UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
Amendment No. 1
(Mark One)
[X] Quarterly Report Under Section 13 OR 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________to________________
Commission file number 001-16653
EMPIRE PETROLEUM CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 73-1238709
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8801 S. Yale, Suite 120, Tulsa, Oklahoma 74137-3575
(Address of principal executive offices)
(918) 488-8068
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.001 Par Value - 42,830,190 shares outstanding as of June 30,
2005.
Transitional Small Business Disclosure Format: [ ] Yes [X] No
EMPIRE PETROLEUM CORPORATION
INDEX TO FORM 10-QSB/A
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheet at June 30, 2005 (Unaudited) 1
Statements of Operations for the three months and
six months ended June 30, 2005 and 2004 (Unaudited) 2
Statements of Cash Flows for the six months ended
June 30, 2005 and 2004 (Unaudited) 3
Notes to Financial Statements 4-8
Item 2. Management's Discussion and Analysis 8-11
Item 3. Controls and Procedures 11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Explanatory Note
This Form 10-QSB/A is being filed by Empire Petroleum Corporation (the
"Company"), as Amendment No. 1 (this "Amendment" or "Form 10-QSB/A"),
to the Company's Quarterly Report on Form 10-QSB for the quarterly
period ended June 30, 2005 (the "Prior Form 10-QSB").
As previously reported in the Company's Current Report on Form 8-K
filed on November 21, 2005, the Board of Directors of the Company
concluded on November 16, 2005 that its previously issued annual and
quarterly financial statements for fiscal years 2003 and 2004 and
quarterly financial statements for the first two quarters of 2005
should not be relied upon because of errors in those financial
statements and that the Company would restate its previously issued
annual financial statements for fiscal year 2003, annual and quarterly
financial statements for fiscal year 2004 and quarterly financial
statements for the first two quarters of 2005 to make the necessary
accounting adjustments. The restatement pertains to the Company's
accounting for exit activities in connection with its office space in
Canada, which was leased by the former management of the Company,
abandoned upon the resignation of such management and subleased by a
third party for a period of time thereafter.
This Amendment is being filed in connection with the restatement
described above. Although this Amendment amends and restates the Prior
Form 10-QSB in its entirety, the information contained herein has not
been updated to reflect events or developments that may have occurred
subsequent to June 30, 2005, except to the limited extent as
specifically described in Items 2 and 3 of Part I below.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EMPIRE PETROLEUM CORPORATION
BALANCE SHEET
June 30
2005
Restated
ASSETS (Unaudited)
___________
Current assets:
Cash $ 439,910
Accounts receivable (net of allowance of $3,750) 80,987
___________
Total current assets 520,897
Property & equipment, net of accumulated
depreciation and depletion 527,109
___________
Total Assets $ 1,048,006
___________
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued
liabilities $ 120,624
Accounts payable to related party 274,682
Note payable 95,771
___________
Total current liabilities 491,077
___________
Total liabilities 491,077
___________
Stockholders' deficiency:
Common stock at par value 42,830
Warrants to purchase common stock 67,875
Additional paid in capital 8,870,260
Accumulated deficit (8,424,036)
___________
Total stockholders' deficiency 556,929
___________
Total liabilities and stockholder's deficiency $ 1,048,006
___________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
____________________________ ________________________
2005 2004 2005 2004
Restated Restated Restated Restated
_____________ _____________ ____________ __________
Revenue:
Petroleum sales $ 73,178 $ 1,497 $ 74,358 $ 36,104
_____________ _____________ ____________ __________
73,178 1,497 74,358 36,104
_____________ _____________ ____________ __________
Costs and expenses:
Production & operating (6,097) 17,652 18,929 39,772
General & administrative 39,886 35,172 82,222 79,182
Reversal of accrued lease
Obligation (222,561) 0 (222,561) 0
____________ _____________ ____________ __________
(188,772) 52,824 (121,410) 118,954
____________ _____________ ____________ __________
Operating income (loss) 261,950 (51,327) 195,768 (82,850)
____________ _____________ ____________ __________
Other (income) and expense:
Miscellaneous (2,132) (5,814) (4,401) (7,998)
Interest expense 1,725 1,725 3,450 3,450
____________ _____________ ____________ __________
Total other (income)
expense (407) (4,089) (951) (4,548)
____________ _____________ ____________ __________
Net income (loss) $ 262,357 $ ( 47,238) $ 196,719 $ (78,302)
____________ _____________ ____________ __________
Net income (loss)
per common share $ .01 $ .00 $ .01 $ .00
____________ _____________ ____________ __________
Weighted average number of
common shares
outstanding 39,219,079 37,830,190 39,219,079 37,830,190
____________ _____________ ____________ __________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30, June 30,
2005 2004
Restated Restated
_________ _________
Cash flows from operating activities:
Net income (loss) $ 196,719 $(78,302)
Adjustments to reconcile net loss to
net cash used in operating activities:
Value of services contributed by employees 25,000 25,000
Reversal of accrued lease obligation (222,561) 0
(Increase) decrease in assets:
Accounts receivable (71,778) 3,564
Prepaid expenses 0 2,651
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (51,066) (18,347)
________ ________
Net cash used in operating activities (123,686) (65,434)
________ ________
Cash flows from financing activities:
Advances from related party 60,190 45,344
Proceeds from private equity placement 500,000 0
________ ________
Net cash provided by financing activities 560,190 45,344
________ ________
Net increase (decrease) in cash 436,504 (20,090)
Cash - Beginning 3,406 21,622
________ ________
Cash -Ending $439,910 $ 1,532
________ ________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
The accompanying unaudited financial statements of Empire Petroleum
Corporation (Empire, or the Company) have been prepared in accordance with
United States generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by United States
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation of the Company's financial position, the results of operations,
and the cash flows for the interim period are included. See Note 4 for a
description of non-recurring adjustments. Operating results for the interim
period are not necessarily indicative of the results that may be expected for
the year ending December 31, 2005.
The information contained in this Form 10-QSB should be read in conjunction
with the audited financial statements and related notes for the year ended
December 31, 2004, which are contained in the Company's Annual Report on Form
10-KSB filed with the Securities and Exchange Commission (the SEC) on March
31, 2005.
The Company has been incurring significant losses in recent years. The
continuation of the Company as a going concern is dependent upon the ability
of the Company to attain future profitable operations. These financial
statements have been prepared on the basis of United States generally accepted
accounting principles applicable to a company with continuing operations,
which assume that the Company will continue in operation for the foreseeable
future and will be able to realize its assets and discharge its obligations
in the normal course of operations. Management believes the going concern
assumption to be appropriate for these financial statements. If the going
concern assumption were not appropriate for these financial statements, then
adjustments might be necessary to adjust the carrying value of assets and
liabilities and reported expenses.
The Company continues to explore and develop its oil and gas interests. The
ultimate recoverability of the Company's investment in its oil and gas
interests is dependent upon the existence and discovery of economically
recoverable oil and gas reserves, confirmation of the Company's interest in
the oil and gas interests, the ability of the Company to obtain necessary
financing to further develop the interests, and upon the ability to attain
future profitable production.
In 2003, the Company engaged a partner to explore its Cheyenne River Prospect,
and signed an agreement to acquire a 10% interest in a block of acreage in the
Gabbs Valley Prospect of western Nevada. In June 2005, the Company completed a
private placement of 5,000,000 shares of its common stock along with warrants
to purchase 1,250,000 shares of its Common Stock for an aggregate purchase
price of $500,000. Subject to certain restrictions, the warrants may be
exercised for a period of one year at an exercise price of $0.25
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per share. Proceeds of the private placement were allocated $67,875 to common
stock warrants and $432,125 to common stock and paid-in capital. These funds
will be used for general corporate purposes and to pay the Company's share of
the costs associated with its 10% interest in the Gabbs Valley Oil Prospect
in Nevada. The Company believes that its available cash as of June 30, 2005
will be sufficient to finance its operations through the next twelve months.
In order to sustain the Company's operations on a long term basis, the
Company intends to continue to look for merger opportunities and consider
public or private financings.
Compensation of Officers and Employees
The Company's only executive officer serves without pay or other compensation.
The fair value of these services is estimated by management and is recognized
as a capital contribution. For the three months ended June 30, 2005, the
Company recorded $12,500 as a capital contribution by its executive officer.
2. NOTES PAYABLE:
In December 2001, the Company executed a note with Weatherford U.S., L.P. to
satisfy an outstanding indebtedness for service in the drilling of the Timber
Draw #1-AH well. The principal amount of this note was $108,334 with interest
payments at 10% per annum commencing on May 27, 2001, until all interest and
principal amounts are paid in full. Timely payments were made in accordance
with the terms of this note through March 2002. In April 2002, the "payee" of
this note agreed to a revised payment schedule extending final payment of
$66,997 from April 10, 2002, until June 10, 2002. In connection with this
payment schedule, an initial payment of $10,000 was made in April 2002,
however, since that time, no further payments have been made. At June 30,
2005, $95,771 was due under this note.
3. PROPERTY AND EQUIPMENT:
At December 31, 2002, the Company's management determined that an impairment
allowance of $6,496,614 was necessary to properly value the Company's oil and
gas properties bringing the net book value of the oil and gas properties to
$594,915. The basis for the impairment was the determination by the United
States Bureau of Land Management (BLM) that it does not consider the Timber
Draw #1-AH well economic. In other words, under the BLM's criteria for
economic determination, the well will not pay out the cost incurred to drill
and complete the well. The BLM also advised the Company that since it did not
commence another test well prior to August 12, 2002, the Timber Draw Unit was
terminated. Furthermore, a bottom hole pressure survey conducted in April 2002
indicated a limited reservoir for the well. The value was calculated using an
estimated $10 per acre market price for the leases multiplied by the Company's
working interest.
In the first quarter 2003, the Company recorded an additional leasehold
impairment charge of $190,066 as a result of the assignment of the leases on
42,237 acres in the Cheyenne River Prospect (See Note 5).
On May 8, 2003, the Company entered into an agreement with O.F. Duffield
(Duffield Agreement) to acquire a ten percent (10%) interest in a block of
acreage in the Gabbs Valley Prospect by agreeing to issue 2,000,000 shares of
the Company's Common Stock to Mr. Duffield for such 10% interest. The shares
were issued in July 2003. This block of acreage in the Gabbs Valley Prospect
consists of federal leases covering approximately 45,000 acres in Nye and
Mineral Counties, Nevada in which Mr. Duffield has a 100% working interest.
Pursuant to the Duffield Agreement, the Company is also entitled to
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acquire up to a 10% interest in a block of 26,080 acres also located in the
Gabbs Valley Prospect should Duffield acquire an interest in this block. The
shares were valued at $.10 per share based on the closing price of the
Company's common stock on the date of issuance.
4. CONTINGENCIES:
The Company's former management (Messrs. McGrain and Jacobsen) entered into a
lease agreement for office space in Canada. This office was closed after
Messrs. McGrain and Jacobsen resigned as officers of the Company. This lease
agreement calls for monthly lease and tax payments of approximately $6,834
(Canadian) through April of 2006. The Company accrued its obligation under
the lease through the term of the lease. During the second quarter of 2005,
the Company determined that the statute of limitations had expired with
respect to its obligation under the lease. Accordingly, the Company reversed
expenses of $222,561, including foreign exchange gains of $4,401 for the
six months ended June 30, 2005, previously recorded for the lease.
5. CHEYENNE RIVER PROSPECT:
On March 28, 2003, a third party paid approximately $84,485 of the Company's
lease rentals on 42,237 acres in the Cheyenne River Prospect in return for an
assignment of such leases. In connection with this transaction, the Company
retained an overriding royalty of 1.5% on 33,597 of the acres and a 2%
overriding royalty on 8,640 of the acres.
On March 31, 2004, a third party paid approximately $52,128 of the Company's
lease rentals on 32,643 acres in the Cheyenne River Prospect in exchange for
an option to drill a test well in order to earn an interest in the farmout
block, which option was subject to the third party first completing a seismic
survey covering 16 square miles in the Cheyenne River Prospect. This survey
was completed in September of 2003. The processing and interpreting of the
data from such survey was completed September 30, 2003, and earned the third
party a 25% interest in the Timber Draw #1-AH well and prospect acreage. This
third party commenced a test well in the NW/4NE/4 Section 15, Twp 39N, Rge
66W, Niobrara County, Wyoming, known as the Empire Hooligan Draw Unit #1-AH,
on August 6, 2004. The well was drilled horizontally to a measured drilling
depth of 9,332 feet. As a result of this earning well being drilled the
Company's working interest in the Hooligan Draw #1-AH well and prospect
acreage was reduced to 26.785% and to 17.5% of the Timber Draw #1-AH well.
This well has undergone testing using different choke and orifice sizes during
this reporting period, and a flow rate of 15 barrels of oil per day was
achieved in mid April however it did not sustain this rate and remedial work
was carried out on it and the Timber Draw #1-AH, however it did not improve
the wells. The producing procedure used in the past whereby the Timber Draw
#1-AH well is shut-in 30 days then produced for about 10 days will be
continued. Other remedial work is currently being considered.
6. RESTATEMENT:
On November 11, 2005, the Company filed a Form 8-K with the SEC disclosing that
it would restate its previously issued financial statements for the year ended
December 31, 2003, annual and quarterly financial statements for 2004, and
quarterly financial statements for the first two quarters of 2005 after
determining that it had erroneously accounted for its exit activities in
connection with its former office space in Canada.
In the third quarter of 2003, the Company recorded an expense for its
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obligation under the lease for the period up to the balance sheet date. It
continued to record an expense of $13,200 per quarter through March 31, 2005
related to the lease (see Note 4). After further review, the Company's
management determined that it should have accrued an obligation for the lease
equal to total amounts owed from the "cease use date" (the date in January
2003 on which the Company's subtenant moved out of the office space) through
the end of the lease term. Additionally, since the lease obligation was in
Canadian dollars, the Company should have recorded a currency exchange gain or
loss on its obligation in each quarter. Based on this analysis, the Company
and its Board of Directors concluded that its previously issued financial
statements for the year ended December 31, 2003, annual and quarterly
financial statements for 2004 and quarterly financial statements for the
first two quarters of 2005 required adjustments of the amounts previously
reported for accounts payable and accrued liabilities, and general and
administrative expenses. The following table summarizes the adjustments
required to previously reported amounts included in these financial statements.
3 Months Ended 6 Months Ended
June 30, 2005 June 30, 2005
Previously As Previously As
Reported Restated Reported Restated
Petroleum sales 73,178 73,178 74,358 74,358
Cost & Expenses:
Production & Operation (6,097) (6,097) 18,929 18,929
General & Administrative 39,886 39,886 95,422 82,222
Reversal of accrued lease
Obligation (158,400) (222,561) (158,400) (222,561)
__________ ________ _________ _________
(124,611) (188,772) (44,049) (121,410)
__________ ________ _________ _________
Operating income 197,789 261,950 118,407 195,768
__________ ________ _________ _________
Other (income) expense:
Miscellaneous - (2,132) - (4,401)
Interest Expense 1,725 1,725 3,450 3,450
__________ ________ _________ _________
1,725 (407) 3,450 (951)
__________ ________ _________ _________
Net income 196,064 262,357 114,957 196,719
__________ ________ _________ _________
Net income per share .00 .01 .00 .01
__________ ________ _________ _________
3 Months Ended 6 Months Ended
June 30, 2004 June 30, 2004
Previously As Previously As
Reported Restated Reported Restated
Petroleum sales 1,497 1,497 36,104 36,104
Cost & Expenses:
Production & Operation 17,652 17,652 39,772 39,772
General & Administrative 48,372 35,172 105,582 79,182
__________ ________ __________ ________
66,024 52,824 145,354 118,954
__________ ________ __________ ________
Operating loss (64,527) (51,327) (109,250) (82,850)
__________ ________ __________ ________
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Other (income) expense:
Miscellaneous (128) (5,814) (153) (7,998)
Interest Expense 1,725 1,725 3,450 3,450
__________ ________ __________ ________
1,597 (4,089) 3,297 (4,548)
__________ ________ __________ ________
Net loss (66,124) (47,238) (112,547) (78,302)
__________ ________ __________ ________
Net loss per share .00 .00 .00 .00
__________ ________ __________ ________
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
GENERAL TO ALL PERIODS
The Company's primary business is the exploration and development of oil and
gas interests. The Company has incurred significant losses from operations,
and there is no assurance that it will achieve profitability or obtain funds
necessary to finance its operations. Sales revenue for all periods presented
is attributable to the production of oil from the Company's Timber Draw #1-AH
and the Hooligan Draw #1-AH wells located in the Eastern Powder River Basin in
the State of Wyoming, otherwise known as the Cheyenne River Prospect.
For all periods presented, the Company's effective tax rate is 0%. The Company
has generated net operating losses since inception, which would normally
reflect a tax benefit in the statement of operations and a deferred asset on
the balance sheet. However, because of the current uncertainty as to the
Company's ability to achieve profitability, a valuation reserve has been
established that offsets the amount of any tax benefit available for each
period presented in the statements of operations.
RESTATEMENT
On November 11, 2005, the Company filed a Form 8-K with the SEC disclosing
that it would restate its previously issued financial statements for the year
ended December 31, 2003, annual and quarterly financial statements for 2004,
and quarterly financial statements for the first two quarters of 2005 after
determining that it had erroneously accounted for its exit activities in
connection with its former office space in Canada.
In the third quarter of 2003, the Company recorded an expense for its
obligation under the lease for the period up to the balance sheet date. It
continued to record an expense of $13,200 per quarter through March 31, 2005
related to the lease (see Note 4 to the financial statements). After further
review, the Company's management determined that it should have accrued an
obligation for the lease equal to total amounts owed from the "cease use date"
(the date in January 2003 on which the Company's subtenant moved out of the
office space) through the end of the lease term. Additionally, since the lease
obligation was in Canadian dollars, the Company should have recorded a
currency exchange gain or loss on its obligation in each quarter. Based on
this analysis, the Company and its Board of Directors concluded that its
previously issued financial statements for the year ended December 31, 2003,
annual and quarterly financial statements for 2004 and quarterly financial
statements for the first two quarters of 2005 required adjustments of the
amounts previously reported for accounts payable and accrued liabilities, and
general and administrative expenses. The effect of the restatement was to
increase the previously reported net income by $66,293 and $81,762 for the
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three months and six months ended June 30, 2005. The restatement increased
net income per share to $.01 for both the three and six month periods ended
June 30, 2005.
THREE MONTH PERIOD ENDED JUNE 30, 2005, COMPARED TO THREE MONTH PERIOD ENDED
JUNE 30, 2004.
For the three months ended June 30, 2005, sales revenue increased $71,681 to
$73,178, compared to $1,497 for the same period during 2004. The increase in
sales revenue was the result of production from the Timber Draw #1-AH and the
Hooligan Draw #1-AH wells. For the three months ended June 30, 2005, sales
volume increased to 1,137 barrels, compared to -0- barrels for the same period
in 2004. The average realized per barrel oil price was $46.66 for the three
months ended June 30, 2005.
Production and operating expenses decreased $23,749 to $(6,097) for the three
months ended June 30, 2005, from $17,652 for the same period in 2004. This
decrease was primarily attributable to the re-negotiation, settlement and
reimbursement of costs previously incurred for the Company's Cheyenne River
and Gabbs Valley Prospects.
General and administrative expenses increased by $4,714 to $39,886 for the
three months ended June 30, 2005, from $35,172 for the same period in 2004.
Expense amounts were consistent with the prior years.
There was no depreciation or depletion expense attributable to the three
months ended June 30, 2005 and 2004, because the depreciable assets were fully
depreciated.
For the three months ended June 30, 2005, interest expense remained at $1,725
which is the same as for the three months ended June 30, 2004. The Company
accrued interest on the Weatherford note in both periods.
For the reasons discussed above, net income increased $309,595 from $(47,238)
for the three months ended June 30, 2004, to $262,357 for the three months
ended June 30, 2005.
SIX MONTH PERIOD ENDED JUNE 30, 2005, COMPARED TO SIX MONTH PERIOD ENDED JUNE
30, 2004.
For the six months ended June 30, 2005, sales revenue increased $38,254 to
$74,358, compared to $36,104 for the same period during 2004. The increase in
sales revenue was the result of improved oil prices and additional production
attributable to the Hooligan Draw #1-AH well. For the six months ended June
30, 2005, sales volume increased 543 barrels to 2,021 barrels, compared to
1,478 barrels for the same period in 2004. The average realized per barrel oil
price increased 37% from $24.76 for the six months ended June 30, 2004 to
$33.88 for the six months ended June 30, 2005.
Production and operating expenses decreased $20,843 to $18,929 for the six
months ended June 30, 2005, from $39,772 for the same period in 2004. This
decrease was primarily attributable to the re-negotiation, settlement and
reimbursement of costs previously incurred for the Company's Cheyenne River
and Gabbs Valley Prospects.
General and administrative expenses increased by $3,040 to $82,222 for the six
months ended June 30, 2005, from $79,182 for the same period in 2004. Expense
amounts were consistent with the prior year.
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There was no depreciation or depletion expense attributable to the six months
ended June 30, 2005 and 2004, because the depreciable assets were fully
depreciated.
For the six months ended June 30, 2005, interest expense remained at $3,450
which is the same as for the six months ended June 30, 2004. The Company
accrued interest on the Weatherford note in both periods.
For the reasons discussed above, net income increased $275,021 from $(78,302)
for the six months ended June 30, 2004, to $196,719 for the six months ended
June 30, 2005.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
As of June 30, 2005 the Company had $439,910 of cash on hand. In June 2005,
the Company completed a private placement of 5,000,000 shares along with
warrants to purchase 1,250,000 shares of its Common Stock for an aggregate
purchase price of $500,000. For more information regarding this private
placement, see the Company's current report on Form 8-K, which was filed with
the SEC on June 9, 2005. The cash from this funding will enable the Company
to pay its share of a seismic survey on its Gabbs Valley Prospect, Nevada,
which is expected to be approximately $35,000 and to fund its share of a well
to be drilled on the Nevada Prospect which is estimated to be $150,000. After
such payment, the Company believes it will have sufficient funds to pay its
normal operational costs of approximately $10,000 per month for the next 12
months. In order to sustain the Company's operations on a long term basis,
the Company intends to continue to look for merger opportunities and consider
public or private financings.
As of June 30, 2005, the Company owes approximately $95,771 including accrued
interest to Weatherford U.S., L.P. for services rendered by Weatherford.
ADVANCES FROM RELATED PARTY
Through March 31, 2005, the Company financed its operations primarily through
advances made to the Company by the Albert E. Whitehead Living Trust, of which
the Company's Chairman of the Board and Chief Executive Officer, Mr.
Whitehead, is the trustee. At June 30, 2005 the Company is indebted to the
Albert E. Whitehead Living Trust in the amount of $274,682.
MATERIAL RISKS
The Company has incurred significant losses from operations and there is no
assurance that it will achieve profitability or obtain funds necessary to
finance continued operations. For other material risks, see the Company's form
10-KSB for the period ended December 31, 2004, which was filed March 31, 2005.
FORWARD-LOOKING INFORMATION
This quarterly report on Form 10-QSB, including this section, includes certain
statements that may be deemed "forward-looking statements" within the meaning
of federal securities laws. All statements, other than statements of
historical facts, that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the future,
including future sources of financing and other possible business
developments, are forward- looking statements. Such statements are subject to
a number of assumptions, risks and uncertainties and could be affected by a
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number of different factors, including the Company's failure to secure short
and long term financing necessary to sustain and grow its operations,
increased competition, changes in the markets in which the Company
participates and the technology utilized by the Company and new legislation
regarding environmental matters. These risks and other risks that could affect
the Company's business are more fully described in reports it files with the
Securities and Exchange Commission, including its Form 10-KSB for the fiscal
year ended December 31, 2004. Actual results may vary materially from the
forward-looking statements. The Company undertakes no duty to update any of
the forward-looking statements in this Form 10-QSB.
Item 3. CONTROLS AND PROCEDURES
As of June 30, 2005, the Company carried out an evaluation under the
supervision of the Company's Chief Executive Officer (and principal
financial officer) of the effectiveness of the design and operation of
the Company's disclosure controls and procedures pursuant to the
Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this
evaluation, the Company's Chief Executive Officer (and principal
financial officer) concluded that the Company's disclosure controls and
procedures were effective at such time. However, prior to the date of
the filing of this Form 10-QSB/A and as a result of the Company's
decision to restate its financial statements as described under the
"Explanatory Note" in this Form 10-QSB/A above, the Company completed a
second evaluation under the supervision of the Company's Chief
Executive Officer (and principal financial officer) of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures as of June 30, 2005. In connection with this
second evaluation and based upon the Company's decision to restate its
financial statements for the quarterly period ended June 30, 2005, the
Company's Chief Executive Officer (and principal financial officer)
concluded that the Company's disclosure controls and procedures were
not effective as of June 30, 2005.
PART II. OTHER INFORMATION
Item 6. Exhibits
31 Certification of Chief Executive Officer (and principal financial officer)
pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities
Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-B,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(submitted herewith).
32 Certification of Chief Executive Officer (and principal financial officer)
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (submitted herewith).
EMPIRE PETROLEUM CORPORATION
SIGNATURES
In accordance with the requirements of the Exchange Act, the small business
issuer caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
EMPIRE PETROLEUM CORPORATION
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Date: February 8, 2006 By: /s/ Albert E. Whitehead
___________________
Albert E. Whitehead
Chairman/CEO
EXHIBIT INDEX
NO. DESCRIPTION
31 Certification of Chief Executive Officer (and principal
financial officer) pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended, and Item 601(b)(31) of Regulation S-B, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(submitted herewith).
32 Certification of Chief Executive Officer (and principal
financial officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (submitted herewith).
EXHIBIT 31
CERTIFICATION
I, Albert E. Whitehead, Chief Executive Officer (and principal financial
Officer) of Empire Petroleum Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Empire Petroleum
Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have;
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;
(b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
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(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the small business issuer's
internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of small business issuer's board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability
to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's
internal control over financial reporting.
February 8, 2006 /s/ Albert E. Whitehead
Albert E. Whitehead,
Chief Executive Officer and
Principal Financial Officer
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Empire Petroleum Corporation (the
"Company") on Form 10-QSB for the period ending June 30, 2005 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Albert E. Whitehead, Chief Executive Officer (and principal financial officer)
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
February 8, 2006 /s/ Albert E. Whitehead
Albert E. Whitehead
Chief Executive Officer and
Principal Financial Officer
A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon
request.
The foregoing certification is being furnished to the Securities and
Exchange Commission as an exhibit to the Report and shall not be
considered filed as part of the Report.
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