UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 OR 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 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
September 30, 2005.
Transitional Small Business Disclosure Format: [ ] Yes [X] No
EMPIRE PETROLEUM CORPORATION
INDEX TO FORM 10-QSB
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheet at September 30, 2005 (Unaudited) 1
Statements of Operations for the three months and
nine months ended September 30, 2005 and 2004 (Unaudited) 2
Statements of Cash Flows for the nine months ended
September 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 11-12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EMPIRE PETROLEUM CORPORATION
BALANCE SHEET
September 30
2005
ASSETS (Unaudited)
___________
Current assets:
Cash $ 406,665
Accounts receivable (net of allowance of $3,750) 105,141
___________
Total current assets 511,806
Property & equipment, net of accumulated
depreciation and depletion 527,109
___________
Total Assets $ 1,038,915
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 139,388
Accounts payable to related party 274,682
Note payable 97,496
___________
Total current liabilities 511,566
___________
Total liabilities 511,566
___________
Stockholders' equity:
Common stock at par value 42,830
Warrants to purchase common stock 67,875
Additional paid in capital 8,882,760
Accumulated deficit (8,466,116)
___________
Total stockholders' equity 527,349
___________
Total liabilities and stockholder's equity $ 1,038,915
___________
See accompanying notes to financial statements.
-1-
EMPIRE PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
____________________________ ________________________
2005 2004 2005 2004
Restated Restated
_____________ _____________ ____________ __________
Revenue:
Petroleum sales $ 41,757 $ 19,674 $ 116,115 $ 55,778
_____________ _____________ ____________ __________
41,757 19,674 116,115 55,778
_____________ _____________ ____________ __________
Costs and expenses:
Production & operating 49,353 32,898 68,282 72,679
General & administrative 32,759 37,919 114,981 117,124
Reversal of accrued lease
Obligation 0 0 (222,561) 0
____________ _____________ ____________ __________
82,112 70,817 (39,298) 189,803
____________ _____________ ____________ __________
Operating income (loss) (40,355) (51,143) 155,413 (134,025)
____________ _____________ ____________ __________
Other (income) and expense:
Miscellaneous 0 11,918 (4,401) 3,920
Interest expense 1,725 1,725 5,175 5,175
____________ _____________ ____________ __________
Total other expense 1,725 13,643 774 9,095
____________ _____________ ____________ __________
Net income (loss) $ (42,080) $ (64,786) $ 154,639 $ (143,120)
____________ _____________ ____________ __________
Net income (loss)
per common share $ .00 $ .00 $ .00 $ .00
____________ _____________ ____________ __________
Weighted average number of
common shares
outstanding 42,830,190 37,830,190 39,980,925 37,830,190
____________ _____________ ____________ __________
See accompanying notes to financial statements.
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EMPIRE PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30, September 30,
2005 2004
Restated
_________ _________
Cash flows from operating activities:
Net income (loss) $ 154,639 $(143,120)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Value of services contributed by employees 37,500 37,500
Reversal of accrued lease obligation (222,561) 0
(Increase) decrease in assets:
Accounts receivable (95,932) 15,145
Prepaid expenses 0 2,651
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (30,577) 2,266
________ ________
Net cash used in operating activities (156,931) (85,558)
________ ________
Cash flows from financing activities:
Advances from related party 60,190 63,987
Proceeds from private equity placement 500,000 0
________ ________
Net cash provided by financing activities 560,190 63,987
________ ________
Net increase (decrease) in cash 403,259 (21,571)
Cash - Beginning 3,406 21,622
________ ________
Cash -Ending $406,665 $ 51
________ ________
See accompanying notes to financial statements.
-3-
EMPIRE PETROLEUM CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 September 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 September 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 September 30, 2005, the Company has accrued a liability of $97,496
in connection with 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 remaining asset
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 of 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
-5-
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 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.
During September 2005 surveyors laid out a 19.5 mile seismic program on the
Gabbs Valley Prospect, and a seismic survey was commenced in early October.
Field work was expected to be finished and final interpretation of the data
was completed in November, 2005. Based on the results the Company is
prepared to join in the drilling of a test well in the first quarter of 2006.
PetroWorld Nevada Corp. (PWC) is a participant in the Gabbs Valley
Prospect with a seismic option to earn a 50% interest from Cortez
Exploration, Inc. The Company's Chief Executive Officer is a Member of
The Board of Directors of both PWC and its parent company PetroWorld
Corporation and owns approximately nine (9%) percent of the parent
Company which is traded on the AIM Exchange in London and the Toronto
Venture Exchange in Toronto. Accounts receivable from PWC totals
$31,071 at September 30, 2005.
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 called for monthly lease and tax payments of
approximately $6,834 (Canadian) through April of 2006. A subtenant
continued to pay the rentals under the lease until December 2002 and
moved out of the office space in January 2003. The Company accrued
obligations under the lease from April 2002 through the first quarter
of 2005. 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 (U.S.)
including foreign exchange losses accrued in connection with the lease (See
Note 6).
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
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reduced to 26.785% and to 17.5% of the Timber Draw #1-AH well. The Company,
and the operator of the wells are considering options to increase production
for the Cheyenne River Prospect wells. Additionally, the Company has also
begun exploring opportunities to sell its interest in the Cheyenne River
Prospect.
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 2003, annual and quarterly financial statements for 2004, and quarterly
financial statements for 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). 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 2003, annual
and quarterly financial statements for 2004 and quarterly financial statements
for 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 9 Months Ended
September 30, 2004 September 30, 2004
Previously As Previously AS
Reported Restated Reported Restated
Petroleum sales 19,674 19,674 55,778 55,778
Cost & Expenses:
Production & Operation 32,898 32,898 72,679 72,679
General & Administrative 51,119 37,919 156,724 117,124
_________ _______ __________ _______
84,017 70,817 229,403 189,803
_________ _______ __________ _______
Operating loss (64,343) (51,143) (173,625) (134,025)
_________ _______ __________ _______
Other (income) expense:
Miscellaneous income - 11,918 (153) 3,920
Interest Expense 1,725 1,725 5,175 5,175
_________ _______ ___________ _______
1,725 13,643 5,022 9,095
_________ _______ ___________ _______
Net loss (66,068) (64,786) (178,647) (143,120)
_________ _______ ___________ _______
Net loss per share .00 .00 .00 .00
_________ _______ ___________ _______
-7-
September 30, 2004
Previously
Reported As Restated
ASSETS
Current Assets:
Cash 51 51
Accounts Receivable 5,917 5,917
_________ ________
Total Current Assets 5,968 5,968
Property, Plant & Equipment (net) 527,109 527,109
_________ _________
Total Assets 533,077 533,077
_________ ________
LIABILITIES & STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable & accrued expenses 293,745 377,035
Accounts payable - related party 194,167 194,167
Note payable 90,596 90,596
_________ ________
Total current liabilities 578,508 661,798
_________ ________
Total liabilities 578,508 661,798
_________ ________
Stockholders' deficiency:
Common stock 37,830 37,830
Additional paid in capital 8,405,635 8,405,635
Accumulated deficit (8,488,896) (8,572,186)
_________ _________
Total stockholders' deficiency (45,431) (128,721)
_________ _________
Total liabilities and stockholders'
deficiency 533,077 533,077
_________ _________
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.
-8-
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 2003, annual and quarterly financial statements for 2004, and
quarterly financial statements for 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 2003, annual and quarterly financial
statements for 2004 and quarterly financial statements for 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 decrease the previously reported net loss by $1,282 for the
three months ended September 30, 2004 and by $35,527 for the nine months ended
September 30, 2004. The restatement did not affect reported loss per share.
THREE MONTH PERIOD ENDED SEPTEMBER 30, 2005, COMPARED TO THREE MONTH PERIOD
ENDED SEPTEMBER 30, 2004.
For the three months ended September 30, 2005, sales revenue increased
$22,083 to $41,757, compared to $19,674 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 September 30, 2005, sales volume increased to 1,129 barrels,
compared to 948 barrels for the same period in 2004. The average realized
per barrel oil price was $36.98 for the three months ended September 30,
2005 compared to $31.40 for the three months ended September 30, 2004.
Production and operating expenses increased $16,455 to $49,353 for the three
months ended September 30, 2005, from $32,898 for the same period in 2004.
The increase was primarily attributable to the seismic analysis being
conducted on the Company's Gabbs Valley Prospect.
General and administrative expenses decreased by $5,160 to $32,759 for
the three months ended September 30, 2005, from $37,919 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 Setember 30, 2005 and 2004, because the depreciable assets were
fully depreciated.
For the three months ended September 30, 2005, interest expense remained at
$1,725 which is the same as for the three months ended September 30, 2004.
The Company accrued interest on the Weatherford note in both periods.
Miscellaneous income decreased by $11,918 from $0 to $11,918 relating to
foreign exchange loss on the Company's recorded Canadian lease obligation.
-9-
For the reasons discussed above, net loss increased $22,706 from $(64,786)
for the three months ended September 30, 2004, to $(42,080) for the three
months ended September 30, 2005.
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2005, COMPARED TO NINE MONTH PERIOD
ENDED SEPTEMBER 30, 2004.
For the nine months ended September 30, 2005, sales revenue increased
$60,337 to $116,115, compared to $55,778 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 nine months ended September 30, 2005, sales volume increased 723
barrels to 3,149 barrels, compared to 2,426 barrels for the same period in
2004. The average realized per barrel oil price increased 29% from $27.04
for the nine months ended September 30, 2004 to $34.99 for the nine months
ended September 30, 2005.
Production and operating expenses decreased $4,397 to $68,282 for the nine
months ended September 30, 2005, from $72,679 for the same period in 2004.
This decrease was primarily attributable to a reduction in property tax
expense incurred for the Company's Cheyenne River, offset by costs incurred
for seismic analysis Of the Company's Gabbs Valley Prospect.
General and administrative expenses decreased by $2,143 to $114,981 for
the nine months ended September 30, 2005, from $117,124 for the same period
in 2004. Expense amounts were consistent with the prior year.
There was no depreciation or depletion expense attributable to the nine
months ended September 30, 2005 and 2004, because the depreciable assets
were fully depreciated.
For the nine months ended September 30, 2005, interest expense remained at
$5,175 which is the same as for the nine months ended September 30, 2004.
The Company accrued interest on the Weatherford note in both periods.
Miscellaneous income increased $8,321 from $(3,920) to $4,401 attributable
to foreign exchange gains on the Company's recorded Canadian lease obligation.
For the reasons discussed above, net income increased $297,759 from
$(143,120) for the nine months ended September 30, 2004, to $154,639 for
the nine months ended September 30, 2005.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
As of September 30, 2005 the Company had $406,665 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.
-10-
As of September 30, 2005, the Company has accrued a liability of approximately
$97,496 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 September 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 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 previously reported in the Company's Current Report on Form 8-K
dated November 16, 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, 2004 and
quarterly financial statements for 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 2005 to make the
necessary accounting adjustments. The Company's Board of Directors
reached this conclusion based upon the recommendation of the Company's
management and with the concurrence of the Company's independent
auditors.
The restatement pertains to the Company's accounting for exit
activities in connection with office space in Canada, which was leased
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by the former management of the Company, abandoned upon the resignation
of such management and subleased for a period of time thereafter. The
Company intends to file amended Annual Reports on Forms 10-KSB for the
years ended December 31, 2003 and December 31, 2004 and amended
Quarterly Reports on Forms 10-QSB for the periods ended March 31, 2004,
June 30, 2004, September 30, 2004, March 31, 2005 and June 30, 2005.
As a result of the foregoing, in the opinion of the Company's Chief
Executive Officer (and principal financial officer), there are material
weaknesses in the Company's disclosure controls and procedures.
During the period covered by this report, there was no change in the
Company's internal controls over financial reporting that has
materially affected, or that is reasonably likely to materially affect,
the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 6. Exhibits
a) Exhibits
31 Certification of Chief Executive Officer (and principal
financial officer) pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended, and Item 601(b)(31) of Regulation S-B, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(submitted herewith).
32 Certification of Chief Executive Officer (and principal
financial officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (submitted herewith).
EMPIRE PETROLEUM CORPORATION
SIGNATURES
In accordance with the requirements of the Exchange Act, the small
business issuer caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMPIRE PETROLEUM CORPORATION
Date: December 20, 2005 By: /s/ Albert E. Whitehead
___________________
Albert E. Whitehead
Chairman/CEO
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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
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issuer's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the controls
and procedures, as of the end of the period covered by this report
based on such evaluation; and
(c) Disclosed in this report any change in the small business
issuer's internal control over financial reporting that
occurred during the small business issuer's most recent
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the small business issuer's
internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors
and the audit committee of small business issuer's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business
issuer's ability to record, process, summarize and report financial
information; and
(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.
December 20, 2005 /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 September 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
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(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
December 20, 2005 /s/ Albert E. Whitehead
Albert E. Whitehead
Chief Executive Officer and
Principal Financial Officer
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