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U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-50929
 Ignis Petroleum Group, Inc.
  (State or other jurisdiction of incorporation or organization)
 (IRS Employer Identification No.)
 
 (Issuers telephone number)
  þ o
  o þ




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##### 



Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheet at December 31, 2007 (unaudited)
    
    3Condensed Consolidated Statements of Operations for the Three and Six Months
Ended December 31, 2007 and 2006 (unaudited)
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months ended
December 31, 2007 and 2006 (unaudited)
    
    5Selected Notes to the Condensed Consolidated Financial Statements (unaudited)
    
    6Item 2. Managements Discussion and Analysis or Plan of Operation
    
    14Item 3. Controls and Procedures
    
    20PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    21Item 2. Unregistered sale of equity securities and use of proceeds
    
    21Item 3. Default Upon Senior Securities
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    23Item 5. Other Information
    
    23Item 6. Exhibits
    
    23SIGNATURES
    
    24EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 Ignis Petroleum Group, Inc. and Subsidiary
 
 Condensed Consolidated Balance Sheet
 (unaudited)
 December 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    41,559Accounts receivable
    
    
    356,012Prepaid expenses and other current assets
    
    
    19,229Total current assets
    
    
    416,800Property and equipment:Oil and Gas Properties, net (successful efforts method)
    
    
    205,870Other assets
    
    
    484,203Total assets
    
    $
    1,106,874LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    230,755Accrued interest
    
    
    768,121Current portion of asset retirement obligation
    
    
    34,176Current portion of long-term debt
    
    
    4,787,000Current portion of debt discount
    
    
    (4,778,399
    )Current portion of derivative liability
    
    
    138,934Current portion of contingent liability
    
    
    1,600,000Total current liabilities
    
    
    2,780,587Long-term liabilities:Long-term debt
    
    
    1,000,000Asset retirement obligation
    
    
    21,988Total long-term liabilities
    
    
    1,021,988COMMITMENTS AND CONTINGENCIES(NOTE 10)Stockholders deficit:Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and
outstandingCommon
stock, $0.001 par value, 300,000,000 shares authorized 57,841,982 issued and
outstanding, net of 18,250,000 shares held in escrow
    
    
    57,842Additional paid-in capital
    
    
    12,763,304Accumulated deficit
    
    
    (15,516,847
    )Total stockholders deficit
    
    
    (2,695,701
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    1,106,874
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Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,(Restated)
    
    
    
    
    
    
    (Restated)2007
    
    
    2006
    
    
    2007
    
    
    2006Oil and natural gas sales
    
    $
    535,872
    
    
    $
    234,909
    
    
    
    831,437
    
    
    
    722,030Management fees
    
    
    45,000
    
    
    
    22,500
    
    
    
    90,000
    
    
    
    22,500Total revenue
    
    
    580,872
    
    
    
    257,409
    
    
    
    921,437
    
    
    
    744,530Operating expenses:Lease operating expense
    
    
    54,759
    
    
    
    9,325
    
    
    
    85,504
    
    
    
    13,904Production and ad
valorem taxes
    
    
    27,125
    
    
    
    9,048
    
    
    
    41,674
    
    
    
    36,218Depreciation,
depletion and
amortization
    
    
    53,212
    
    
    
    244,677
    
    
    
    122,335
    
    
    
    611,425Accretion of asset
retirement obligation
    
    
    3,783
    
    
    
    6,035
    
    
    
    7,566
    
    
    
    6,035Exploration expenses,
including dry holes
    
    
    
    
    
    
    229,110
    
    
    
    
    
    
    
    229,330General and
administrative
expenses
    
    
    369,327
    
    
    
    760,598
    
    
    
    1,097,950
    
    
    
    1,243,613Total operating expenses
    
    
    508,209
    
    
    
    1,258,794
    
    
    
    1,355,029
    
    
    
    2,140,525Income (Loss) from operations
    
    
    72,664
    
    
    
    (1,001,385
    )
    
    
    (433,592
    )
    
    
    (1,395,995
    )Other income (expense)Gain from valuation of
derivative liability
    
    
    90,708
    
    
    
    2,493,828
    
    
    
    220,909
    
    
    
    4,605,254Interest expense
    
    
    (197,102
    )
    
    
    (398,830
    )
    
    
    (370,734
    )
    
    
    (658,696
    )Gain on sales of oil and
gas property
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    (106,394
    )
    
    
    2,094,998
    
    
    
    (89,825
    )
    
    
    3,946,558Net Income (loss)
    
    
    (33,730
    )
    
    
    1,093,613
    
    
    
    (523,417
    )
    
    
    2,550,563Basic income (loss) per
common share:
    
    $
    (0.00
    )
    
    $
    0.02
    
    
    $
    (0.01)$
    
    
    
    0.05Weighted average number of
common shares outstanding
    
    
    56,885,439
    
    
    
    50,284,647
    
    
    
    55,585,050
    
    
    
    50,488,361Diluted income (loss) per
common share:
    
    $
    (0.00
    )
    
    $
    0.02
    
    
    $
    (0.01)$
    
    
    
    0.04Diluted weighted average
number of common shares outstanding
    
    
    56,885,439
    
    
    
    58,313,551
    
    
    
    55,585,050
    
    
    
    58,517,345
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##### Table of Contents



For the
    
    
    For theSix Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006(Restated)Cash flow from operating activitiesNet income (loss)
    
    $
    (523,417
    )
    
    $
    2,550,563Adjustments to reconcile net income (loss) to net cash used
in operating activitiesDepreciation and depletion
    
    
    122,335
    
    
    
    611,425Amortization of debt cost
    
    
    152,232
    
    
    
    Loss from valuation adjustment of oil and gas properties
    
    
    
    
    
    
    229,330Stock issued for compensation and services
    
    
    39,484
    
    
    
    240,425Amortization of discount of debentures
    
    
    6,732Accretion of asset retirement obligation expense
    
    
    7,566
    
    
    
    6,035Gain on derivative financial instrument
    
    
    (220,909
    )
    
    
    (4,605,254
    )Change in current assets and liabilities:Accounts receivable
    
    
    (193,701
    )
    
    
    143,542Prepaid expenses and other current assets
    
    
    53,914
    
    
    
    172,440Accounts payable and accrued expenses
    
    
    221,388
    
    
    
    220,973Cash used in operating activities
    
    
    (334,376
    )
    
    
    (430,521
    )Cash flow from investing activitiesPurchase of oil and gas properties
    
    
    Sale of oil and gas property
    
    
    60,000
    
    
    
    91,353Cash provided by/(used) investing activities
    
    
    60,000
    
    
    
    91,353Cash flow from financing activitiesProceeds from note payable
    
    
    
    
    
    
    500,000Cash provided by financing activities
    
    
    
    
    
    
    500,000Net increase(decrease) in cash
    
    
    (274,376
    )
    
    
    160,832Cash at beginning of period
    
    
    315,935
    
    
    
    872,572Cash at end of period
    
    $
    41,559
    
    
    $
    1,033,404Supplemental non-cash financing transactions:Conversion of debenture into equity
    
    $
    103,000
    
    
    $
    
  5




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IGNIS PETROLEUM GROUP, INC. AND SUBSIDIARY
 
 SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
         6




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As PreviouslyReported
    
    
    
    
    
    As RestatedAs of December 31, 2006
    
    Adjustments
    
    As of December 31, 2006Property and equipment
    
    
    2,608,174
    
    
    
    (19,940
    )
    
    
    2,588,234Accumulated depletion
    
    
    (1,263,782
    )
    
    
    (149,892
    )
    
    
    (1,413,674
    )Other assets
    
    
    550,366
    
    
    
    (550,366
    )
    
    
    0Other assets  loan fees net of amortization
    
    
    0
    
    
    
    724,729
    
    
    
    724,729Current portion of long term debt
    
    
    360,000
    
    
    
    140,000
    
    
    
    500,000Less current portion of debt discount
    
    
    0
    
    
    
    (499,976
    )
    
    
    (499,976
    )Current portion of derivative liability
    
    
    0
    
    
    
    519,560
    
    
    
    519,560Current portion of warrant liability
    
    
    0
    
    
    
    998,626
    
    
    
    998,626Long term debt
    
    
    3,416,204
    
    
    
    (3,416,204
    )
    
    
    Derivative liability
    
    
    3,561,860
    
    
    
    (3,561,860
    )
    
    
    Warrant liability
    
    
    3,694,293
    
    
    
    (3,694,293
    )
    
    
    Accumulated deficit
    
    
    (17,151,567
    )
    
    
    7,950,475
    
    
    
    (9,201,092
    )For The Six Months
    
    
    
    
    
    For The Six MonthsEnded December 31, 2006
    
    
    
    
    
    Ended December 31, 2006Oil and natural gas sales
    
    
    706,123
    
    
    
    15,907
    
    
    
    722,030Management Fees
    
    
    0
    
    
    
    22,500
    
    
    
    22,500Lease operating expense
    
    
    (9,325
    )
    
    
    (4,579
    )
    
    
    (13,904
    )Production and ad valorem taxes
    
    
    (9,048
    )
    
    
    (27,170
    )
    
    
    (36,218
    )Depreciation, depletion and amortization
    
    
    (674,671
    )
    
    
    63,246
    
    
    
    (611,425
    )Exploration expenses, including dry holes
    
    
    (428,412
    )
    
    
    199,082
    
    
    
    (229,330
    )General and administrative expenses
    
    
    (1,154,473
    )
    
    
    (89,140
    )
    
    
    (1,243,613
    )Gain (loss) from valuation of derivative liability
    
    
    (957,047
    )
    
    
    5,562,301
    
    
    
    4,605,254Interest expense
    
    
    (1,835,887
    )
    
    
    1,177,191
    
    
    
    (658,696
    )Net income (loss)
    
    
    (4,362,740
    )
    
    
    6,919,338
    
    
    
    2,556,598Basic and diluted income (loss) per common share
    
    
    (0.09
    )
    
    
    0.14
    
    
    
    0.05For The Three Months
    
    
    
    
    
    For The Three MonthsEnded December 31, 2006
    
    
    
    
    
    Ended December 31, 2006Management Fees
    
    
    0
    
    
    
    22,500
    
    
    
    22,500Depreciation, depletion and amortization
    
    
    (204,839
    )
    
    
    (39,838
    )
    
    
    (244,677
    )General and administrative expenses
    
    
    (671,458
    )
    
    
    (89,140
    )
    
    
    (760,598
    )Gain (loss) from valuation of derivative liability
    
    
    (316,117
    )
    
    
    2,809,945
    
    
    
    2,493,828Interest expense
    
    
    (952,632
    )
    
    
    553,802
    
    
    
    (398,830
    )Net income (loss)
    
    
    (2,163,655
    )
    
    
    3,257,268
    
    
    
    1,093,613Basic and diluted income (loss) per common share
    
    
    (0.04
    )
    
    
    0.06
    
    
    
    0.02
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Convertible debentures payable
    
    $
    4,787,000Less: unamortized discount on debentures
    
    
    (4,778,399
    )Convertible debentures, net
    
    $
    8,601
  10




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11




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2007Asset retirement obligation at June 30, 2007
    
    
    48,598Liabilities incurred
    
    
    Liabilities settled
    
    
    Accretion expense
    
    
    3,783Cummulative effect adjustment
    
    
    Asset retirement obligation at September 30, 2007
    
    
    52,381Accretion expense
    
    
    3,783Asset retirement obligation at December 31, 2007
    
    
    56,164
       8.
    
    STOCKHOLDER EQUITY
  12




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13




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-
  
 Item 2. Managements Discussion and Analysis or Plan of Operation.
 Forward-Looking Statements
   14




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Plan of Operations
 Overall Strategy
     15




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Determining Whether a General Partner, or the General Partners as a Group, Controls a
Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights.
  Liquidity and Capital Resources
     16




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Financing Activities
  Operating Activities
  Results of Operations
   17




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Overall
  Increase
    
    
    
    
    
    
    
    
    
    
    IncreaseThree Months Ended December 31,
    
    
    (Decrease)
    
    
    Six Months Ended December 31,
    
    
    (Decrease)2007
    
    
    2006
    
    
    
    
    
    
    2007
    
    
    2006Results of oil and gas
producing operations
    
    $
    441,992
    
    
    
    (240,787
    )
    
    
    682,779
    
    
    $
    664,358
    
    
    
    (152,382
    )
    
    
    816,740General & administrative expense
    
    $
    (369,327
    )
    
    
    (760,598
    )
    
    
    391,271
    
    
    $
    (1,097,950
    )
    
    
    (1,243,613
    )
    
    
    145,663Gain/(loss) from valuation
of derivative liaility
    
    $
    90,708
    
    
    
    2,493,828
    
    
    
    (2,403,120
    )
    
    $
    220,909
    
    
    
    4,605,254
    
    
    
    (4,384,345
    )Interest expense
    
    $
    (197,102
    )
    
    
    (398,830
    )
    
    
    201,728
    
    
    
    (370,734
    )
    
    
    (658,696
    )
    
    
    287,962Gain on sale of property
    
    $
    
    
    
    
    
    
    
    
    
    
    
    $
    60,000
    
    
    
    0Net income/ (loss)
    
    $
    (33,730
    )
    
    
    1,093,613
    
    
    
    (1,127,343
    )
    
    
    (523,417
    )
    
    
    2,550,563
    
    
    
    (3,425,307
    )
    18




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Operating revenues
 Three Months Ended
    
    Three Months Ended
    
    Six Months Ended
    
    Six Months EndedDecember 31, 2007
    
    December 31, 2006
    
    December 31, 2007
    
    December 31, 2006Operating revenues
    
    $
    535,872
    
    
    
    234,909
    
    
    
    831,437
    
    
    
    722,030SalesCondensate (Mbbls)
    
    
    4.3
    
    
    
    3.4
    
    
    
    7.8
    
    
    
    8.2Natural Gas (MMcf)
    
    
    14.9
    
    
    
    7.9
    
    
    
    23.5
    
    
    
    29.1Total (BOE)
    
    
    6.8
    
    
    
    4.8
    
    
    
    11.7
    
    
    
    13.1Average priceCondensate ($/Bbl)
    
    $
    91.38
    
    
    
    58.13
    
    
    
    85.60
    
    
    
    63.54Natural Gas ($/Mcf)
    
    $
    9.35
    
    
    
    6.84
    
    
    
    8.33
    
    
    
    7.25
  Operating expenses
    19




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Interest Expense
  Gain on valuation of derivative liability
  Off Balance Sheet Arrangements
  
 Item 3. Controls and Procedures.
  20




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PART II  OTHER INFORMATION
 
 Item1. Legal Procedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  21




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Item 3. Defaults Upon Senior Securities
  22




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Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
  Exhibit No.
    
    Description*31.1
    
    Certification by Chief Executive Officer, required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification by Chief Financial Officer, required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification by Chief Executive Officer, required by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
1350 of Chapter 63 of Title 18 of the United States Code,
promulgated pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*32.2
    
    Certification by Chief Financial Officer, required by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
1350 of Chapter 63 of Title 18 of the United States Code,
promulgated pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Filed herewith 23




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SIGNATURES
  Ignis Petroleum Group, Inc. (Registrant)Date: February 19, 2008
    
    By:
    
    /s/ Geoff EvettGeoff EvettPresident and Chief Executive OfficerDate: February 19, 2008
    
    By:
    
    /s/ Geoff LongGeoff LongChief Financial Officer
 24




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Exhibit Index
 Exhibit No.
    
    Description*31.1
    
    Certification by Chief Executive Officer, required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification by Chief Financial Officer, required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification by Chief Executive Officer, required by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
1350 of Chapter 63 of Title 18 of the United States Code,
promulgated pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.*32.2
    
    Certification by Chief Financial Officer, required by Rule
13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section
1350 of Chapter 63 of Title 18 of the United States Code,
promulgated pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Filed herewith