UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549


________________________




FORM 10-K


__________________________




(Mark One)


x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended March 31, 2013





o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


For the transition period from __________ to ___________





Commission file number:  333-82580





SIGNATURE EXPLORATION AND PRODUCTION CORP.


(Exact name of registrant as specified in its charter)


____________________





Delaware

(State or other Jurisdiction of Incorporation or Organization)

59-3733133

(IRS Employer I.D. No.)


___________________________




4700 Millenia Blvd, Suite 175


Orlando, FL 32839


Phone: (888) 895-3594


Fax: (888) 800-5918


(Address and telephone number of


principal executive offices)


___________________________







Securities registered under Section 12 (b) of the Exchange Act:Title of each class
Name of each exchange on which registeredNone
NoneSecurities registered under Section 12(g) of the Exchange Act:$0.0001 Par Value Common StockTitle of Class





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   No ü





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes   No ü





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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.  Yes ü  No





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer           Accelerated filer


Non-accelerated filer           Smaller reporting company  ü





Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).  Yes   No ü





The aggregate market value of the voting stock held by non-affiliates of the registrant on July 9, 2013, the last business day of the registrant’s most recently completed first quarter, based on the closing price on that date of $0.06 on the Over the Counter Bulletin Board, was approximately $285,000.





Documents Incorporated by Reference


None




1





SIGNATURE EXPLORATION AND PRODUCTION CORP.


FORM 10-K








TABLE OF CONTENTS




PART I


1ITEM 1.
DESCRIPTION OF BUSINESS
1ITEM 1A.
RISK FACTORS
3ITEM 1B.
UNRESOLVED STAFF COMMENTS
3ITEM 2.
PROPERTY
3ITEM 3.
LEGAL PROCEEDINGS
3ITEM 4.
SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
3Part II


4ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
4ITEM 6.
SELECTED FINANCIAL DATA
9ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATION
9ITEM 7A.
QUANTITIATIVE AND QUILITATIVE DISCLOSERS ABOUT MARKET RISK
13ITEM 8.
FINANCIAL STATEMENTS
13ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
13ITEM 9A.
CONTROLS AND PROCEDURES
13ITEM 9B.
OTHER INFORMATION
15PART III


15ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
15ITEM 11.
EXECUTIVE COMPENSATION
16ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
16ITEM 13.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
17ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
17PART IV


19ITEM 15.
EXHIBITS
19


2






Forward Looking Statements




This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts are forward-looking statements. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” or similar expressions used in this report.





These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by us in those statements include, among others, the following:





●
the quality of our properties with regard to, among other things, the existence of reserves in economic quantities;●
uncertainties about the estimates of reserves;





●
our ability to increase our production and oil and natural gas income through exploration and development;●
the number of well locations to be drilled and the time frame within which they will be drilled;





●
the timing and extent of changes in commodity prices for natural gas and crude oil;●
domestic demand for oil and natural gas;





●
drilling and operating risks;●
the availability of equipment, such as drilling rigs and transportation pipelines;





●
changes in our drilling plans and related budgets;●
the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity; and





●
other factors discussed under Item 1A Risk Factors with the heading “Risks Related To Our Business”.





Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this report.






3






PART I





ITEM 1.
DESCRIPTION OF BUSINESS







Company Background




Our company was incorporated in the State of Delaware on April 4, 2001, under the name of “Flagstick Ventures, Inc.” On March 28, 2008, a majority of our stockholders approved changing our name to Signature Exploration and Production Corp. as our business model had changed to becoming an independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States.  As of March 31, 2013, we have not yet generated revenues or incurred expenses related to the energy operations.





Our common stock is quoted for trading on the OTC Bulletin Board under the symbol SXLP.





Our principal executive offices are located at 4700 Millenia Blvd, Suite 175, Orlando, FL 32839. Our telephone number is (888) 898-3594.





Business Strategy





We intend to build our business through the acquisition of non-producing and producing oil and natural gas properties located in North America. The current landscape for acquiring oil and gas properties is quite challenging, and, at the same time, quite compelling.  We will endeavor to identify the most attractive drillbit opportunities, while adhering to strict internal transaction and risk management guidelines and maintaining regard for both engineering and capital structure. We will strive to insure that incremental economics generate acceptable rates of return, thus creating significant value for our shareholders. By doing so, Signature expects to benefit from management's large proprietary deal flow, extensive industry contacts, and relationships within the energy financial community.





Our search for oil and gas properties has been initially directed towards small and medium-sized oil and natural gas opportunities, in order to minimize front-end dilution. We are presently seeking lower risk property interests, and those properties which exhibit multi-zone stacked pay, in order to mitigate drilling risk. In building our portfolio of oil and gas interests, we may include non-operated and operated projects. The following are some of our investment and/or drilling related criteria:




·
Developmental drilling in proved producing areas;




·
Scalable acreage position;




·
Availability of deeper pool opportunities;




·
Stacked pay;




·
Acceptable incremental drillbit economics, high internal rate of return via developmental drilling, recompletions and workovers.




Seasonality





The exploration for oil and natural gas reserves depends on access to areas where operations are to be conducted. Seasonal weather variations, including freeze-up and break-up affect access in certain circumstances.  Natural gas is used principally as a heating fuel and for power generation.  Accordingly, seasonal variations in weather patterns affect the demand for natural gas.





Markets





We are currently in the exploration stage and we have not generated revenues. We are not producing oil or gas and we have no customers. The availability of a ready market and the prices obtained for oil and gas produced depend on many factors, including the extent of domestic production and imports of oil and gas, the proximity and capacity of natural gas pipelines and other transportation facilities, fluctuating demand for oil and gas, the marketing of competitive fuels, and the effects of governmental regulation of oil and gas production and sales.


4







A ready market exists for domestic oil and gas through existing pipelines and transportation of liquid products. Whether there exists an international market depends upon the existence of international delivery systems and on political and pricing factors.




Competition





The strength of commodity prices has resulted in significantly increased industry operating cash flows and has led to increased drilling activity.  This has  increased  competition  for undeveloped lands; skilled personnel; access  to  drilling rigs, service rigs and  other  equipment;  and  access  to processing and  gathering  facilities,  all  of  which  may  cause drilling and operating costs to increase.  Some of our competitors are larger than us and have substantially greater financial and marketing resources.  In addition, some of our competitors may be able to secure products and services from vendors on more favorable terms, offer a greater product selection, and adopt more aggressive pricing policies than we can.





Government Regulation





Our operations will be subject to various types of regulation at the federal, state and local levels. Such regulation includes requiring permits for the drilling of wells; maintaining bonding requirements in order to drill or operate wells; implementing spill prevention plans; submitting notification and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface usage and the restoration of properties upon which wells have been drilled, the plugging and abandoning of wells and the transporting of production.




Our operations will be also subject to various conservation matters, including the regulation of the size of drilling and of spacing units or proration units, the number of wells which may be drilled in each unit, and the unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas we may be able to produce from our wells and to limit the number of wells or the locations at which we may be able to drill.




Operations on properties in which we have an interest are subject to extensive federal, state and local environmental laws that regulate the discharge or disposal of materials or substances into the environment and otherwise are intended to protect the environment. Numerous governmental agencies issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial administrative, civil and criminal penalties and in some cases injunctive relief for failure to comply.




Some laws, rules and regulations relating to the protection of the environment may, in certain circumstances, impose “strict liability” for environmental contamination. These laws render a person or company liable for environmental and natural resource damages, cleanup costs and, in the case of oil spills in certain states, consequential damages without regard to negligence or fault. Other laws, rules and regulations may require the rate of oil and gas production to be below the economically optimal rate or may even prohibit exploration or production activities in environmentally sensitive areas. In addition, state laws often require some form of remedial action, such as closure of inactive pits and plugging of abandoned wells, to prevent pollution from former or suspended operations.




Legislation has been proposed in the past and continues to be evaluated in Congress from time to time that would reclassify certain oil and gas exploration and production waste as hazardous waste. If such reclassification is successful, it would make these wastes subject to much more stringent storage, treatment, disposal and clean-up requirements, which could have a significant adverse impact on operating costs. From time to time initiatives to further regulate the disposal of oil and gas wastes are also proposed in certain states and may include initiatives at the county, municipal and local government levels. These various initiatives could have a similar adverse impact on operating costs.




5




The regulatory burden of environmental laws and regulations increases our cost and risk of doing business and consequently affects our profitability. The federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, also known as the “Superfund” law, imposes liability, without regard to fault, on certain classes of persons with respect to the release of a “hazardous substance” into the environment. These persons include the current or prior owner or operator of the disposal site or sites where the release occurred and companies that transported, disposed or arranged for the transport or disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources. It is not uncommon for the federal or state government to pursue such claims. The federal Environmental Protection Agency and various state agencies continue to promulgate regulations that limit the disposal and permitting options for certain hazardous and non-hazardous wastes.




It is also not uncommon for neighboring landowners and other third parties to file claims for personal injury or property or natural resource damages allegedly caused by the release of hazardous substances into the environment.




Employees





We currently have one employee. They are not covered by a collective bargaining agreement, nor have we experienced a strike or other adverse work stoppage due to organized labor.








ITEM 1A.
RISK FACTORS





Not Applicable




ITEM 1B.
UNRESOLVED STAFF COMMENTS





None





ITEM 2.
PROPERTY





Our executive offices are located at 3200 Southwest Freeway, Ste 3300, Houston, TX 77027.





ITEM 3.
LEGAL PROCEEDINGS





The Company is not a party to any pending legal proceedings nor is any of its property subject to pending legal proceedings.





ITEM 4.
SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS





Not Applicable


































6




Part II





ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES








Our common stock is quoted on the OTC Bulletin Board under the symbol "SXLP".





For the periods indicated, the following table sets forth the high and low per share intra-day sales prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.




For the periods indicated, the following table sets forth the high and low per share intra-day sales prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.




Fiscal Year 2013
High ($)
Low ($)Fourth Quarter
$  0.03
$  0.08Third Quarter
$  0.03
$  0.20Second Quarter
$  0.07
$  0.07First Quarter
$  0.06
$  0.18Fiscal Year 2012Fourth Quarter
$  0.25
$  0.12Third Quarter
$  0.50
$  0.10Second Quarter
$  0.19
$  0.04First Quarter
$  0.22
$  0.07





Dividends and Dividend Policy





We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business and for general corporate purposes. We cannot assure you that we will pay dividends in the future. Our future dividend policy is within the discretion of our Board of Directors and will depend upon various factors, including our results of operations, financial condition, capital requirements and investment opportunities.





Recent Sales of Unregistered Securities





February 2013 Convertible Notes and Warrants





During February 2013, the Company entered into two Convertible Note Agreements ("Notes") for a total of $4,118.  The Company received aggregate proceeds of $3,500 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in February 2014.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 41,180 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.


7





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.


November 2012 Convertible Notes and Warrants





During November 2012, the Company entered into two Convertible Note Agreements ("Notes") for a total of $13,178.  The Company received aggregate proceeds of $11,200 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in November 2013.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 131,780 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





July 2012 Convertible Notes and Warrants





On July 17, 2012, the Company issued 115,000 restricted shares of common stock of the Company to two stockholders for $23,000.On August 15, 2012 the 115,000 restricted shares were returned to the Company in exchange for two Convertible Note Agreements ("Notes") for a total of $27,060 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in February 2013.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 270,600 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





February 2012 Convertible Notes and Warrants





During February 2012, the Company entered into two Convertible Note Agreements ("Notes") for a total of $11,766.  The Company received aggregate proceeds of $11,000 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in February 2013.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 117,660 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.


8





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





August 2011 Convertible Notes and Warrants





During August 2011, the Company entered into three Convertible Note Agreements ("Notes") for a total of $47,060.  The Company received aggregate proceeds of $40,000 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in August 2012.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 470,600 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





March 2011 Convertible Notes and Warrants





During March 2011, the Company entered into two Convertible Note Agreements ("Notes") for a total of $70,590.  The Company received aggregate proceeds of $60,000 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in March 2012.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes include an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to each Note holder a 5-year warrant (the "Warrant") to purchase 705,900 shares of common stock of the Company.  The Warrant is exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holder will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





August 2010 Convertible Notes and Warrants





During August 2010, the Company entered into two Convertible Note Agreements ("Notes") for a total of $58,824.  The Company received aggregate proceeds of $50,000 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in August 2011.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes include an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to each Note holder a 5-year warrant (the "Warrant") to purchase 588,240 shares of common stock of the Company.  The Warrant is exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.


9





The note holder will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.


February 2010 Convertible Notes and Warrants





On February 10, 2010, the Company entered into two Convertible Note Agreements ("Notes") for a total of $352,942.  The Company received aggregate proceeds of $300,000  $ reflecting a 15% original issue discount to the Note holders.





The Notes were due on February 10, 2011.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.65. The Notes include an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to each Note holder a 5-year warrant (the "Warrant") to purchase 271,494 shares of common stock of the Company.  The Warrant is exercisable at a price equal to $0.75 The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holder will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.




Due to the issuance of convertible debt in August 2010at $0.10 per share, the conversion price of these notes and warrants issued by the Company was reduced to $0.10 per share, pursuant to the anti-dilution provisions of these notes and warrants. Also, pursuant to the anti-dilution provisions of the warrants, the number of shares of common stock issuable upon exercise of the warrants will increase so that the aggregate exercise price payable, after taking into account the reduction in the exercise price to $0.10 per share, will be equal to the aggregate exercise price of the warrants prior to the adjustment.





January 2010 Convertible Notes and Warrants





On January 13, 2010, the Company entered into two Convertible Note Agreements ("Notes") for a total of $64,706.  The Company received aggregate proceeds of $55,000 reflecting a 15% original issue discount to the Note holders.





The Notes were due on January 13, 2011.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.35. The Notes include an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to each Note holder a 5-year warrant (the "Warrant") to purchase 92,437 shares of common stock of the Company.  The Warrant is exercisable at a price equal to $0.50. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holder will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





Due to the issuance of convertible debt in August 2010 at $0.10 per share, the conversion price of these notes and warrants issued by the Company was reduced to $0.10 per share, pursuant to the anti-dilution provisions of these notes and warrants. Also, pursuant to the anti-dilution provisions of the warrants, the number of shares of common stock issuable upon exercise of the warrants will increase so that the aggregate exercise price payable, after taking into account the reduction in the exercise price to $0.10 per share, will be equal to the aggregate exercise price of the warrants prior to the adjustment.


10





December 2009 Convertible Notes and Warrants





On December 7, 2009, the Company entered into two Convertible Note Agreements ("Notes") for a total of $352,942.  The Company received aggregate proceeds of $300,000 reflecting a 15% original issue discount to the Note holders.





The Notes were due on December 7, 2010.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.35. The Notes include an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of this Note, the Company issued to each Note holder a 5-year warrant (the "Warrant") to purchase 504,203 shares of common stock of the Company.  The Warrant is exercisable at a price equal to $0.50. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holder will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





Due to the issuance of convertible debt in August 2010 at $0.10 per share, the conversion price of these notes and warrants issued by the Company was reduced to $0.10 per share, pursuant to the anti-dilution provisions of these notes and warrants. Also, pursuant to the anti-dilution provisions of the warrants, the number of shares of common stock issuable upon exercise of the warrants will increase so that the aggregate exercise price payable, after taking into account the reduction in the exercise price to $0.10 per share, will be equal to the aggregate exercise price of the warrants prior to the adjustment.





Consulting Agreements





During the year ended March 31, 2011, the Company issued 60,000 shares of its restricted common stock pursuant to a Consulting Services Agreement. The Company recorded the $62,400 fair value of the shares issued as stock-based consulting.





On April 19, 2010, the Company issued 28,571 shares to legal counsel as a retainer for services under the 2007 Plan. The shares were issued at fifty percent (50%) of the closing price on the date of issuance for a total of $10,000.





Employment Agreements





Mr. Alan Gaines, our former Chief Executive Officer and Chairman, had entered into an Employment Agreement with the Company for a one year term beginning May 2, 2011.  Mr. Gaines would have been compensated with 12,012,413 shares of restricted common stock, payable upon the completion of a Qualified Acquisition or Qualified Equity Raise.  An expense of $960,993 would have been recorded as stock compensation at the time a Qualified Acquisition or Qualified Equity Raise is completed.  Upon the resignation of Mr. David on April 18, 2012, the shares were canceled and no expense was recognized.





Dr. Amiel David, our former Chief Operating Officer, has entered into an Employment Agreement with the Company for a one year term beginning May 2, 2011. Dr. David would have been compensated with 12,013,413 shares of restricted common stock, payable upon the completion of a Qualified Acquisition or Qualified Equity Raise.  An expense of $961,073 would have been recorded as stock compensation at the time a Qualified Acquisition or Qualified Equity Raise is completed.  Upon the resignation of Mr. David on April 18, 2012, the shares were canceled and no expense was recognized.





Note Conversions





During the year ended March 31, 2012, the Company converted a total of $104,000 of notes payable from certain Note Holders into common stock of the Company.  The Company issued 1,400,000 shares of our common stock to satisfy the principal balances of the notes payable. During the year ended March 31, 2010, the Company converted a total of $21,250 of notes payable and $373 of interest payable from certain Note Holders into common stock of the Company. The Company issued 2,125,000 shares of our common stock to satisfy the principal balances of the notes payable and 37,254 shares of our common stock to satisfy accrued interest of the notes payable. A loss of $177,941 was recognized for the conversion of a $2,000 note during the year ended March 31, 2010.


11







Equity Compensation Plan Information





The 2007 Amended Stock Option Plan was adopted by the Board of Directors on February 6, 2008. Under this plan, a maximum of 8,000,000 shares of our common stock, par value $0.0001, were authorized for issue. The vesting and terms of all of the options are determined by the Board of Directors and may vary by optionee; however, the term may be no longer than 10 years from the date of grant.





On August 20, 2009, the Company issued 4,000,000 options to a consultant valued at $984,600 under the 2007 Plan. The option’s exercise price is equal to fifty percent (50%) of the average closing bid price for the three day period prior to notice of exercise. The consultant will only be allowed to purchase shares upon the exercise of the option or portion thereof to the extent that, at the time of the purchase, the purchase will not result in the consultant beneficially owning more than 9.9% of the issued and outstanding common shares of the Company. These options expired on August 20, 2010.







ITEM 6.
SELECTED FINANCIAL DATA





N/A





ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATION





The following discussion of our plan of operation, financial condition and results of operations should be read in conjunction with the Company’s financial statements, and notes thereto, included elsewhere herein.  This discussion contains forward-looking statements that involve risks and uncertainties.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in this Annual Report.





Overview




Our company was incorporated in the State of Delaware on April 4, 2001, under the name of “Flagstick Ventures, Inc.” On March 28, 2008, a majority of our stockholders approved changing our name to Signature Exploration and Production Corp. as our business model had changed to becoming an independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States.  As of March 31, 2013, we have not yet generated revenues or incurred expenses related to the energy operations.








Plan of Operation





Our primary strategy is to develop existing acreage position through the drillbit in order to accrete significant value to our stockholders. The company will continue to seek those acquisitions of select properties that have been identified as attractive, both technically and geologically, and possess meaningful upside potential.





The Company continues to operate with very limited capital. Since our inception in 2001, we have been unable to locate a consistent source of additional financing for use in our operational or expansion plans. The Company is currently attempting to raise sufficient funds to purchase leases of oil and gas properties.  We can give no assurances that the Company will be able to purchase any leases.  Each oil and gas property in which we obtain an interest in will have an operator who will be responsible for marketing production.


12





In an effort to protect our stockholders, we intend not only to continue to search for an appropriate source of additional financing, but to re-evaluate our business and expansion plans to include an evaluation of other lines of business or other industries. Until we complete the re-evaluation of our business plan, we intend to focus our available capital resources on the operation of acquiring oil and gas properties.





Unproven Properties





Catron Prospect – Carton County, NM





We acquired a lease of 1,320 acres in Catron County, New Mexico. The lease term was for ten years.  The lease was cancelled on by the Department of the Interior and $36,000 was expensed in the year ended March 31, 2013. We are evaluating options for the use of this land.





Cash Requirements





We estimate that we will require an additional $1,717,000 to fund our currently anticipated requirements for ongoing operations for our existing business for the next twelve-month period. We expect to pay $30,000 for professional fees and expense related to being a public company and $30,000 for expenses related to general operations.  We will also need approximately $1,657,000 to repay $1,450,000 of notes payable and the related interest of approximately $208,000.





Based upon our cash position, we will need to raise additional capital prior by the end of fiscal 2014 in order to fund current operations. These factors raise substantial doubt about our ability to continue as a going concern.  We are pursuing several alternatives to address this situation, including the raising of additional funding through equity or debt financings.  We are in discussions with our existing stockholders to provide additional funding in exchange for notes or equity.   In order to finance existing operations and pay current liabilities over the next twelve months, we will need to raise $1,717,000 of capital. However, there can be no assurance that the requisite financing will be consummated in the necessary time frame or on terms acceptable to us.  Should we be unable to raise sufficient funds, we may be required to curtail our operating plans or possibly cease operations.  No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future.





Results of Operations





Comparison of the fiscal year ended March 31, 2013 and March 31, 2012.





FINANCIAL INFORMATION





2013


2012Loss on oil and gas properties

$
36,000


$
-Investor relations


-



1,000General and administrative


76,000



102,000Other income/(expense)


148,000



88,000Net income/(loss)

$
36,000


$
(15,000
)





Loss on oil and gas properties.Loss on oil and gas properties increased by $36,000 due to a lease cancelation during 2013.





Investor Relations.Investor relations expenses decreased by approximately $1,000 in 2013.  Investor relations were limited in 2013 as a cost savings measure.





General and Administrative.  General and administrative expenses decreased in 2013 due to a decrease in professional fees.


13








Other Income/(Expense).  Other expenses increased by $60,000 in 2013 due to the change in the fair value of convertible notes and warrants.





Liquidity and Capital Resources





We had cash balances totaling approximately $2,400 as of March 31, 2013.   Historically, our principal source of funds has been cash generated from financing activities.





Cash flow from operations. We have been unable to generate either significant liquidity or cash flow to fund our current operations. We anticipate that cash flows from operations will be insufficient to fund our business operations for the next twelve-month period.





Cash flows from investing activities.There was $0 cash used in investing activities for the years ended March 31, 2013 and 2012.


Cash flows from financing activities. Net cash provided by financing activities was generated from promissory notes that total $37,700 and $51,000 for the years ended March 31, 2013 and 2012.





Variables and Trends





We have no operating history with respect to our acquisition and development of oil and gas properties. In the event we are able to obtain the necessary financing to move forward with our business plan, we expect our expenses to increase significantly as we grow our business. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance and must be considered in light these circumstances.





Critical Accounting Policies





General




The preparation of financial statements requires management to utilize estimates and make judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The estimates are evaluated by management on an ongoing basis, and the results of these evaluations form a basis for making decisions about the carrying value of assets and liabilities that are not readily apparent from other sources. Although actual results may differ from these estimates under different assumptions or conditions, management believes that the estimates used in the preparation of our financial statements are reasonable. Policies involving the most significant judgments and estimates are summarized below.




Oil and Gas Activities




We follow the successful efforts method of accounting for our oil and gas activities. Accordingly, costs associated with the acquisition, drilling and equipping of successful exploratory wells are capitalized. Geological and geophysical costs, delay and surface rentals and drilling costs of unsuccessful exploratory wells are charged to expense as incurred. Costs of drilling development wells are capitalized. Upon the sale or retirement of oil and gas properties, the cost thereof and the accumulated depreciation or depletion are removed from the accounts and any gain or loss is credited or charged to operations.




Fair Value of Financial Instruments




The Company holds certain financial liabilities which are measured at fair value on a recurring basis in accordance with ASC Topic 825-10-15.   ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability.








Convertible notes issued with detachable warrants were measured at fair value, in accordance with ASC Topic 825-10-15, as one instrument, and that fair value was allocated to each component. The Company made the fair value election due to this methodology providing a fairer representation of the economic substance of the transaction within the fair value hierarchy. Due to the lack of relevant and market reflective Level 1 and Level 2 inputs, the Company valued the instruments using Level 3 inputs, which require significant judgment and estimates on behalf of management in developing model assumptions. The factors considered in developing those assumptions included; the Company’s inability to attract investment at terms more favorable to the Company, the lack of success in developing oil properties thus far, the continuing reduction in the net assets of the Company and the Company’s history of default on currently outstanding debt.


14




Based on management’s evaluation of the assumptions discussed above, the liabilities were initially recorded in an amount equal to the transaction price, which represented the fair value of the total liability at initial recognition.. The model used by the Company is calibrated so that the model value at initial recognition equals the transaction price. On an ongoing basis the fair value model used in valuing the convertible notes and derivative liability utilizes the following inputs; exercise price per warrant, conversion price per share, contract term, volatility, current stock prices and risk free rates. The following assumptions were made in the model: (1) risk free interest rate of 0.19% to 0.51%, (2) remaining contractual life of 1 to 4.98 years, (3) expected stock price volatility of 697% and (4) expected dividend yield of zero.




Equity-Based Compensation




The computation of the expense associated with stock-based compensation requires the use of a valuation model. The FASB issued accounting guidance requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility, expected option lives, and expected option forfeiture rates, to value equity-based compensation. We currently use a Black-Scholes option pricing model to calculate the fair value of our stock options. We primarily use historical data to determine the assumptions to be used in the Black-Scholes model and have no reason to believe that future data is likely to differ materially from historical data. However, changes in the assumptions to reflect future stock price volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. This accounting guidance requires the recognition of the fair value of stock compensation in net income. Although every effort is made to ensure the accuracy of our estimates and assumptions, significant unanticipated changes in those estimates, interpretations and assumptions may result in recording stock option expense that may materially impact our financial statements for each respective reporting period.





Commitments





Except as shown in the following table, as of March 31, 2013, we did not have any material capital commitments, other than funding our operating losses and repaying outstanding debt. It is anticipated that any capital commitments that may occur will be financed principally through borrowings from stockholders (although such additional financing has not been arranged). However, there can be no assurance that additional capital resources and financings will be available to us on a timely basis, or if available, on acceptable terms.





Future payments due on our contractual obligations as of March 31, 2013 are as follows:








Convertible notes from shareholders

$
443,000Convertible notes from shareholders, at face value


1,003,000Accrued interest


208,000Total

$
1,654,000


15




Off Balance Sheet Arrangements





We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.





Stock-Based Compensation





Please see page F-6, Note 3 of the audited financial statements.





Recent Accounting Pronouncements





Please see page F-6, Note 3 of the audited financial statements.





ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSERS ABOUT MARKET RISK





N/A





ITEM 8.
FINANCIAL STATEMENTS





The financial statements required to be filed hereunder are set forth on pages F-1 through F-6 and are incorporated herein by this reference.





ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES





There were no changes in or disagreements with our accountants on accounting and financial disclosure during the last two fiscal years.





ITEM 9A.
CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Financial Officer concluded as of March 31, 2013 that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal controls over financial reporting discussed immediately below.





Management’s Report on Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment. The internal controls for the Company are provided by executive management’s review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:


16





(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;


(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and


(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2012. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permits us to provide only management's report in this annual report.





Identified Material Weaknesses





A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.  The matters involving internal controls over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:





·
ineffective controls over period end financial disclosure and reporting processes including not having a functioning audit committee consisting of independent Board members as well as lack of expertise with respect to the application of US GAAP and SEC rules and regulations.





·
one individual who, as an officer and director of the Company, has sole access and authority to receive cash and make cash disbursements





Management believes that the material weaknesses set forth above did not have an adverse effect on our financial results.





Management’s Remediation Initiatives





As a result of our findings, we have begun to remediate the deficiencies.  In an effort to remediate the identified material weaknesses and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:





1.
Identify and/or retain a second employee or member of management who is appropriately trained who will also have duel control with respect to the receipt of cash and the making of cash disbursements; and


2.
Establish formal general accounting policies and procedures.


3.
Update some of our current procedures to better address period end financial disclosure.


4.
Update controls relating to other processes.





17





Although we have not remedied these issues in the past fiscal year, we anticipate that these initiatives will be at least partially, if not fully, implemented by March 31, 2014.  Additionally, we plan to test our updated controls in order to remediate our deficiencies by March 31, 2014.





Conclusion





As a result of management's assessment of the effectiveness of our internal control over financial reporting as of March 31, 2013, and the identification of the material weakness set forth above, management has concluded that our internal control over financial reporting is not effective.  It is reasonably possible that, if not remediated, the material weaknesses noted above, could result in a material misstatement in our reported financial statements that might result in a material misstatement in a future annual or interim period.  In light of the identified material weakness and the conclusion that our internal control over financial reporting is not effective, management will take the remediation initiatives set forth above.  In addition management performed (1) additional review of the area described above, and (2) performed additional analyses, including but not limited to a detailed balance sheet and statement of operations analytical review. These procedures were completed so management could gain assurance that the financial statements and schedules included in this Form 10-K fairly present in all material respects the financial position, results of operations and cash flows for the periods presented.





Changes in Internal Control over Financial Reporting





There were no changes were made during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting, as required by Rules 13a-15(d) and 15d-15(d) under the exchange Act.







ITEM 9B.
OTHER INFORMATION





None.





PART III





ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE





The names of our executive officers and directors, their ages as of June 30, 2013, and the positions currently held by each are as follows:





Name
Age
PositionSteven Weldon
37
Chief Executive  Officer and Director





Steven Weldon, a Certified Public Accountant,has served as our Chief Financial Officer since September 2005.  Prior to joining Signature Exploration and Production Corp. Mr. Weldon was the Tax Manager for Westgate Resorts, Ltd., a timeshare developer, since July 2000.  Since September 2005, Mr. Weldon has also served as the Chief Financial Officer of Inverted Paradigms Corp., a software developer.  Mr. Weldon was an adjunct professor at Florida Southern College from January 2002 to October 2005.  Since May 2005, Mr. Weldon has served as the president, sole stockholder and director of Viking Financial Solutions, LLC, a public accounting firm providing tax and accounting services.  Mr. Weldon received his Bachelor of Science degree and his Masters in Business Administration from Florida Southern College.





During the past five years none of our directors, executive officers, promoters or control persons was:





1)
the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;





2)
convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);





3)
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or





4)
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.


18








Section 16(a) Beneficial Ownership Reporting Compliance.





Since we have no stock registered under Section 12(b) or Section 12(g) of the Exchange Act, there are no persons who need to file reports under Section 16(a) of the Exchange Act.





Code of Ethics





We adopted the Signature Exploration and Production Corp. Code of Ethics for the CEO and Senior Financial Officers (the “finance code of ethics”), a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer and other finance organization employees. A copy of the finance code of ethics may be obtained from the Company, free of charge, upon written request delivered to Signature Exploration and Production Corp. 3200 Southwest Freeway, Suite 3300, Houston, TX 77027.  If we make any substantive amendments to the finance code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to our Chief Executive Officer or Chief Financial Officer, we will disclose the nature of such amendment or waiver in a report on Form 8-K.





ITEM 11.  EXECUTIVE COMPENSATION





The following summary compensation table reflects all compensation awarded to, earned by, or paid to our Chief Executive Officer and president and other employees for all services rendered to us in all capacities during each of the years ended March 31, 2013, 2012 and 2011.





Summary Compensation Table





Name and Position
Year
Salary ($)
Bonus ($)
Stock Awards ($)
Option Awards

($)
Non-Equity Incentive Plan

Compensation
Nonqualified

Deferred Compensation Earnings

($)
All Other Compensation
TotalSteven Weldon, CEO, President and Director
2013
30,000
-
-
-
-
-
-
30,0002012
30,000
-
-
-
-
-
-
30,0002011
30,000
-
-
-
-
-
-
30,000





Directors’ Compensation





Directors are not currently compensated, although each is entitled to be reimbursed for reasonable and necessary expenses incurred on our behalf. All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. Officers are appointed annually by the Board of Directors and each executive officer serves at the discretion of the Board of Directors. Our board of directors does not have an audit or any other committee.





ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table presents information known to us, as of June 28, 2013, relating to the beneficial ownership of common stock by:




·
each person who is known by us to be the beneficial holder of more than 5% of our outstanding common stock;


·
each of our named executive officers and directors; and


·
our directors and executive officers as a group.




We believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them, except as noted.




Percentage ownership in the following table is based on 8,501,104 shares of common stock outstanding as of June 28, 2013.  A person is deemed to be the beneficial owner of securities that can be acquired by that person within 60 days from the date of this Annual Report upon the exercise of options, warrants or convertible securities.  Each beneficial owner’s percentage ownership is determined by dividing the number of shares beneficially owned by that person by the base number of outstanding shares, increased to reflect the shares underlying options, warrants or other convertible securities included in that person’s holdings, but not those underlying shares held by any other person.





Number of

Shares of Common Stock Beneficially OwnedName of Beneficial Owner
Percentage of Shares Beneficially OwnedSteven Weldon
3,745,212
44.0%Screaming Reach Investments, LLC
1,000,000
11.8%All directors and officers (1 person)
3,745,212
44.0%


___________


(1)
Unless otherwise noted, the address of each person listed is c/o Signature Exploration and Production Corp. 4700 Millenia Blvd, Suite 175, Orlando, FL 32839.








ITEM 13.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE





Not Applicable







ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES





Fiscal 2013
Fiscal 2012Audit Fees(1)
$29,000
$49,000Audit-Related Fees(2)
-0-
-0-Tax Fees(3)
-0-
-0-Subtotal
$29,000
$49,000All other Fees(4)
-0-
-0-Total
$29,000
$49,000





(1)
Audit Fees –Audit fees billed to the Company in FY 2012 by our former auditor, Mark Bailey and Company, Ltd. were for auditing the Company’s annual financial statements and reviewing the financial statements included in the Company’s Quarterly Reports on Form 10-Q.





(2)
Audit-Related Fees – There were no other fees billed by Mark Bailey and Company, Ltd, and during the last two fiscal years for assurance and related services that were reasonably related to the performance of the audit or review of the Company's financial statements and not reported under "Audit Fees" above.





(3)
Tax Fees– There were no tax fees billed during the last past fiscal year for professional services.





(4)
All Other Fees – There were no other fees billed by during the last two fiscal years for products and services provided.






19








Pre-approval of Audit and Non-Audit Services of Independent Auditor





The Board of Director’s policy is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. The Board of Director’s pre-approval policy with respect to non-audit services is included as Exhibit 99.1 of to this Annual Report. Pre-approval is generally provided for up to 12 months from the date of pre-approval and any pre-approval is detailed as to the particular service or category of services. The Board of Directors may delegate pre-approval authority to one or more of its members when expedition of services is necessary.





20








PART IV





ITEM 15.
EXHIBITS





EXHIBIT NUMBER
DESCRIPTION3.1
Form of Articles of Incorporation of Signature Exploration and Production Corp. (Previously filed on Form SB-2, filed with the Securities and Exchange Commission on February 12, 2002)3.2
Bylaws of Signature Exploration and Production Corp.(Previously filed on Form SB-2, filed with the Securities and Exchange Commission on February 12, 2002)10.1
Code of Ethics (Previously filed on Form 10-KSB, filed with the Securities and Exchange Commission on June 22, 2004)10.2
Diabetic Treatment Centers of America, Inc. 2005 Restricted Stock Plan (Previously filed on the Company’s Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on August 5, 2005)10.3
Joint Venture Agreement (Previously filed on Form 8-K, filed with the Securities and Exchange Commission on May 16,2006)10.4
2007 Amended Stock Option(5) (Previously filed on Form S-8 POS, filed with the Securities and Exchange Commission on February 8, 2008)10.5
Letter of Intent Dated February 3, 2009 (Previously filed on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2009)10.6
Letter of Intent Dated February 24, 2009 (Previously filed on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2009)10.7
Gating Agreement – Scott Allen (Previously filed on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2009)10.8
Gating Agreement – SEARA LLC (Previously filed on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2009)10.9
Gating Agreement – B&R Holding Company, LLC (Previously filed on Form 10-K, filed with the Securities and Exchange Commission on July 14, 2009)31.1
Certification of Chief Executive Officer Pursuant to Securities and Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*99.1
Audit Committee Pre-Approval Policy(2)101
XBRL Instant Document (IN ACCORDANCE WITH THE TEMPORARY HARDSHIP EXEMPTION PROVIDED BY RULE 201 OF REGULATION S-T, THE DATE BY WHICH THE INTERACTIVE DATA FILE IS REQUIRED TO BE SUBMITTED HAS BEEN EXTENDED BY SIX BUSINESS DAYS.)





*Filed Herewith






21








SIGNATURES




In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







SIGNATURE EXPLORATION AND PRODUCTION CORP.




Dated:  July 15, 2013




By:           /S/  Steven Weldon


Name:           Steven Weldon


Title:
Chief  Executive  Officer, President and Chairman




22





Table of Contents





Report of Independent Registered Certified Public Accounting Firm
F-1Report of previous Independent Registered Public Accounting Firm
F-2Financial Statements:Balance Sheets – March 31, 2012 and 2011
F-3Statements of Operations – Years ended March 31, 2013 and 2012and the Period from March 1, 2008 (Inception) to March 31, 2013
F-4Statements of Stockholders’ Equity (Capital Deficiency) – Years endedMarch 31, 2013 and 2012 and the Period from March 1, 2008 (Inception) to March 31, 2013
F-5Statements of Cash Flows – Years ended March 31, 2013 and 2013
F-6Notes to Financial Statements
F-7







LJ SULLIVAN CERTIFIED PUBLIC ACCOUNTANT, LLC


701 Brickell Avenue, Suite 1550


Miami, Florida 33131








REPORT OF IINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the Board of Directors and Stockholders of Signature Exploration and Production Corp.





I have audited the accompanying balance sheets of Signature Exploration and production Corp. as of March 31, 2013, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended.  Signature Exploration and Production Corp.’s management is responsible for these financial statements.  My responsibility is to express an opinion on these financial statements based on my audit.





I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting.  My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion the effectiveness of the company’s internal control over financial reporting.  Accordingly, I express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.





In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Signature Exploration and Production Corp. as of March 31, 2013, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming the company will continue as a going concern.  As discussed in Note 2 of the accompanying financial statements, the company has incurred losses, has not generated any revenue, and has negative operating cash flows since the inception of exploration activities.  These factors and the need for additional financing in order for the company to meet its business plan, raise substantial doubt about its ability to continue as a going concern.  Management’s plan to continue as a going concern is also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.











L J Sullivan Certified Public Accountant, LLC


Miami, Florida


July 12, 2013













REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders of Signature Exploration and Production Corp.  We have audited the accompanying balance sheets of Signature Exploration and Production Corp. as of March 31, 2012 and  2011, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year  period ended March 31, 2012 and from inception (March 1, 2008) to date. Signature Exploration and Production Corp’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Signature Exploration and Production Corp. as of March 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2012 and from inception to date, in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 of the accompanying financial statements, the Company has incurred losses, has not generated any revenue, and has negative operating cash flows since the inception of exploration activities. These factors and the need for additional financing in order for the Company to meet its business plans, raise substantial doubt about its ability to continue as a going concern. Management’s plan to continue as a going concern is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.








Mark Bailey & Company, Ltd.


Reno, NV


July 16, 2012















SIGNATURE EXPLORATION AND PRODUCTION CORP.


(An Exploration Stage Company)


Condensed Balance Sheets





AssetsMarch 31,


March 31,2013


2012Current assets:Cash

$
2,427


$
2,174Debt issuance costs


3,963



4,625Prepaid expenses and other current assets


100



450Total current assets


6,490



7,249Property and Equipment:Property and Equipment, less accumulated depreciation of  $777 and $477


128



428Oil and gas properties, unproven


-



36,000Total property and equipment


128



36,428Total assets

$
6,618


$
43,677Liabilities and Stockholders’Equity (Deficiency)Current liabilities:Accounts payable

$
11,886


$
6,560Accrued interest


208,088



163,998Other accrued expenses


45,751



13,456Convertible notes from shareholders


442,750



442,750Convertible notes from shareholders, at fair value


227,521



308,255Derivative liability, at fair value


260,311



334,497Total current liabilities


1,196,307



1,269,516Commitments and contingencies


-



-Stockholders’ equity (deficiency):Common stock, $0.0001 par value, 250,000,000 shares authorized 8,501,104 and 32,527,930 shares issued and outstanding at March 31, 3013 and March 31, 2012


851



3,253Additional paid-in capital


4,366,262



4,363,860Deficit accumulated related to abandoned activities


(1,676,223
)


(1,676,223
)Deficit accumulated during exploration stage


(3,880,579
)


(3,916,729
)Total stockholders’ equity (deficiency)


(1,189,689
)


(1,225,839
)Total liabilities and stockholders’ equity (deficiency)

$
6,618


$
43,677





The accompanying notes are an integral part of the financial statements





F-3








SIGNATURE EXPLORATION AND PRODUCTION CORP.


(An Exploration Stage Company)


Statements of Operations


For the years ended March 31, 2013 and 2012,


and the Period from March 1, 2008 (Inception) to March 31, 2013








2013


2012


Inception March 1, 2008 – March 31, 2013Net revenue

$
-


$
-


$
-Cost of revenue


-



-



-Gross profit (loss)


-



-



-Loss on oil and gas properties


36,000



-



168,189Stock compensation


-



-



2,085,078Investor relations


-



991



568,805General and administrative expenses


75,718



101,850



537,041Loss from continuing operations


(111,718
)


(102,841
)


(3,358,122
)Other income/(expense)Change in fair value of convertible notes


101,701



62,430



205,725Change in fair value of warrants


97,575



89,320



210,800Loss on extinguishment of debt


-



-



(177,941
)Loss on loan modification


-



-



(283,000
)Interest expense


(51,408
)


(63,672
)


(478,043
)Total other income/(expenses)


147,868



88,077



(522,459
)Net income/(loss)

$
36,150


$
(14,764
)

$
(3,880,581
)Weighted average common shares outstanding – basic and diluted


9,668,582



29,778,111



9,531,985Net loss per share - basic and diluted

$
(0.00
)

$
(0.00
)

$
(0.41
)







The accompanying notes are an integral part of the financial statements.


F-4








SIGNATURE EXPLORATION AND PRODUCTION CORP.


(An Exploration Stage Company)


Statements of Stockholders’ Equity (Deficiency)


For the years ended March 31, 2013 and 2012,


and the Period from March 1, 2008 (Inception) to March 31, 2013


Deficit


DeficitAccumulated


AccumulatedAdditional


Related to


DuringCommon stock


Paid-in


Abandoned


ExplorationShares


Amount


Capital


Activities


Stage


TotalBalance, March 1, 2008


886,816


$
89


$
1,469,648


$
(1,676,223
)

$
-


$
(206,486
)Net loss


-



-



-



-



(9,845
)


(9,845
)Balance, March 31, 2008


886,816


$
89


$
1,469,648


$
(1,676,223
)


(9,845
)

$
(216,331
)Issuance of stock as compensation, in March 2009


10,326



1



515



-



-



516Loss on loan modification


-



-



202,500



-



-



202,500Net loss


-



-



-



-



(341,967
)


(341,967
)Balance, March 31, 2009


897,143


$
90


$
1,672,663


$
(1,676,223
)

$
(351,812
)

$
(355,282
)Issuance of stock for debt conversions


2,162,254



216



21,406



-



-



21,622Compensation expense – employment contracts


3,873,000



387



1,030,653



-



-



1,031,040Compensation expense – stock option


-



-



984,600



-



-



984,600Compensation expense – consulting


80,137



8



89,249



-



-



89,257Beneficial conversion features


-



-



133,000



-



-



133,000Loss on loan modification


-



-



258,441



-



-



258,441Net loss


-



-



-



-



(2,964,861
)


(2,964,861
)Balance, March 31, 2010


7,012,534


$
701


$
4,190,012


$
(1,676,223
)

$
(3,316,673
)

$
(802,183
)Compensation expense – consulting


60,000



6



62,394



-



-



62,400Legal Retainer


28,570



3



9,997



-



-



10,000Net loss


-



-



-



-



(585,293
)


(585,293
)Balance, March 31, 2011


7,101,104


$
710


$
4,262,403


$
(1,676,223
)

$
(3,901,966
)

$
(1,315,076
)
 Compensation – employment contracts


24,026,826



2,403



(2,403
)


-



-



-Issuance of stock for debt conversions


1,400,000



140



103,860



-



-



104,000Net loss


-



-



-



-



(14,763
)


(14,763
)Balance, March 31, 2012


32,527,930


$
3,253


$
4,363,860


$
(1,676,223
)

$
(3,916,729
)

$
(1,225,839
)Compensation – employment contracts


(24,026,826
)


(2,403
)


2,403Sale of stock subscription






6



11,494











12,500Return of stock sold






(6
)


(11,494
)










(12,500
)Rounding






1Net income


-



-



-



-



36,150



36,150Balance, March 31, 2013


8,501,104


$
851


$
4,366,263


$
(1,676,223
)

$
(3,880,579
)

$
(1,189,689
)







F-5







SIGNATURE EXPLORATION AND PRODUCTION CORP.


(An Exploration Stage Company)


Statements of Cash Flows


For the years ended March 31, 2013 and 2012,


and the Period from March 1, 2008 (Inception) to March 31, 2013





2013


2012


Inception (March 1, 2008 – March 31, 2013)Cash flows from operating activities:Net loss

$
36,150


$
(14,763
)

$
(3,880,581
)Adjustments to reconcile net loss to net cash used inoperating activities:Depreciation expense


300



207



777Loss on oil and gas assets


36,000



-



168,189Stock compensation


-



-



2,172,350Loss on loan modification


-



-



283,000Loss on extinguishment of debt


-



-



177,941Change in fair value of convertible notes


(101,701
)


(62,430
)


(205,725
)Change in fair value of warrants


(97,575
)


(89,320
)


(210,800
)Non-cash interest


7,317



18,705



388,467Changes in operating assets and liabilities:Other assets


350



5,463



5,363Accounts payable


5,327



6,197



(5,642
)Accrued expenses


76,385



39,423



112,254Net cash used in operating activities


(37,447
)


(96,518
)


(994,406
)Cash flows from investing activities:Investment in oil and gas properties


-



-



(72,189
)Purchase of property and equipment


-



-



(906
)Net cash used in investing activities


-



-



(73,095
)Cash flows from financing activities:Proceeds from issuance of debt to stockholders


37,700



51,000



1,069,200Net cash provided by financing activities


37,700



51,000



1,069,200Net increase (decrease) in cash


253



(45,518
)


1,699Cash, beginning of year

$
2,174


$
47,692


$
728Cash, end of year

$
2,427


$
2,174


$
2,427Supplemental disclosures of cash flow information:Cash paid during the year for:Interest

$
-


$
-


$
-Non-cash investing and financing activities:Stock issued for legal retainer included in other assets

$
-


$
-


$
5,462Convertible debt issued for oil and gas lease agreements

$
-


$
-


$
96,000Stock issued to settle convertible debt

$
-


$
104,000


$
125,250Stock issued to settle interest expense

$
-


$
-


$
373












F-6







SIGNATURE EXPLORATION AND PRODUCTION CORP.


Notes to Financial Statements


March 31, 2013 and 2012





NOTE 1 – ORGANIZATION AND PRINCIPLES OF CONSOLIDATION





Reporting Entity. Signature Exploration and Production Corp.  (“Signature” or “the Company”) was incorporated on April 4, 2001 under the laws of the State of Delaware. The Company is authorized to issue 250,000,000 shares of common stock, par value $.0001. As of March 1, 2008, the Company became an exploration stage company engaged in the acquisition and development of crude oil and natural gas leases in the United States. We have reported our Statement of Operations and Statement of Cash Flows from the inception as an exploration stage company to the current reporting period of March 31, 2013. The Company’s office is located in Houston, Texas.





NOTE 2 – BASIS OF PRESENTATION





The Company’s financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since April 4, 2001, which losses have caused an accumulated deficit of approximately $5,568,000 at March 31, 2013 of which $3,881,000 has been accumulated during our current exploration activities. In addition, the Company has consumed cash in its operating activities of approximately $97,000 and $184,000 for the years ended March 31, 2013 and 2012, respectively. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.





Management has been able, thus far, to finance the losses through a public offering, private placements and obtaining operating funds from stockholders. The Company is continuing to seek sources of financing.  There are no assurances that the Company will be successful in achieving its goals.





In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. The Company is currently acquiring and developing crude oil and natural gas leases.   Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.





NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Exploration Stage Company. The Company is considered to be in the exploration stage.





Cash and Cash Equivalents.The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.





Revenue Recognition.Revenue associated with the production and sales of crude oil, natural gas, natural gas liquids and other natural resources owned by the Company will be recognized when production is sold to a purchaser at a fixed or determinable price when delivery has occurred and title passes from the Company to its customer, and if the collectability of the revenue is probable.





Use of Estimates.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.




F-7





SIGNATURE EXPLORATION AND PRODUCTION CORP.


Notes to Financial Statements


March 31, 2013 and 2012





NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED







Income Taxes.  The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in financial statements or tax returns. Deferred tax items are reflected at the enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.   Due to the uncertainty regarding the success of future operations, management has valued the deferred tax asset allowance at 100% of the related deferred tax assets.





Loss per Share. The Company’s basic loss per share has been calculated using the weighted average number of common shares outstanding during the period. The Company has 74,172,730 potentially dilutive common shares at March 31, 2013.  However, such common stock equivalents were not included in the computation of diluted net loss per share as their inclusion would have been anti-dilutive.





Oil and gas properties.In July 2009, the Company changed its method of accounting for its oil and gas exploration and development activities from the full cost method to the successful efforts method. This change did not affect our financial statements, as we did not have any activity at that time. Although the full cost method of accounting for oil and gas exploration and development activities continue to be an accepted alternative, the successful efforts method of accounting is the preferred method. The Company believes the successful efforts method provides a more transparent representation of its results of operations and the ability to assess the Company’s investments in oil and gas properties for impairment based on their estimated fair values rather than being required to base valuation on prices and costs as of the balance sheet date.





In accordance with the successful efforts method of accounting for oil and gas properties, costs of productive wells, developmental dry holes and productive leases are capitalized into appropriate groups of properties based on geographical and geological similarities. These capitalized costs are amortized using the unit-of-production method based on estimated proved reserves. Proceeds from sales of properties are credited to property costs, and a gain or loss is recognized when a significant portion of an amortization base is sold or abandoned.





Exploration costs, such as exploratory geological and geophysical costs, delay rentals and exploration overhead, are charged to expense as incurred. Exploratory drilling costs, including the cost of stratigraphic test wells, are initially capitalized but charged to exploration expense if and when the well is determined to be nonproductive. The determination of an exploratory well’s ability to produce must be made within one year from the completion of drilling activities. The acquisition costs of unproved acreage are initially capitalized and are carried at cost, net of accumulated impairment provisions, until such leases are transferred to proved properties or charged to exploration expense as impairments of unproved properties.




F-8





SIGNATURE EXPLORATION AND PRODUCTION CORP


Notes to Financial Statements


March 31, 2013 and 2012








NOTE 4 – FAIR VALUE MEASUREMENTS





The Company holds certain financial liabilities that are measured at fair value on a recurring basis in accordance with ASC Topic 825-10-15.   ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:





Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.





Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.





Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 fair value elections are made on an instrument-by-instrument basis. The Company uses Level 3 inputs to value convertible notes and detachable warrants accounted for as derivatives.





The tables below detail the Company’s assets and liabilities measured at fair value.





Fair Value Measurements March 31, 2013Level 1


Level 2


Level 3


TotalConvertible notes from stockholders, at fair value

$
-


$
-


$
227,521


$
227,521Derivative liability

$
-


$
-


$
260,311


$
260,311Fair Value Measurement March 31, 2012Level 1


Level 2


Level 3


TotalConvertible notes from stockholders, at fair value

$
-


$
-


$
308,255


$
308,255Derivative liability

$
-


$
-


$
334,497


$
334,497







F-9





SIGNATURE EXPLORATION AND PRODUCTION CORP


Notes to Financial Statements


March 31, 2013 and 2012





NOTE 4 – FAIR VALUE MEASUREMENTS, CONTINUED




The following table presents the changes in Level 3 instruments measured on a recurring basis for the years ended March 31, 2013 and 2012:




Convertible Notes


Derivative Liability


TotalBalance, March 31, 2011

$
440,775


$
393,726


$
834,501Realized and unrealized gains (losses);Included in other income (expense)


(62,430
)


(89,320
)


(151,750
)Purchases, issuances, and settlements


(70,090
)


30,091



(39,999
)Balance, March 31, 2012

$
308,255


$
334,497


$
642,752Realized and unrealized gains (losses);Included in other income (expense)


(101,701
)


(97,575
)


(199,276
)Purchases, issuances, and settlements


20,967



23,389



(44,356
)Balance, March 31, 2013

$
227,521


$
260,311


$
487,832





The convertible notes and derivative liability in the preceding tables were measured at fair value, in accordance with ASC Topic 825-10-15, as one instrument and that fair value was allocated to each component.  The Company made the fair value election due to this methodology providing a fairer representation of the economic substance of the transaction within the fair value hierarchy. Due to the lack of relevant and market reflective Level 1 and Level 2 inputs, the Company valued the instruments using Level 3 inputs, which require significant judgment and estimates on behalf of management in developing model assumptions. The factors considered in developing those assumptions included; the Company’s inability to attract investment at terms more favorable to the Company, the lack of success in developing oil properties thus far, the continuing reduction in the net assets of the Company and the Company’s history of default on currently outstanding debt.




Based on management’s evaluation of the assumptions discussed above, the liabilities were initially recorded in an amount equal to the transaction price, which represented the fair value of the total liability at initial recognition. The model used by the Company is calibrated so that the model value at initial recognition equals the transaction price. On an ongoing basis the fair value model used in valuing the convertible notes and derivative liability utilizes the following inputs; exercise price per warrant, conversion price per share, contract term, volatility, current stock prices and risk free rates. The following assumptions were made in the model (1) risk free interest rate of 0.18% to 0.63%, (2) remaining contractual life of 1 to 4.87 years, (3) expected stock price volatility of 797% and (4) expected dividend yield of zero.





The carrying amounts of cash, accounts payable and accrued expenses approximate their respective fair values because of the short-term maturity of these items. The carrying amount of the Company’s convertible notes from shareholders represents the face value of the notes, which approximated fair value at the time of issuance.





F-10





SIGNATURE EXPLORATION AND PRODUCTION CORP


Notes to Financial Statements


March 31, 2013 and 2012





NOTE 5 – OIL AND GAS PROPERTIES





Catron Prospect – Carton County, NM





We acquired a lease of 1,320 acres in Catron County, New Mexico for $36,000.  The lease term was for ten years.  The Department of the Interior canceled the lease and $36,000 was expensed in the year ended March 31, 2013.








NOTE 6 – DEFERRED INCOME TAXES





At March 31, 2013, the Company had net operating loss carryforwards for income tax purposes of approximately $4,173,000 available as offsets against future taxable income.  The net operating loss carryforwards are expected to expire at various times from 2024 through 2031. Utilization of the Company’s net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions.  Such an ownership change would substantially increase the possibility of net operating losses expiring before complete utilization.





The tax effects of the primary temporary differences giving rise to the Company’s deferred tax assets and liabilities are as follows for the year ended March 31, 2013:





Deferred tax assets:

2013


2012Net operating loss carryforward

$
1,583,000


$
1,521,000Stock based compensation


-



-Total deferred tax assets


1,583,000



1,521,000Less valuation allowance


(1,583,000
)


(1,521,000
)Net deferred tax asset

$
-


$
-








Because of the Company’s lack of earnings history, the deferred tax assets have been fully offset by a valuation allowance. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during those periods that the temporary differences


become deductible. The Company believes that the tax positions taken in its tax returns would be sustained upon examination by taxing authorities. During the year ended March 31, 2013, the decrease in the deferred tax asset valuation allowance amounted to approximately $62,000.





The provision for income taxes is different than would result from applying the U.S. statutory rate to profit before taxes for the reasons set forth in the following reconciliation:


2013


2012Tax benefit computed at U.S. statutory rates

$
(205,000
)

$
(5,000
)Increases (decreases) in taxes resulting from:Non-deductible items


22,000



(53,000
)Change in valuation allowance


198,000



63,000State taxes


(15,000
)


(5,000
)Total

$
-


$
-







F-11





SIGNATURE EXPLORATION AND PRODUCTION CORP.


Notes to Financial Statements


March 31, 2013





NOTE 7 – CONVERTIBLE NOTES AND WARRANTS





Convertible Notes from Shareholders





The Company has debt outstanding to shareholders, which was issued between 2006 and 2009. The debt was not issued with warrants and some of the debt was not originally issued with a conversion feature. During fiscal years 2009 and 2010, the notes without conversion features were modified to contain a conversion feature, for which the Company recorded a loss on the modification.  Convertible notes from shareholders issued during fiscal year 2010 contained a beneficial conversion feature, with the discount being amortized over the term of the note, see table below.


For the year ended March 31, 2013


For the year ended March 31, 2012Convertible Notes


Accrued Interest


Convertible Notes


Accrued InterestBalance, beginning of period

$
446,750


$
163,998


$
446,750


$
119,031Conversion to common stock


-



-



(4,000
)


-Accrued interest


-



44,090



-



44,967Balance, end of period

$
442,750


$
208,088


$
442,750


$
163,998





Convertible notes from shareholders accrue interest at a rate of 10 percent per annum. The note holders have the sole option of converting the principal and interest represented by these notes into our common stock at a strike price equal to a $0.01. The note holders will only be allowed to convert shares or portion thereof to the extent that, at the time of the conversion, the conversion will not result in the note holders beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





The Company is currently in default on the entire $442,750 of convertible notes from shareholders and the $208,088 of related accrued interest.  As of March 31, 2013, no shareholders have made demands for payment of these loans.




Convertible Notes from Shareholders at fair value and derivative liability





The table below provides the details of the convertible notes from shareholders at fair value and the derivative liability at fair value for each issuance of convertible notes with detachable warrants for which a fair value election was made. See Note 4 for a discussion of the fair value election and a reconciliation of the change in the fair value of the notes and derivative liability.


Notes


Derivative

Liability (Warrants)Month Notes were issued

Face Value on Issuance Date


Proceeds


Fair Value at March 31, 2012


Fair Value at March 31, 2013


Fair Value at March 31, 2012


Fair Value at March 31, 2013December 2009(2)

$
352,942


$
300,000


$
47,109


$
44,652


$
113,204


$
62,748January 2010


64,706



60,000



7,919



4,785



9,493



4,746February 2010 (1)


352,942



300,000



156,694



95,706



114,872



64,483August 2010


58,824



50,000



30,482



18,148



30,464



17,382March 2011


70,590



60,000



34,006



20,441



34,062



19,672August 2011


47,060



40,000



27,012



16,157



27,455



15,940February 2012


11,766



11,000



5,033



3,044



4,947



2,837August 2012


27,030



23,000



-



15,295



-



16,995November 2012


13,178



11,200



-



7,295



-



8,118February 2013


4,118



3,500



-



1,998



-



2,120$
1,003,156


$
858,700


$
308,255


$
227,521


$
334,497


$
260,311


(1)
A portion of the proceeds from this debt, $100,000 was not received until April 2010.


(2)
$100,000 of this debt was converted to 1,000,000 shares of common stock.


F-12


SIGNATURE EXPLORATION AND PRODUCTION CORP.
 Notes to Financial Statements
 March 31, 2013 and 2012
 
 
 NOTE 7 – CONVERTIBLE NOTES AND WARRANTS - CONTINUED


The notes above were all issued with a 15% original issue discount to the note holders and have a nominal interest rate of 16.63%. The note holders may convert, into shares of common stock, any portion of the notes that are outstanding, whether such portion represents principle or interest at $0.10. All of the convertible debt at fair value has a one-year maturity. Therefore, at March 31, 2013 $858,830 of the debt is in default, although no shareholders have made demands for payment of these loans.




Each note was issued with a five-year warrant to purchase shares of common stock of the Company.  The warrants expire at various dates from 2014 to 2017. The table below shows the change in the number of warrants outstanding as of March 31, 2013 and 2012.


Warrants OutstandingNumber of Shares


Exercise PriceOutstanding at March 31, 2011


11,332,946


$
0.15-$0.10Warrants issued


588,260


$
0.15Warrants exercised


-



-Warrants expired/cancelled


-



-Outstanding at March 31, 2012


11,921,206


$
0.15-$0.10Warrants issued


443,560


$
0.15Warrants exercised


-Warrants expired/cancelled


-Outstanding at March 31, 2013


12,364,766


$
0.15-$0.10





The convertible notes and warrants issued between December 2009 and February 2010 originally contained substantially higher conversion and exercise prices, however, due to the anti-dilution provisions in the agreements, and as a result of the debt and warrants issued in August 2010, all of the previous exercise prices were revised to be $0.10, which was the conversion price contained in the August 2010 note agreement.





All of the notes and warrants contain an anti-dilution adjustment that states the conversion and exercise price may not be adjusted below $0.01.  In addition, the note holder is only allowed to convert shares or exercise warrants or portions thereof to the extent that at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





As part of its ongoing analysis for the proper classification of debt and equity instruments, the Company evaluated how many shares would need to be issued if all debt was converted and all warrants were exercised at the lowest possible price of $0.01. If such conversions and exercises were to take place the Company would have to issue 291,309,990 additional shares. Currently there are 250,000,000 shares authorized, leaving a deficit of 28,372,164 shares, which takes into account the 19,871,060 shares already outstanding at March 31, 2013.





In accordance with ASC topic 815-40, the Company evaluated whether an additional liability should be recorded to reflect the deficit in authorized shares.  Specifically, the Company considered the guidance in ASC 840-40-35-12, which allows for reclassification of contracts on a systematic, rational and consistently applied basis. Based on this guidance the Company determined that the only potentially convertible shares not currently recorded as a liability relate to the convertible notes from shareholders, in the amount of $446,750. As this debt is already convertible at


$0.01 the Company believes this debt would be converted before any other notes and warrant exercises, causing the Company to have enough authorized shares to issue upon the potential conversion of those 44,675,000 shares. Therefore, no additional liability was recorded at March 31, 2013.





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NOTE 8 – CAPITAL TRANSACTIONS





Employment Agreements





Mr. Alan Gaines, our former Chief Executive Officer and Chairman, had entered into an Employment Agreement with the Company for a one-year term beginning May 2, 2011.  Mr. Gaines would have been compensated with 12,012,413 shares of restricted common stock, payable upon the completion of a Qualified Acquisition or Qualified Equity Raise.  An expense of $960,993 would have been recorded as stock compensation at the time a Qualified Acquisition or Qualified Equity Raise is completed.  Upon the resignation of Mr. David on April 18, 2012, the shares were canceled and no expense was recognized.





Dr. Amiel David, our former Chief Operating Officer, has entered into an Employment Agreement with the Company for a one-year term beginning May 2, 2011. Dr. David would have been compensated with 12,013,413 shares of restricted common stock, payable upon the completion of a Qualified Acquisition or Qualified Equity Raise.  An expense of $961,073 would have been recorded as stock compensation at the time a Qualified Acquisition or Qualified Equity Raise is completed.  Upon the resignation of Mr. David on April 18, 2012, the shares were canceled and no expense was recognized.





On September 29, 2009, the Company entered into an Employment Agreement with Steven Weldon, our Chief Executive Officer.  As compensation for entering into this Agreement, the Company granted and issued to Mr. Weldon 3,600,000 shares of the common stock of the Company. The stock is restricted as defined by the rules and regulations promulgated under the Securities Act of 1933, as amended.  The shares are fully paid and non-assessable. An expense of $900,000 was recognized for year ended March 31, 2010.   In the event that Mr. Weldon’s employment pursuant to this agreement is terminated for any reason, 100,000 shares per month remaining on the contract will be contributed back to the Company for cancellation.





The shares issued pursuant to this Agreement were subject to certain terms and conditions. The shares were represented by 36 certificates of 100,000 shares each.  The Company is holding all Certificates not delivered to the Executive.  One certificate representing 100,000 shares has been delivered to the Executive on the 7th of each month beginning November 7, 2009.





Note Conversions





During the year ended March 31, 2012, the Company converted a total of $104,000 of notes payable from certain Note Holders into common stock of the Company.  The Company issued 1,400,000 shares of our common stock to satisfy the principal balances of the notes payable.





NOTE 9 – STOCK OPTION PLAN





On February 6, 2008, the Board of Directors adopted the Signature Exploration and Production Corp. 2007 Amended Stock Option Plan (“2007 Plan”).  Under the 2007 Plan, 8,000,000 shares of the Company’s restricted common stock may be issuable upon the exercise of options issued to employees, advisors and consultants.





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SIGNATURE EXPLORATION AND PRODUCTION CORP.


Notes to Financial Statements


March 31, 2013 and 2012








NOTE 9 – STOCK OPTION PLAN - CONTINUED





At March 31, 2013 the Company has no stock options outstanding.








NOTE 10 – SUBSEQUENT EVENT





June 2013 Convertible Notes and Warrants





During June 2013, the Company entered into two Convertible Note Agreements ("Notes") for a total of $30,588.  The Company received aggregate proceeds of $26,000 reflecting a 15% original issue discount to the Note holders and a nominal rate of 16.63%.





The Notes are due in June 2014.  The note holders may convert any portion of the Notes that are outstanding, whether such portion represents principal or interest, into shares of common stock of the Company at a price equal to $0.10. The Notes includes an anti-dilution adjustment that may not be adjusted below $0.01.





Simultaneously with the issuance of these Notes, the Company issued to the Note holders a 5-year warrant (the "Warrants") to purchase 131,780 shares of common stock of the Company.  The Warrants are exercisable at a price equal to $0.15. The Warrants include an anti-dilution adjustment that may not be adjusted below $0.01.





The note holders will only be allowed to convert shares or exercise warrants or portion thereof to the extent that, at the time of the conversion or exercise, the conversion or exercise will not result in the note holder beneficially owning more than 9.9% of the issued and outstanding common shares of the Company.





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