|
|
|
151
|
|
|
|
177
|
|
|
Proved
undeveloped gas reserves (MMcf)
|
|
|
45,060
|
|
|
|
45,060
|
|
|
|
45,060
|
|
|
Total
proved gas reserves (MMcf)
|
|
|
45,189
|
|
|
|
45,211
|
|
|
|
45,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
proved oil equivalents (MBbl) (1)
|
|
|
15,565
|
|
|
|
15,601
|
|
|
|
15,632
|
|
|
Total
proved gas equivalents (MMcfe) (1)
|
|
|
93,453
|
|
|
|
93,607
|
|
|
|
93,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present
value of estimated future net cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before
income taxes, discounted at 10% (2)
|
|
$
|
13,016
|
|
|
$
|
44,461
|
|
|
$
|
58,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of non-GAAP financial measure:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PV-10
(3)
|
|
$
|
13,016
|
|
|
$
|
44,461
|
|
|
$
|
58,076
|
|
|
Less:
Undiscounted income taxes
|
|
|
2,872
|
|
|
|
19,754
|
|
|
|
24,736
|
|
|
Plus:
10% discount factor
|
|
|
191
|
|
|
|
2,521
|
|
|
|
3,156
|
|
|
Discounted
income taxes
|
|
|
2,681
|
|
|
|
17,233
|
|
|
|
21,580
|
|
|
Standardized
measure of discounted future net cash flows
|
|
$
|
10,335
|
|
|
$
|
27,778
|
|
|
$
|
37,844
|
|
|
|
|
|
|
(1)
|
|
Oil
is converted to Mcfe of gas equivalent at six Mcfe per barrel, and vice
versa.
|
|
|
|
|
|
(2)
|
|
Standardized
measure is the present value of estimated future net revenue to be
generated from the production of proved reserves, determined in accordance
with the rules and regulations of the SEC (using prices and costs in
effect as of the date of estimation), less future development, production
and income tax expenses, and discounted at 10% per annum to reflect the
timing of future net revenues.
|
|
|
|
|
|
(3)
|
|
Karbon’s
standardized measure does not reflect any future income tax expenses
because it was not subject to income taxes. The standardized measure shown
should not be construed as the current market value of the reserves. The
10% discount factor used to calculate present value, which is required by
FASB pronouncements, is not necessarily the most appropriate discount
rate. The present value, no matter what discount rate is used, is
materially affected by assumptions as to timing of future production,
which may prove to be inaccurate.
|
The
average prices utilized for the first 9 months of 2008, and at December 31
of 2007 and 2006, respectively, were $1.18, $0.87 and $0.54 per Mcf, and $32.67,
$31.86 and $31.67 per barrel of oil.
The
period of January 1, 2007 to December 31 , 2008 has seen no significant changes
in either geological reserves or business activity of the company that could
significantly affect the oil and gas extraction activity within the
North-Kopanskoye Field. Therefore, apart of the reported oil and gas produced
during that period, the originally available data as of December 31, 2006 and
various assumptions prepared during the compilation of the underlying data are
believed to be reasonably accurate updates for December 31 , 2008 and December
31, 2007.
The PV-10
values shown in the above table are not intended to represent the current market
value of the estimated proved oil and gas reserves owned by KARBON, our majority
owned subsidiary. Reserve estimates are inherently imprecise and are continually
subject to revisions based on production history, results of additional
exploration and development, prices of oil and gas, and other
factors.
The table
above also shows a reconciliation of our PV-10 to our standardized measure of
discounted future net cash flows (the most directly comparable measure
calculated and presented in accordance with GAAP). PV-10 is our estimate of the
present value of future net revenues from estimated proved oil and natural gas
reserves after deducting estimated production and ad valorem taxes, future
capital costs and operating expenses, but before deducting any estimates of
future income taxes. The estimated future net revenues are discounted at an
annual rate of 10% to determine their “present value.” We believe PV-10 to be an
important measure for evaluating the relative significance of our oil and
natural gas properties and that the presentation of the non-GAAP financial
measure of PV-10 provides useful information to investors because it is widely
used by professional analysts and sophisticated investors in evaluating oil and
gas companies. Because there are many unique factors that can impact an
individual company when estimating the amount of future income taxes to be paid,
we believe the use of a pre-tax measure is valuable for evaluating our company.
We believe that most other companies in the oil and gas industry calculate PV-10
on the same basis. PV-10 should not be considered as an alternative to the
standardized measure of discounted future net cash flows as computed under GAAP.
Reference should also be made to the Supplemental Oil and Gas Information
included in the Consolidated Financial Statements for additional
information.
North-Kopanskoye
Oilfield
The
North-Kopanskoye field covers an approximate area of 13 square kilometers and
lies about 55 kilometers southeast of the city of Orenburg and 30 kilometers
south of the Orenburg gas-condensate field.
The field
is in the Urals Foredeep Province in the Volga-Urals Basin.
The North
Kopanskoye field is a broad north/south-oriented elongated anticline structure.
There are four domes on the structure. The central dome is the largest of the
four. There are two smaller domes to the south and one smaller dome to the
north. The field contains two reservoirs, the Pennsylvanian Bashkirian A-4 and
Permian Artinskian Artinsky-1.
The
Bashkirian A-4 and Artinsky-1 are structurally trapped, carbonate reservoirs.
The Bashkirian A-4 reservoir accumulated oil on two of the four individual domes
and is limited by OWCs. The Artinsky-1 reservoir has a larger accumulation of
oil limited by an OWC, an associated gas cap, and a separate nonassociated gas
accumulation that is limited by a GWC.
The
Artinsky-1 reservoir accumulations are trapped on three of the structural domes
in two separate accumulations. The central and northern domes contain a
continuous accumulation. This accumulation consists of oil and an associated gas
cap. It is mapped as high as 1,900 meters true vertical depth subsea (TVDSS)
with a GOC at 1,979.5 meters TVDSS and an OWC at 2,021 meters
TVDSS.
The area
of the Artinsky-1 oil accumulation is about 10.2 square kilometers and the
average thickness is 8.8 meters. The estimated volumes above the highest known
oil in the 131 well on the northern dome as well as the volumes located in the
saddle area between the northern and central domes have been associated with
probable reserves. The highest oil test in the 127 well was at 1,976.9 meters
TVDSS. The 127 and 128 wells tested oil and water across the intervals of
2,021.9 to 2,028.9 meters TVDSS and 2,008.9 to 2,029.9 meters TVDSS,
respectively. The highest water-only test at 2,043.9 meters TVDSS occurred in
the 128 well. The 129 well tested "no flow" in the Artinsky-1 reservoir over a
low porosity and low permeability interval, as indicated by log interpretation.
The northern dome of this accumulation tested oil from two different intervals
down to 2,015 meters TVDSS in the 131 well.
The gas
cap above the central dome of the Artinsky-1 oil reservoir is defined by gas and
condensate tests in the 127 and 129 wells. The deepest gas test was at 1,984.9
meters TVDSS in the 129 well. The average thickness in this gas cap is 5.1
meters with an area of approximately 2.8 square kilometers.
The
Artinsky-1 accumulation on the small southern structure, tested by the 109 well,
is a nonassociated gas reservoir with a GWC estimated at 2,030 meters TVDSS.
This gas reservoir has an area of approximately 1.2 square kilometers and
estimated average thickness of 5.8 meters (Figure 5). The 109 well tested gas
and condensate down to 2,027.6 meters TVDSS and the adjacent 101 well tested
water as high as 2,036.7 meters TVDSS.
The
Bashkirian A-4 Central reservoir is mapped as high as 2,800 meters TVDSS. The
OWC is estimated at 2,839 meters TVDSS. This reservoir encompasses about 4.3
square kilometers with an average thickness of 12.4 meters. Oil was successfully
tested in the 130 and 133 wells. Both wells tested water-free oil with the
deepest oil test in the 130 well at 2,839 meters TVDSS. A test in the 133 well
over an interval of 2,832.2 to 2,842.8 meters TVDSS produced oil and
water.
The
accumulation on the smaller southern dome, the Bashkirian A-4 South reservoir,
is mapped as high as 2,900 meters TVDSS with an OWC at 2,905 meters TVDSS. This
reservoir covers approximately 0.7 square kilometers and has an average
thickness of 3.4 meters. The smaller southern accumulation was proved by a test
in the 108 well with oil-only down to 2,900.8 meters TVDSS and water tested as
high as 2,929.8 meters TVDSS.
The
Concession area of the North-Kopanskoye field for Exploration is located and
delimited by the following geographic coordinates:
|
COORDINATES
|
LATITUDE:
|
LONGITUDE
|
|
1
|
51°
22,3'
|
55°
32,8'
|
|
2
|
51°
27,3'
|
55°
32,8'
|
|
3
|
51°
27,3'
|
55°
36,4'
|
|
4
|
51°
22,3'
|
55°
36,4'
|
Approximate
area: 3,213 acres.
Item 3.
Legal
Proceedings.
From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm business. Except as disclosed below we are
currently not aware of any such legal proceedings or claims that will have,
individually or in the aggregate, a material adverse affect on business,
financial condition or operating results.
Item 4.
Submission of Matters to a Vote of
Security Holders.
None.
PART II
Item 5.
Market for Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market
Information
Our
common stock is quoted on the OTC Bulletin Board trades under the symbol “PNRC.”
The following table sets forth, for the periods indicated, the high and low bid
prices of our common stock. These prices reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not represent actual
transactions.
|
|
|
Fiscal Year 2008
|
|
|
|
|
High
|
|
|
Low
|
|
|
First
Quarter
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Second
Quarter
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Third
Quarter
|
|
$
|
1.50
|
|
|
$
|
0.70
|
|
|
Fourth
Quarter
|
|
$
|
1.20
|
|
|
$
|
0.20
|
|
Holders
As of April 30, 2009, we had
approximately 73 holders of our common stock. The number of record holders was
determined from the records of our transfer agent and does not include
beneficial owners of common stock whose shares are held in the names of various
security brokers, dealers, and registered clearing agencies. The transfer agent
of our common stock is StockTrans, Inc.
Dividends
The
Company has not paid any cash dividends to date and does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth certain information about the common stock that may
be issued upon the exercise of options under the equity compensation plans as of
December 31, 2008.
EQUITY
COMPENSATION PLAN INFORMATION
|
Plan
category
|
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
|
|
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
|
|
|
Number
of securities
remaining
available for future issuance under equity compensation plans (excluding
securities reflected in column (a)
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity
compensation plans approved by security holders
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Recent Sales of Unregistered
Securities
Unless
otherwise noted, the issuances noted below are all considered exempt from
registration by reason of Section 4(2) of the Securities Act of 1933, as
amended, and/or Rule 506 as promulgated under Regulation D:.
On
January 30, 2009, we entered into a Share Exchange Agreement with Auxerre
Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to which we
acquired 51% of the outstanding securities of Karbon in exchange for 107,406,000
shares of our common stock (the “Karbon Acquisition”).
On
January 30, 2009, prior to the Karbon Acquisition and the issuance of the
107,406,000, ZRV Consulting, Inc., the former majority shareholder of Premier,
returned 107,406,000 shares of common stock of Premier for
cancellation.
Item
6. Selected Financial Data.
Not
required under Regulation S-K for “smaller reporting companies.”
Item 7.
Management’s Discussion
and Analysis or Plan of Operations.
FORWARD-LOOKING
STATEMENTS
The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in this report are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. Our actual results may differ significantly from
management's expectations.
The
following discussion and analysis should be read in conjunction with the
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
Our
immediate priority is to secure suitable financing to continue with the business
of Karbon as a result of the recent transaction. Prior to concluding
the merger Premier’s sole purpose was the acquisition or combination with a
business prospect. This was critical to insure our survival and to preserve our
shareholder's investment in our common shares. Even with the completed
transaction the company will have to obtain sufficient capital to sustain its
operations in that Karbon operations are currently not
profitable. This discussion historically relates to financial results
of Premier Energy as a standalone entity prior to its merger with Karbon. One
should also refer to the financial statements of Karbon and related proformas
filed on form 8/A and filed as an exhibit to this form and to managements
discussion of operations contained in that document. Unless necessary
funding is secured in a timely fashion, we believe our operation post merger
with Karbon may continue to be not profitable and in need of further
significant financing.
RESULTS
OF OPERATIONS
Our
Company posted losses of $72,985 for the seven months ended December 31, 2008
compared to $11,943 for year ended May 31, 2008. The company
continued to have no source of revenues or any other income for the period,
Significant components of operating expenses were Professional fees rose from
$6,454 to $46,619, an increase of $40,165 as a result of maintaining regulatory
compliance of being a public company and Salary expense rose from the year ended
May 31, 2008 for the seven months ended December 31, 2008 by $20,833 as a result
of hiring a chief executive officer.
From
inception to December 31, 2008 we have incurred losses of $ 85,078. The
principal components of our losses for this period as above were regulatory
compliance and officer’s salary in addition to general and administration
expense relating to rent and other office type expenses.
LIQUIDITY
AND CASH RESOURCES
At
December 31, 2008 we had negative working capital of ($49,078) compared to
$23,907 at May 31, 2008. At December 31, 2008 we had $ 20,290 in cash compared
to 23,907 in cash as of May 31, 2008.
Because
of a minimum amount of cash and not being able to generate any revenue from
Premier Energy all future liquidity from operations will have to come from
Karbon’s operations. However, since Karbon has had continued losses the combined
operation will have to raise additional funds for the development of the
business and to respond to unanticipated requirements or expenses.
We are in
the process of attempting to secure arrangements for financing, but we can
provide no assurance to investors we will be able to secure such financing.
There can be no assurance that additional financing will be available to us, or
on terms that are acceptable. Consequently, we may not be able to proceed with
our intended business plans and our business may then likely fail.
Some of
the statements contained in this Form 10-K that are not historical facts are
"forward-looking statements" which can be identified by the use of terminology
such as "estimates," "projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Form 10-K, reflect our current beliefs with respect to future events and involve
known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events. Factors that may cause actual results, our performance or
achievements, or industry results, to differ materially from those contemplated
by such forward-looking statements include without limitation:
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·
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Our
ability to attract and retain management, and to integrate and maintain
technical information and management information
systems;
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·
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Our
ability to raise capital when needed and on acceptable terms and
conditions;
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·
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The
intensity of competition;
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·
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General
economic conditions; and
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All
written and oral forward-looking statements made in connection with this
Form 10-K that are attributable to us or persons acting on our behalf are
expressly qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
Our
Management’s Discussion and Analysis should be read in conjunction with our
financial statements included herein.
Critical
Accounting Policies and Estimates
This
discussion and analysis of our financial condition and results of operations are
based on the financial statements of Premier prior to its merger with
Karbon. Management feels the critical accounting policies of Karbon,
the operation that will essentially represent the primary operations of Premier
on a go forward basis. are the most significant critical representations. As
such the following policies are primarily Karbon’s. The preparation of our
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. In the following
discussion, we have identified the accounting estimates which we consider as the
most critical to aid in fully understanding and evaluating our reported
financial results in the future. Estimates regarding matters that are inherently
uncertain require difficult, subjective or complex judgments on the part of our
management. We analyze our estimates, including those related to oil and gas
reserves, oil and gas properties, income taxes, contingencies and litigation,
and base our estimates on historical experience and various other assumptions
that we believe reasonable under the circumstances. Actual results may differ
from these estimates.
Successful Efforts Method of Accounting
We will
account for our natural gas and crude oil exploration and development activities
utilizing the successful efforts method of accounting. Under this method, costs
of productive exploratory wells, development dry holes and productive wells, and
undeveloped leases are capitalized. Oil and gas lease acquisition costs are also
capitalized. Exploration costs, including personnel costs, certain geological
and geophysical expenses, and delay rentals for oil and gas leases are charged
to expense as incurred. Exploratory drilling costs are initially capitalized but
charged to expense if and when the well is determined not to have found reserves
in commercial quantities. The sale of a partial interest in a proved property is
accounted for as a cost recovery and no gain or loss is recognized as long as
this treatment does not significantly affect the unit-of-production amortization
rate. A gain or loss is recognized for all other sales of producing
properties.
The
application of the successful efforts method of accounting requires managerial
judgment to determine the proper classification of wells designated as
developmental or exploratory which will ultimately determine the proper
accounting treatment of the costs incurred. The results from a drilling
operation can take considerable time to analyze and the determination that
commercial reserves have been discovered requires both judgment and industry
experience. Wells may be completed that are assumed to be productive and
actually deliver oil and gas in quantities insufficient to be economic, which
may result in the abandonment of the wells at a later date. Wells are drilled
which have targeted geologic structures which are both developmental and
exploratory in nature and an allocation of costs is required to properly account
for the results. The evaluation of oil and gas leasehold acquisition costs may
require managerial judgment to estimate the fair value of these costs with
reference to drilling activity in a given area. Drilling activities in an area
by other companies may also effectively condemn leasehold
positions.
The
successful efforts method of accounting can have a significant impact on the
operational results reported when we are entering a new exploratory area in
hopes of finding an oil and gas field that will be the focus of future
development drilling activity. The initial exploratory wells may be unsuccessful
and will be expensed.
Reserve
Estimates
Estimates
of oil and gas reserves, by necessity, are projections based on geologic and
engineering data, and there are uncertainties inherent in the interpretation of
such data as well as the projection of future rates of production and the timing
of development expenditures. Reserve engineering is a subjective process of
estimating underground accumulations of oil and gas that are difficult to
measure. The accuracy of any reserve estimate is a function of the quality of
available data, engineering and geological interpretation and judgment.
Estimates of economically recoverable oil and natural gas reserves and future
net cash flows necessarily depend upon a number of variable factors and
assumptions, such as historical production from the area compared with
production from other producing areas, the assumed effects of regulations by
governmental agencies and assumptions governing future oil and natural gas
prices, future operating costs, severance taxes, development costs and work-over
costs, all of which may in fact vary considerably from actual results. For these
reasons, estimates of the economically recoverable quantities of oil and natural
gas attributable to any particular group of properties, classifications of such
reserves based on risk of recovery, and estimates of the future net cash flows
expected there from may vary substantially. Any significant variance in the
assumptions could materially affect the estimated quantity and value of the
reserves, which could affect the carrying value of oil and gas properties and/or
the rate of depletion of the oil and gas properties. Actual production, revenues
and expenditures with respect to our reserves will likely vary from estimates,
and such variances may be material.
Impairment
of Oil and Gas Properties
We review
the carrying values of our long-lived assets whenever events or changes in
circumstances indicate that such carrying values may not be recoverable. If,
upon review, the sum of the undiscounted pretax cash flows is less than the
carrying value of the asset group, the carrying value is written down to
estimated fair value. Individual assets are grouped for impairment purposes at
the lowest level for which there are identifiable cash flows that are largely
independent of the cash flows of other groups of assets, generally on a
field-by-field basis. The fair value of impaired assets is determined based on
quoted market prices in active markets, if available, or upon the present values
of expected future cash flows using discount rates commensurate with the risks
involved in the asset group. The long-lived assets of the Company, which are
subject to periodic evaluation, consist primarily of oil and gas properties and
undeveloped leaseholds.
Stock-Based
Compensation
Stock and
stock-based grants are charged to earnings over the period services are
provided, which is generally equivalent to the vesting period.
We accrue
for anticipated vesting of stock grants in interim reporting periods based upon
our best estimates at the time of the interim period of the conditions and
criteria under which the options will vest. These conditions and criteria
include service through the vesting date, announced future terminations,
performance criteria based upon most recent forecasts and market conditions
where appropriate. The estimates used are subjective and based upon management’s
judgment and may change over time as experience emerges. Changes to the interim
accruals due to changes in the estimates of the conditions and criteria are
recorded in the period in which the estimate changes occur.
Asset
Retirement Obligations
Legal
obligations associated with the retirement of long-lived assets result from the
acquisition, construction, development and normal use of the asset. The
Company’s asset retirement obligations relate primarily to the retirement of oil
and gas properties and related production facilities, lines and other equipment
used in the field operations. The fair value of a liability for an asset
retirement obligation is recognized in the period in which it is incurred, if a
reasonable estimate of fair value can be made. The estimated fair value of the
liability is added to the carrying amount of the associated asset. This
additional carrying amount is then depreciated over the life of the asset. The
liability increases due to the passage of time based on the time value of
money until the obligation is settled.
Recently
Adopted Accounting Pronouncements
In
June 2006, the Financial Accounting Standards Board (“FASB”) issued
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an
Interpretation of SFAS No. 109” (“FIN 48”). The interpretation creates a
single model to address accounting for uncertainty in tax positions.
Specifically, the pronouncement prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. The interpretation
also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition of certain tax
positions.
The
Company adopted the provisions of FIN 48 effective January 1, 2007. The
adoption of this accounting principle did not have an effect on the Company’s
financial statements as of December 31, 2008.
Recently
Issued Accounting Pronouncements
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not expect the adoption of FSP
FAS 157-4 will have a material impact on its financial condition or results of
operation.
In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.” This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP
effective January 1, 2009. The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.
In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157. Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets and information about the inputs and
valuation techniques used to develop the fair value measurements of plan assets.
This FSP is effective for fiscal years ending after December 15,
2009. The Company does not expect the adoption of FSP FAS 132(R)-1
will have a material impact on its financial condition or results of
operation.
In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ARB No. 51,” as well as other
modifications. While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements. The changes would be effective March
1, 2010, on a prospective basis.
In June
2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting, and therefore need to be included in the computation of earnings per
share under the two-class method as described in FASB Statement of Financial
Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective
for financial statements issued for fiscal years beginning on or after December
15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP
EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material
effect on our consolidated financial position and results of operations if
adopted.
In May
2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162,
"The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162 sets
forth the level of authority to a given accounting pronouncement or document by
category. Where there might be conflicting guidance between two categories, the
more authoritative category will prevail. SFAS No. 162 will become effective 60
days after the SEC approves the PCAOB's amendments to AU Section 411 of the
AICPA Professional Standards. SFAS No. 162 has no effect on the Company's
financial position, statements of operations, or cash flows at this
time.
In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities--an amendment of
FASB Statement No. 133. This standard requires companies to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity's financial position,
financial performance, and cash flows. This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The Company has not yet adopted the
provisions of SFAS No. 161, but does not expect it to have a material impact on
its consolidated financial position, results of operations or cash
flows.
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of "plain vanilla" share options in
accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff
indicated in SAB 107 that it will accept a company's election to use the
simplified method, regardless of whether the company has sufficient information
to make more refined estimates of expected term. At the time SAB 107 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of
SA
B 110 for fiscal
year 2009. It is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash
flows.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In
December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information
to disclose to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. An entity may not apply it before that date. The effective
date of this statement is the same as that of the related FASB Statement No.
160, Noncontrolling Interests in Consolidated Financial Statements. The Company
will adopt this statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In
February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
Item 7A. Quantitative and Qualitative Disclosure about
Market Risk.
Not
required under Regulation S-K for “smaller reporting companies.”
Item 8.
Financial
Statements.
The financial statements begin on Page
F-1.
Item
9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
On
February 5, 2009 (the “Dismissal Date”), the Company advised Moore &
Associates Chartered (the “Former Auditor”) that it was dismissed as the
Company’s independent registered public accounting firm. The decision
to dismiss the Former Auditor as the Company’s independent registered public
accounting firm was approved by the Company’s Board of Directors on January 30,
2009. Except as noted in the paragraph immediately below, the reports
of the Former Auditor on the Company’s consolidated financial statements for the
years ended May 31, 2008 and May 31, 2007 did not contain an adverse opinion or
disclaimer of opinion, and such reports were not qualified or modified as to
uncertainty, audit scope, or accounting principle.
The
reports of the Former Auditor on the Company’s consolidated financial statements
as of and for the years ended May 31, 2008 and May 31, 2007, contained an
explanatory paragraph which noted that there was substantial doubt as to the
Company’s ability to continue as a going concern as the Company had a net loss
as of May 31, 2008.
During
the years ended May 31, 2008 and May 31, 2007, and through the Dismissal Date,
the Company has not had any disagreements with the Former Auditor on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the Former
Auditor’s satisfaction, would have caused them to make reference thereto in
their reports on the Company’s consolidated financial statements for such
years.
During
the years ended May 31, 2008 and May 31, 2007, and through the Dismissal Date,
there were no reportable events, as defined in Item 304(a)(1)(v) of
Regulation S-K.
The
Company has requested that Former Auditor furnish it with a letter addressed to
the Securities and Exchange Commission stating whether it agrees with the above
statements. A copy of this letter is incorporated by reference as
Exhibit 16.1.
On
January 30, 2009 (the “RBSM Engagement Date”), the Company engaged RBSM LLP
(“RBSM”) as its independent registered public accounting firm for the Company’s
fiscal year ended December 31, 2008. The decision to engage RBSM as
the Company’s independent registered public accounting firm was approved by the
Company’s Board of Directors.
During
the two most recent fiscal years and through the RBSM Engagement Date, the
Company has not consulted with RBSM regarding either:
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1.
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application
of accounting principles to any specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
Company’s financial statements, and neither a written report was provided
to the Company nor oral advice was provided that the New Auditor concluded
was an important factor considered by the Company in reaching a decision
as to the accounting, auditing or financial reporting issue;
or
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|
2.
|
any
matter that was either the subject of a disagreement (as defined in
Regulation S-K, Item 304(a)(1)(iv) and the related instructions) or
reportable event (as defined in Regulation S-K, Item
304(a)(1)(v)).
|
On April
16, 2009 (the “Resignation Date”), RBSM advised the Company that it
was resigning as the Company’s independent registered public accounting
firm. RBSM was engaged on January 30, 2009 and did not issue a report on
the Company’s consolidated financial statements during the most recent two
fiscal years and through the Resignation Date. From January 30, 2009
through April 16, 2009 , the Company has not had any disagreements with
RBSM on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to RBSM’s satisfaction, would have caused them to make
reference thereto in their reports on the Company’s financial statements for
such year.From January 30, 2009 through April 16, 2009 , there were no
reportable events, as defined in Item 304(a)(1)(v) of Regulation
S-K.
The
Company has requested that RBSM furnish it with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements. A copy of this letter is incorporated by reference as
Exhibit 16.2.
On April
16, 2009 (the “Femida Engagement Date”), the Company engaged Audit Firm
“Femida-Audit”, LLC (“New Auditor”) as its independent registered public
accounting firm for the Company’s fiscal year ended December 31, 2008. The
decision to engage the New Auditor as the Company’s independent registered
public accounting firm was approved by the Company’s Board of
Directors.
During
the two most recent fiscal years and through the Femida Engagement Date, the
Company has not consulted with the New Auditor regarding either:
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1.
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except
to the extend that the New Auditor audited the financial statements of the
Company’s wholly owned subsidiary (KARBON, CJSC) for the years ended
December 31, 2008, 2007 and 2006, the application of accounting principles
to any specified transaction, either completed or proposed, or the type of
audit opinion that might be rendered on the Company’s financial
statements, and neither a written report was provided to the Company nor
oral advice was provided that the New Auditor concluded was an important
factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue;
or
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2.
|
any
matter that was either subject of disagreement or event, as defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instruction to Item
304 of Regulation S-K, or a reportable event, as that term is explained in
Item 304(a)(1)(v) of Regulation
S-K.
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Item 9A.
Controls and
Procedures.
Evaluation
of Disclosure Controls and Procedures
As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
were not effective as of the end of the applicable period to ensure that the
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act (i) is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and (ii) is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosures. Our
disclosure controls and procedures were not effective as the Company did not
have the needed accounting personnel to perform required
functions. In order to remediate this weakness, during the second
quarter of 2009, the Company engaged RBSM LLP as an independent
consultant to evaluate its needs and provided needed accounting
services.
Managements
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934. Our internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
|
|
·
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and disposition of our
assets;
|
|
|
·
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of our management and
directors; and
|
|
|
·
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations and provide only
reasonable assurance, not absolute assurance, with respect to financial
statement preparation and presentation. The design of an internal control system
reflects resource constraints and the benefits must be considered relative to
the costs of implementing and maintaining the system.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2008. This assessment was based on criteria
established in
Internal
Control—Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our assessment, we
believe that as of December 31, 2008 the Company’s internal control over
financial reporting was effective based on those criteria.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
annual report.
Changes
in Internal Control over Financial Reporting
Except as
set forth above in the Evaluation of Disclosure Controls and Procedures, there
were no changes in the Company’s internal controls over financial reporting
during the fourth quarter of 2008 that materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
PART III
Item 10.
Directors, Executive
Officers, Promoters, Control Persons and Corporate Governance; Compliance with
Section 16(a) of the Exchange Act.
Our
directors, executive officers, significant employees, as well as their ages and
the positions they held, as of December 31, 2008, are set forth
below. Our directors hold office until our next annual meeting of
stockholders and until their successors in office are elected and
qualified. All of our officers serve at the discretion of our Board
of Directors. There are no family relationships among our executive
officers and directors.
Executive Officers and
Directors
Below are
the names and certain information regarding Premier’s executive officers and
directors following the acquisition of Premier.
|
Name
|
|
Age
|
|
Position
|
|
Dr. Anton
Prodanovic
|
|
63
|
|
Chief
Executive Officer and Director
|
|
Michael
Yuster
|
|
51
|
|
President
and Director
|
|
Alexey
Goleshev
|
|
37
|
|
Chief
Financial Officer and Director
|
|
Bosko
Popovic
|
|
46
|
|
Chief
Operating Officer and Director
|
|
Aslanbi
Kodzokov
|
|
42
|
|
Secretary
and Director
|
|
|
|
|
|
|
Officers
are elected annually by the Board of Directors (subject to the terms of any
employment agreement), at its annual meeting, to hold such office until an
officer’s successor has been duly appointed and qualified, unless an officer
sooner dies, resigns or is removed by the Board.
Background
of Executive Officers and Directors
Dr. Anton Prodanovic
,
our Chief Executive Officer and a director of the Company, has been focused on
the evaluation, planning, permitting, contracting, construction and management
of various energy projects. From 2000 until joining our company,
Dr. Prodanovic has served as a consultant to various oil and gas projects,
renewable energy sources and emerging alternative fuel projects. Between 1984
and 2000, Dr. Prodanovic served in various capacities with Mobil
Corporation as an officer or senior executive with various divisions and
projects within Mobil Corporation, and from 1976 until 1984 he was a Senior
Research Associate with Exxon Production Research Co., a division of Exxon
Corporation. Dr. Prodanovic is a member of the American Society of Civil
Engineers and the American Society of Mechanical Engineers. He was co-founder or
organizer of Offshore Mechanics & Arctic Engineering, Polar Offshore Arctic
Conferences, Offshore Technology Conferences and Russian Arctic Offshore
Conferences. A Fulbright scholar (1973), Dr. Prodanovic also served as
Assistant Professor at the University of Sarajevo, Yugoslavia and was a Research
Assistant at Rice University. Dr. Prodanovic holds a Ph.D. in Structural
Engineering from Rice University, an M.A. in International Business from the
University of Texas and a B.S. in Civil Engineering from the University of
Sarajevo.
Michael Yuster,
our President
and a director, has served as principal executive officer and sole director of
ZRV Consulting Inc., West Orange, New Jersey, which provides consulting services
to various commercial companies and businesses since June 11, 2008. Between
March 2001 and April 1, 2007, Mr. Yuster was Vice President of Medical
Adult Daycare Center and Always Care Adult Center Inc., Old Bridge, New Jersey.
Between 1996 and 2001, Mr. Yuster was Director of Operations for Available
Care Inc., Medical Transportation Company and Ambulance and Invalid Coach,
Milltown, New Jersey.
Alexey Goleshev,
our Chief
Financial Officer and a director, has served as Vice President of National
Republic Bank (Russia) since June 2003 where has been responsible for planning
of oil and gas project financing. From November 1998 through June
2001, Mr. Goleshev has served as the President of Codexbank. Mr.
Goleshev holds a MBA from the Pacific Coast University.
Bosko Popovic
, our Chief
Operating Officer and a director, has served as a Director of a Representation
Office for Auxerre Trading Ltd, a significant shareholder of the Company, since
October 2005 where he has monitored and controlled assets in Russia and traded
crude oil and products. From July 2003 through September 2005, Mr.
Popovic served as Director of the Moscow office where he was responsible for
processing and supplying crude oil. Mr. Popovic holds an engineering
degree from the University of Belgrade.
Aslanbi Kodzokov,
our
Secretary and a director, has since 2006, served as the Deputy General Director
for the Legal Department of OOO Rossgaz and the Director of the Legal Department
for OAO Hydrometalurg from 2002 to 2006. From 2000 to 2002, Mr.
Kodzokov served as the General Director of Moscow Institute of Economy and
Law. Mr. Kodzokov earned an economics degree from the
Government University of Kabardino-Balkaria and a law degree from the Moscow
Institute of Economy and Law.
Committees
Our
directors are elected by the vote of a majority in interest of the holders of
our voting stock and hold office until the expiration of the term for which he
or she was elected and until a successor has been elected and qualified.
Meetings
may be held from time to time to consider matters for which approval of our
Board of Directors is desirable or is required by law.
A
majority of the authorized number of directors constitutes a quorum of the Board
of Directors for the transaction of business. The directors must be present at
the meeting to constitute a quorum. However, any action required or permitted to
be taken by the Board of Directors may be taken without a meeting if all members
of the Board of Directors individually or collectively consent in writing to the
action.
Nominating
Committee
The Board
of Directors does not have a standing nominating
committee. Nominations for election to the Board of Directors may be
made by the Board of Directors or by any shareholder entitled to vote for the
election of directors in accordance with our bylaws and Florida
law.
Audit
Committee
The Board
of Directors acts as the audit committee but it intends on appointing an audit
committee. The Company does not have a qualified financial expert at
this time because it has not been able to hire a qualified candidate. Further,
the Company believes that it has inadequate financial resources at this time to
hire such an expert. The Company intends to continue to search for a qualified
individual for hire.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires executive officers and directors, and persons who beneficially
own more than ten percent of the Company’s common stock, to file initial reports
of ownership and reports of changes in ownership with the SEC for Companies
registered under Section 12 of the Exchange Act (“Section 12”) . Since we are
not registered under Section 12, the executive officers, directors and greater
than ten percent beneficial owners were not required by SEC regulations to file
forms under 16(a).
Code
of Ethics
We have
not adopted a Code of Business Conduct and Ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions because of the small number
of persons involved in the management of the Company.
Item
11. Executive Compensation
Neither
Karbon nor Premier have paid their executive officers any compensation during
the last two fiscal years.
Employment
Agreements
On
October 16, 2008 we entered into an employment agreement with
Dr. Prodanovic. Under the terms of this
24 month agreement, he
will serve as Chief Executive Officer. In addition, during the term of the
agreement we agreed to cause him to be successively nominated for election to
the Board of Directors. As compensation, we agreed to pay Dr. Prodanovic an
annual base salary of $100,000, which such base is subject to annual merit
review and increase as deemed appropriate by the Board, together with bonus
compensation in amounts as may be determined by the Board. We have agreed to
grant Dr. Prodanovic options to purchase 200,000 of our common stock at an
exercise price equal to fair market value on the date of grant. He is also
entitled to participate in such benefit packages as we provide to similarly
situated employees, four weeks paid vacation and 10 paid holidays. The agreement
contains customary provisions related to non-compete, confidentiality,
non-solicitation and invention assignment
.
The
agreement may be terminated by us for cause as set forth in the agreement, by us
without cause, or by Dr. Prodanovic under certain circumstances. If we
terminate the agreement for cause, he is not entitled to any severance benefits.
If we should terminate the agreement without cause, we are obligated to pay
Dr. Prodanovic an amount equal to his monthly base salary for the greater
of 24 months or until he is hired in a new position which is consistent with his
experience and stature. If such new position pays less than his then current
base salary we are obligated to pay the difference for the balance of the 24
month severance period. If his employment in the new position should terminate
prior to the expiration of the 24 month severance period, we are obligated to
pay his monthly base salary during the remaining period. In the event we should
fail to appoint Dr. Prodanovic Chief Executive Officer and a member of our
Board of Directors in any successive periods during the term of the agreement,
should we fail to compensate him pursuant to the terms of the agreement, or if
there is a material breach of the agreement, Dr. Prodanovic is entitled to
terminate the agreement and we shall be obligated to pay him the same severance
benefits had we terminated the agreement without cause.
We have
entered two year employment agreements with each of Alexey Goleshev, Bosko
Popovic and Aslanbi Kodzokov providing annual salaries of $50,000.
Outstanding Equity Awards at
Fiscal Year-End
The
Company’s Named Executive Officers did not hold unexercised options or any other
stock awards as of the end of our years ended December 31, 2008
and 2007, respectively. As such, the table has been
omitted.
Director Compensation and
Committees
We
presently are considering to pay compensation to our directors for acting in
such capacity, including the grant of shares of common stock or options and
reimbursement for reasonable out-of-pocket expenses in attending
meetings.
Directors
did not receive compensation for the fiscal year ended December 31,
2008.
Item 12.
Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters.
The
following tables set forth certain information as of April 28, 2009, regarding
(i) each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director, nominee and
executive officer of the Company and (iii) all officers and directors as a
group.
|
Name
of Beneficial Owner (1)
|
|
Common
Stock
Beneficially
Owned
|
|
|
Percentage
of
Common
Stock (2)
|
|
|
Dr. Anton
Prodanovic *
|
|
|
0
|
|
|
|
**
|
|
|
Michael
Yuster *(3)
|
|
|
54,594,000
|
|
|
|
25.9
|
%
|
|
Alexey
Goleshev *
|
|
|
0
|
|
|
|
**
|
|
|
Bosko
Popovic *
|
|
|
0
|
|
|
|
**
|
|
|
Aslanbi
Kodzokov *
|
|
|
0
|
|
|
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
Auxerre
Trading Ltd.
|
|
|
107,406,000
|
|
|
|
51.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All
officers and directors as a group (5 persons)
|
|
|
54,594,000
|
|
|
|
25.9
|
%
|
*Executive
officer and/or director of Premier.
** Less than 1%
|
(1)
|
Except
as otherwise indicated, the address of each beneficial owner is c/o
Premier Energy Corp., 14785 Preston Road, Suite 550, Dallas,
Texas 75254.
|
|
(2)
|
Applicable
percentage ownership is based on 210,600,000 shares of common stock
outstanding as of April 30, 2009, together with securities exercisable or
convertible into shares of common stock within 60 days of April 30, 2009
for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to
securities. Shares of common stock that are currently
exercisable or exercisable within 60 days of April 30, 2009 are deemed to
be beneficially owned by the person holding such securities for the
purpose of computing the percentage of ownership of such person, but are
not treated as outstanding for the purpose of computing the percentage
ownership of any other person.
|
|
(3)
|
Shares
are held by ZRV Consulting, Inc. which is wholly owned by Mr.
Yuster.
|
Item
13. Certain Relationships And Related Transactions
On
January 30, 2009, we entered into a Share Exchange Agreement with Auxerre
Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to which we
acquired 51% of the outstanding securities of Karbon in exchange for 107,406,000
shares of our common stock (the “Karbon Acquisition”). Bosko Popovic,
an executive officer and director of the Company, is an employee of
Auxerre.
On
January 30, 2009, prior to the Karbon Acquisition, ZRV Consulting Inc., the
former majority shareholder of Premier, returned 107,406,000 shares of common
stock of Premier for cancellation. Michael Yuster, a director
and officer of the Company, is the sole owner and director of ZRV Consulting,
Inc.
Except as
set forth above, we have not entered into any material transactions with any
director, executive officer, and promoter, beneficial owner of five percent or
more of our common stock, or family members of such persons.
Item
14.
Principal
Accounting Fees and Services.
The
following table sets forth fees billed to us by our auditors during the fiscal
years ended December 31, 2008 and May 31, 2008 for: (i) services rendered for
the audit of our annual financial statements and the review of our quarterly
financial statements, (ii) services by our auditor that are reasonably related
to the performance of the audit or review of our financial statements and that
are not reported as Audit Fees, (iii) services rendered in connection with tax
compliance, tax advice and tax planning, and (iv) all other fees for services
rendered.
|
|
|
December 31, 2008
|
|
|
May 31, 2008
|
|
|
|
|
|
|
|
|
|
|
(i)
Audit Fees
|
|
$
|
2000.00
|
|
|
$
|
4,800.00
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
(ii)
Audit Related Fees
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
(iii)
Tax Fees
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iv)
All Other Fees
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
(1)
includes $1,800.00 accrued audit fees for 12/31/2008 audited financial
statements
|
Exhibit
No.
|
|
Description
|
|
3.1
|
|
Articles
of Incorporation (4)
|
|
3.2
|
|
Bylaws
(4)
|
|
10.1
|
|
Share
Exchange Agreement dated as of January 30, 2009 by and among Auxerre
Trading Ltd., Karbon, CJSC and Premier Energy Corp. ( 1
)
|
|
|
|
|
|
10.2
|
|
Employment
Agreement between Premier Energy Corp. and Alexey Goleshev ( 1
)
|
|
|
|
|
|
10.3
|
|
Employment
Agreement between Premier Energy Corp. and Bosko Popovic ( 1
)
|
|
|
|
|
|
10.4
|
|
Employment
Agreement between Premier Energy Corp. and Aslanbi Kodzokov ( 1
)
|
|
|
|
|
|
16.1
|
|
Letter
from Audit Firm Femida-Audit LLC, dated February 11, 2009
(2)
|
|
|
|
|
|
16.2
|
|
Letter
from RBSM LLP, dated April 21, 2009 (3)
|
|
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley
Act.
|
|
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley
Act.
|
|
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
|
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
|
|
|
|
|
99.1
|
|
Karbon,
CJSC Financial Statements for the years ended December 31, 2008, 2007 and
2006
|
|
(1)
|
Incorporated
by reference to the Form 8K Current Report filed with the Securities and
Exchange Commission on February 2,
2009.
|
|
(2)
|
Incorporated
by reference to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on February12,
2009.
|
|
(3)
|
Incorporated
by reference to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on April 21,
2009.
|
|
(4)
|
Incorporated
by reference to the Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission on August 31,
2007.
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PREMIER ENERGY CORP.
|
Date: April
30, 2009
|
By:/s/
Dr. Anton Prodanovic
|
|
|
Dr. Anton
Prodanovic
|
|
|
Chief
Executive Officer and Director (Principal Executive
Officer)
|
|
Date: April
30, 2009
|
By:
/s/Alexey Goleshev
|
|
|
Alexey
Goleshev
|
|
|
Chief
Financial Officer and Director (Principal Financial & Accounting
Officer)
|
POWER
OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Dr. Anton Prodanovic as his true and lawful
attorney-in-fact and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this report on Form
10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Name
|
Position
|
Date
|
|
|
|
|
|
/s/
Dr. Anton Prodanovic
Dr. Anton
Prodanovic
|
Chief
Executive Officer and Director (Principal Executive
Officer)
|
April
30, 2009
|
|
|
|
|
|
/s/
Alexey Goleshev
Alexey
Goleshev
|
Chief
Financial Officer and Director (Principal Financial Officer and Principal
Accounting Officer)
|
April
30, 2009
|
|
|
|
|
|
/s/
Michael Yuster
Michael
Yuster
|
President
and Director
|
April
30, 2009
|
|
|
|
|
|
/s/
Bosko Popovic
Bosko
Popovic
|
Chief
Operating Officer and Director
|
April
30, 2009
|
|
|
|
|
|
/s/Aslanbi
Kodzokov
Aslanbi
Kodzokov
|
Secretary
and Director
|
April
30,
2009
|
Report of Independent
Registered Public Accounting Firm
TO THE
BOARD OF DIRECTORS
PREMIER
ENERGY CORP.
FKA
PREMIER NURSING PRODUCTS CORP.
(A
DEVELOPMENT STAGE COMPANY)
We have
audited the accompanying balance sheet of Premier Energy Corp. f
ka Premier Nursing Products Corp. (a
Development Stage Company)
, as of December 31, 2008 and the related
statements of operations, stockholders` equity and comprehensive income and cash
flows for the seven month period then ended. 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 audits.
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 the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide 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 Premier Energy Corp. f
ka Premier Nursing Products Corp. (a
Development Stage Company)
, as of December 31, 2008, and the results of
its operations and its cash flows for the 7 months’ period then ended in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has suffered recurring losses from operations and has a
significant working capital deficit that raise doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Audit
Firm “Femida-Audit”, LLC
Audit
Firm “Femida-Audit”, LLC
Moscow,
Russia
April 28,
2009
MOORE
& ASSOCIATES, CHARTERED
ACCOUNTANTS AND
ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Premier
Energy Corporation fka Premier Nursing Products Corporation
(A
Development Stage Company)
We have
audited the accompanying balance sheet of Premier Energy Corporation fka Premier
Nursing Products Corporation (A Development Stage Company) as of May 31, 2008,
and the related statements of operations, stockholders’ equity and cash flows
for the year then ended. 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 audits.
We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about 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 audits provide 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 Premier Energy Corporation fka
Premier Nursing Products Corporation (A Development Stage Company) as of May 31,
2008, and the related statements of operations, stockholders’ equity and cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has continuing losses and a working capital
deficit which raises substantial doubt about its ability to continue as a going
concern. Management’s plans concerning these matters are also
described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/
Moore & Associates, Chartered
Moore
& Associates Chartered
Las
Vegas, Nevada
July 14,
2008
6490 West Desert Inn Rd, Las
Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
PREMIER
ENERGY CORP.
fka
Premeier Nursing Products Corp.
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
May 31, 2008
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
20,290
|
|
|
$
|
23,907
|
|
|
|
|
|
20,290
|
|
|
$
|
23,907
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
20,290
|
|
|
$
|
23,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
Payable and accrued expenses
|
|
$
|
38,268
|
|
|
$
|
-
|
|
|
Advances
from related parties
|
|
|
31,100
|
|
|
|
-
|
|
|
|
|
|
69,368
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
69,368
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.0001 par value, 10,000,000 shares authorized,
none
|
|
|
|
|
|
|
issued
and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common
Stock, $0.0001 par value,
|
|
|
|
|
|
|
|
|
|
100,000,000
shares authorized,
|
|
|
|
|
|
|
|
|
|
210,600,000
shares issued and outstanding
|
|
|
21,060
|
|
|
|
21,060
|
|
|
at
December 31, 2008 and May 31, 2008, respectively
|
|
|
|
|
|
|
|
|
|
Additional Paid-in
Capital
|
|
|
14,940
|
|
|
|
14,940
|
|
|
Accumulated
Deficit during development stagem
|
|
|
(85,078
|
)
|
|
|
(12,093
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,078
|
)
|
|
$
|
23,907
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
20,290
|
|
|
$
|
23,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
|
|
|
|
|
|
|
(December 26, 2006) to
|
|
|
|
|
December 31, 2008
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Filing
fees
|
|
|
-
|
|
|
|
185
|
|
|
|
335
|
|
|
Professional
fees
|
|
|
46,619
|
|
|
|
6,454
|
|
|
|
53,073
|
|
|
Salary
expense
|
|
|
20,833
|
|
|
|
-
|
|
|
|
20,833
|
|
|
General
and administrative
|
|
|
5,634
|
|
|
|
5,115
|
|
|
|
10,749
|
|
|
|
|
|
73,086
|
|
|
|
11,754
|
|
|
|
84,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense(income)
|
|
|
(101
|
)
|
|
|
189
|
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(72,985
|
)
|
|
|
(11,943
|
)
|
|
|
(85,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Before Provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
|
(72,985
|
)
|
|
|
(11,943
|
)
|
|
|
(85,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax Expense(Benefit)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(72,985
|
)
|
|
$
|
(11,943
|
)
|
|
$
|
(85,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding
|
|
|
210,600,000
|
|
|
|
202,367,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements
fka
Premier Nursing Products Corp.
(
A Development Stage Company)
Statements
of Stockholders Equity
For
the period December 26, 2006 (date of inception) to December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued for cash at $0.0001 per share
|
|
|
|
|
|
|
|
|
|
|
|
to
founder on December 27, 2006
|
|
|
162,000,000
|
|
|
$
|
16,200
|
|
|
$
|
(7,200
|
)
|
|
$
|
-
|
|
|
$
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for period ended May 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
(150
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at May 31, 2007
|
|
|
162,000,000
|
|
|
|
16,200
|
|
|
$
|
(7,200
|
)
|
|
$
|
(150
|
)
|
|
$
|
8,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued for cash at $0.0006 (par value $0.0001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on
October 30, 2007
|
|
|
48,600,000
|
|
|
|
4,860
|
|
|
|
22,140
|
|
|
|
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for year ended May 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,943
|
)
|
|
|
(11,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at May 31, 2008
|
|
|
210,600,000
|
|
|
$
|
21,060
|
|
|
$
|
14,940
|
|
|
$
|
(12,093
|
)
|
|
$
|
23,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for seven months ended December 31,2008
|
|
|
|
|
|
|
|
|
|
|
(72,985
|
)
|
|
|
(72,985
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008
|
|
|
210,600,000
|
|
|
$
|
21,060
|
|
|
$
|
14,940
|
|
|
$
|
(85,078
|
)
|
|
$
|
(49,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements
fka
Premier Nursing Products Corp.
(
A Development Stage Company)
|
|
|
|
|
|
|
|
|
From
Inception
|
|
|
|
|
|
|
|
|
|
|
(December
26, 2006) to
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(72,985
|
)
|
|
$
|
(11,943
|
)
|
|
$
|
(85,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable and accured liabilities
|
|
|
38,268
|
|
|
|
-
|
|
|
|
38,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
(34,717
|
)
|
|
|
(11,943
|
)
|
|
|
(46,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from Advance from related party
|
|
|
31,100
|
|
|
|
-
|
|
|
|
31,100
|
|
|
Proceeds
from sale of common stock
|
|
|
-
|
|
|
|
27,000
|
|
|
|
36,000
|
|
|
|
|
|
31,100
|
|
|
|
27,000
|
|
|
|
67,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase(decrease) in cash
|
|
|
(3,617
|
)
|
|
|
15,057
|
|
|
|
20,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at beginning of period
|
|
|
23,907
|
|
|
|
8,850
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at end of period
|
|
$
|
20,290
|
|
|
$
|
23,907
|
|
|
$
|
20,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid:
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash
Tranactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered
|
|
$
|
30,640
|
|
|
$
|
12,000
|
|
|
$
|
42,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants,
options and stock issued for debt financing
|
|
$
|
23,950
|
|
|
$
|
172,000
|
|
|
$
|
-
|
|
See
accompanying notes to financial statements
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
NOTE
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A)
ORGANIZATION
Premier
Energy Corp. fka Premier Nursing Products, Corp. (a development stage company)
(the "Company") was incorporated under the laws of the State of Florida on
December 26, 2006. On September 25, 2008 the Board of Directors and holder of a
majority of our issued and outstanding common stock adopted a resolution
changing the name of Premier Nursing Products Corp. to Premier Energy Corp. and
in connection therewith on September 25, 2008 we filed Articles of Amendment to
our Articles of Incorporation with the Secretary of State of Florida. The
effective time of the name change will be close of business on October 6, 2008.
There will be no mandatory exchange of stock certificates. Following the name
change, the share certificates which reflect our prior name will continue to be
valid. Certificates reflecting the corporate new name will be issued in due
course as old share certificates are tendered for exchange or transfer to our
transfer agent Activities during the development stage include developing the
business plan and raising capital.
(B) USE
OF ESTIMATES
In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from those
estimates.
(C) CASH
AND CASH EQUIVALENTS
For
purposes of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at the time of
purchase to be cash equivalents. The Company at times has cash in excess of FDIC
insurance limits and places its temporary cash investments with high credit
quality financial institutions. At December 31, 2008, the Company did not have
any balances that exceeded FDIC insurance limits.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
(D)
RECLASSIFICATIONS
Certain
amounts from prior periods have been reclassified to conform to the current
period presentation
(E)
STOCK-BASED COMPENSATION
Effective
January 1, 2006 The Company adopted SFAS No. 123R "Share-Based Payment" ("SFAS
123R"), a revision to SFAS No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123.) The company has yet to award any stock compensation, so the
adoption of the this pronounce has had not material effect on the financial
statements
Under the
modified prospective approach, the provisions of SFAS 123R apply to new awards
and to awards that were outstanding on January 1, 2006 that are subsequently
modified, repurchased or cancelled. Under the modified prospective approach,
compensation cost recognized in the year ended December 31, 2006 includes
compensation cost for all share-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the grant -date fair value estimated in
accordance with the original provisions of SFAS 123, and the compensation costs
for all share-based payments granted subsequent to January 31, 2006, based on
the grant-date fair value estimated in accordance with the provisions of SFAS
123R.
(F) LOSS
PER SHARE
Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting Standards No. 128,
"Earnings Per Share." As of December 31, 2008 and 2007, there we no common share
equivalents outstanding.
(G)
BUSINESS SEGMENTS
The
Company operates in one segment and therefore segment information is not
presented.
(H)
LONG-LIVED ASSETS
The
Company intend to account for long-lived assets under the Statements of
Financial Accounting Standards Nos. 142 and 144 "Accounting for Goodwill and
Other Intangible Assets" and "Accounting for Impairment or Disposal of
Long-Lived Assets" ("SFAS No. 142 and 144"). In accordance with SFAS No. 142 and
144, long-lived assets, goodwill and certain identifiable intangible assets held
and used by the Company are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. For purposes of evaluating the recoverability of long-lived assets,
goodwill and intangible assets, the recoverability test is performed using
undiscounted net cash flows related to the long-lived assets. Currently the
Company has no long-lived assets
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
(I)
RECENT ACCOUNTING PRONOUNCEMENTS
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not expect the adoption of FSP
FAS 157-4 will have a material impact on its financial condition or results of
operation.
In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.” This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP
effective January 1, 2009. The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.
In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157. Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets and information about the inputs and
valuation techniques used to develop the fair value measurements of plan assets.
This FSP is effective for fiscal years ending after December 15,
2009. The Company does not expect the adoption of FSP FAS 132(R)-1
will have a material impact on its financial condition or results of
operation.
In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ARB No. 51,” as well as other
modifications. While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements. The changes would be effective March
1, 2010, on a prospective basis.
In June
2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting, and therefore need to be included in the computation of earnings per
share under the two-class method as described in FASB Statement of Financial
Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective
for financial statements issued for fiscal years beginning on or after December
15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP
EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material
effect on our consolidated financial position and results of operations if
adopted.
In May
2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162,
"The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162 sets
forth the level of authority to a given accounting pronouncement or document by
category. Where there might be conflicting guidance between two categories, the
more authoritative category will prevail. SFAS No. 162 will become effective 60
days after the SEC approves the PCAOB's amendments to AU Section 411 of the
AICPA Professional Standards. SFAS No. 162 has no effect on the Company's
financial position, statements of operations, or cash flows at this
time.
In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities--an amendment of
FASB Statement No. 133. This standard requires companies to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity's financial position,
financial performance, and cash flows. This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The Company has not yet adopted the
provisions of SFAS No. 161, but does not expect it to have a material impact on
its consolidated financial position, results of operations or cash
flows.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of "plain vanilla" share options in
accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff
indicated in SAB 107 that it will accept a company's election to use the
simplified method, regardless of whether the company has sufficient information
to make more refined estimates of expected term. At the time SAB 107 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of
SA
B 110 for fiscal
year 2009. It is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash
flows.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In
December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines
what
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
information
to disclose to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. An entity may not apply it before that date. The effective
date of this statement is the same as that of the related FASB Statement No.
160, Noncontrolling Interests in Consolidated Financial Statements. The Company
will adopt this statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In
February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
(J) FAIR
VALUE OF ASSETS AND LIABILITIES
Effective
June 1, 2008, the Company adopted Statement of Financial Accounting Standards
No. 157,
Fair Value
Measurements
(SFAS 157), which provides a framework for measuring fair
value under GAAP. SFAS 157 defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. SFAS 157
requires that valuation techniques maximize the use of observable inputs and
minimize the use of unobservable inputs. SFAS 157 also establishes a fair value
hierarchy, which prioritizes the valuation inputs into three broad
levels.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
There are
three general valuation techniques that may be used to measure fair value, as
described below:
|
A)
|
Market
approach – Uses prices and other relevant information generated by market
transactions involving identical or comparable assets or liabilities.
Prices may be indicated by pricing guides, sale transactions, market
trades, or other sources;
|
|
B)
|
Cost
approach – Based on the amount that currently would be required to replace
the service capacity of an asset (replacement cost);
and
|
|
C)
|
Income
approach – Uses valuation techniques to convert future amounts to a single
present amount based on current market expectations about the future
amounts (includes present value techniques, and option-pricing models).
Net present value is an income approach where a stream of expected cash
flows is discounted at an appropriate market interest
rate.
|
The
adoption of SFAS 157 had no material impact on the financial
statements
(K)
INCOME TAXES
The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
NOTE
2 ADVANCES
A related
party (officer/stockholder) has advanced the Company funds to pay bills. The
amounts are non-interest bearing and payable upon demand.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
.
NOTE
3 STOCKHOLDERS' EQUITY
On May
30, 2008, the Company increased its number of Authorized Common Shares from
100,000,000 (One Hundred Million Common Shares) to 250,000,000 (Two Hundred and
Fifty Million Common Shares) and the Par Value changed from ($.001) to ($.0001).
The Aggregate par value of the Common Shares changed from ($10,000) TO ($25,000)
and the Aggregate par value of the Preferred changed from ($10,000) TO ($1,000).
The number of authorized preferred shares remained at 10,000,000.
On July
28, 2008 the Corporation's Board of Directors and the holder of a majority of
its issued and outstanding common stock adopted resolutions approving an
eighteen for one (18:1) forward stock split of the Corporation's issued and
outstanding common stock, par value $0.0001 per share. The split became
effective August 8, 2008. All prior amounts have been adjusted retroactive for
the stock split.
On
September 5, 2008, the Company and its principal shareholder and executive
officer, Sheldon R. Rose, entered into an agreement with ZRV Consulting Inc.
pursuant to which ZRV acquired 162,000,000 shares of Premier for a cash
consideration of $300,000. . The transaction was completed on September 5, 2008.
As a result of the transaction, there are currently outstanding 210,600,000
common shares of which ZRV owns 162,000,000 common shares or approximately 77%
of the outstanding common shares.
NOTE
4 COMMITMENTS AND CONTINGENCIES
On
October 16, 2008 The Company entered into an employment agreement with Dr.
Prodanovic. Under the terms of the 24 month agreement, he will serve as Chief
Executive Officer. In addition, during the term of the agreement we agreed to
cause him to be successively nominated for election to the Board of Directors.
As compensation, the Company agreed to pay Dr. Prodanovic an annual base salary
of $100,000, which such base is subject to annual merit review and increase as
deemed appropriate by the Board, together with bonus compensation in amounts as
may be determined by the Board. The Company has agreed to issue Dr. Prodanovic
options to purchase 200,000 of our common stock. As of December 31, 2008 the
Options have not be granted and the Company is currently negotiating the terms.
He is also entitled to participate in such benefit packages as we provide to
similarly situated employees, four weeks paid vacation and 10 paid holidays. The
agreement contains customary provisions related to non-compete, confidentiality,
non-solicitation and invention assignment. As of December 31, 2008 the Company
recorded accrued salary of $16,667.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
The
agreement may be terminated by us for cause as set forth in the agreement, by us
without cause, or by Dr. Prodanovic under certain circumstances. If we terminate
the agreement for cause, he is not entitled to any severance benefits. If we
should terminate the agreement without cause, we are obligated to pay Dr.
Prodanovic an amount equal to his monthly base salary for the greater of 24
months or until he is hired in a new position which is consistent with his
experience and stature. If such new position pays less than his then current
base salary we are obligated to pay the difference for the balance of the 24
month severance period. If his employment in the new position should terminate
prior to the expiration of the 24 month severance period, we are obligated to
pay his monthly base salary during the remaining period. In the event we should
fail to appoint Dr. Prodanovic Chief Executive Officer and a member of our Board
of Directors in any successive periods during the term of the agreement, should
we fail to compensate him pursuant to the terms of the agreement, or if there is
a material breach of the agreement, Dr. Prodanovic is entitled to terminate the
agreement and we shall be obligated to pay him the same severance benefits had
we terminated the agreement without cause.
NOTE
5 GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and allow it to continue as
a going concern. The ability of the Company to continue as a going concern is
dependent on the Company obtaining adequate capital to fund operating losses
until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
Premier
Energy Corp.
fka
Premier Nursing Products Corp.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2008
NOTE
6 SUBSEQUENT EVENTS
On
January 30, 2009, the Company entered into a Share Exchange Agreement with
Auxerre Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to
which the Company acquired 51% of the outstanding securities of Karbon in
exchange for 107,406,000 shares of our common stock (the “Karbon Acquisition”).
Considering that, following the merger, Auxerre controls the majority of the
Company’s outstanding voting common stock and the Company effectively succeeded
our otherwise minimal operations to those that are theirs, Karbon is considered
the accounting acquirer in this reverse-merger transaction. A
reverse-merger transaction is considered, and accounted for as, a capital
transaction in substance; it is equivalent to the issuance of Karbon securities
for the Company’s net monetary assets, which are deminimus, accompanied by a
recapitalization. Accordingly, the Company (Premier) will not recognize any
goodwill or other intangible assets in connection with this reverse merger
transaction. Karbon is the surviving and continuing entity and the historical
financials following the reverse merger transaction will be those of
Karbon. Premier was a "shell company" (as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately
prior to our acquisition of 51% of KARBON pursuant to the terms of the share
exchange agreement. As a result of such acquisition, the Company’s
operations, in addition to the acquisition, exploration and development, if
warranted, of prospective oil and gas properties, will include (i) consulting
and working together with KARBON to plan and execute any exploration and
development activities they conduct, (ii) reviewing annualized budgets from
KARBON, and (iii) approving costs in excess of certain prescribed amounts by
KARBON. Consequently, the Company believes that acquisition has caused us to
cease to be a shell company as we no longer have nominal operations and also are
no longer considered a development stage enterprise as of the effective date of
this transaction.
On
January 30, 2009, prior to the Karbon Acquisition and the issuance of the
107,406,000, ZRV Consulting, Inc., the former majority shareholder of Premier,
returned 107,406,000 shares of common stock of Premier for
cancellation.
In
conjuction with the transaction, the Company changed its fiscal year end to
December 31, to conform to that of Karbon, the accounting acquirer
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