**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, DC 20549**

 

FORM 10-K

AMENDMENT #1

 

(Mark One)

x**ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**         EXCHANGE ACT OF 1934**

For thefiscal year ended: December 31, 2008

 

o**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**        EXCHANGE ACT OF 1934**

Commission File No.: 333-141993

 

**PETROCORP INC.**--------------------------------------------------------------------------(Exact Name of Registrant as Specified in Its Charter)

 
| DELAWARE

---------------------------------------------------------  (State or Other Jurisdiction of Incorporation

            or  Organization) | 20-5134664

-----------------------------------------------  (I.R.S. Employer Identification No.) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|

** **

1065 Dobbs Ferry Road, White Plains, New York 10607

---------------------------------------------------------------------------

(Address of Principal Executive Offices)

 

(914) 674-4373

-------------------------------------------------------------------

(Registrant’s Telephone Number, Including Area Code)

 

Securitiesregistered pursuant to Section 12(b) of the Act:  None

 

Securitiesregistered pursuant to Section 12(g) of the Act:  Common Stock, par value $.0001

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yeso   No x

 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or 15(d) of the Act.   Yes o   No x

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.   Yes x   No o

 

Indicate by check mark if disclosure of delinquent filerspursuant to Item 405 of Regulation S-K (s 229.405) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 

10-K.   o

 

----

 

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

 

   Large accelerated filer   Accelerated filer  Non-accelerated filer   Smaller reporting company x

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct).

   Yes  No x

 

Theaggregate market value of the voting and non-voting common equity held bynon-affiliates of the registrant as of February 28, 2009:  $10,248,000.

 

The numberof shares of the registrant’s common stock outstanding as of February 28, 2009: 22,680,000.

 

 

 

 

 

 

 

2

----

 

**EXPLANATORY NOTE**

 

On December 22, 2009 we received a commentletter from the Securities and Exchange Commission relating to our AnnualReport on Form 10-K for the fiscal year ended December 31, 2008 which we filedwith the Securities and Exchange Commission on April 9, 2009 (the “OriginalReport”).  The primary purpose of this amendment to the OriginalReport (the “Amendment”) is to respond to the comment letter.

 

In this Amendment we have revised thediscussion of our controls and procedures and our internal control overfinancial reporting included in Item 9A, “Disclosure Controls and Procedures”.

 

This Amendment includes informationcontained in the Original Report, and we have made no attempt in the Amendmentto modify or update the disclosures presented in the Original Report, except asidentified above.  The disclosures in this Amendment continue tospeak as of the date of the Original Report, and do not reflect eventsoccurring after the filing of the Original Report.  Accordingly, thisAmendment should be read in conjunction with our other filings made with theSecurities and Exchange Commission subsequent to the filing of the OriginalReport, including any amendments to those filings.  The filing ofthis Amendment shall not be deemed to be an admission that the Original Report,when made, included any untrue statement of a material fact or omitted to statea material fact necessary to make a statement not misleading.

 

 

 

 

 

 

 3

----

**Item 9A. Controls and Procedures**

 

**Disclosure Controls and Procedures**

 

Regulations under the Securities ExchangeAct of 1934 (the “Exchange Act”) require public companies to maintain“disclosure controls and procedures,” which are defined as controls and otherprocedures that are designed to ensure that information required to bedisclosed by the issuer in the reports that it files or submits under theExchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Securities and Exchange Commission's rules andforms.  Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports that it files or submitsunder the Exchange Act is accumulated and communicated to the issuer'smanagement, including its principal executive and principal financial officers,or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure.

 

We conducted an evaluation, with theparticipation of our Chief Executive Officer and Chief Financial Officer, ofthe effectiveness of our disclosure controls and procedures as of December 31,2008.  Based on that evaluation, our Chief Executive Officer andChief Financial Officer have concluded that as of December 31, 2008, ourdisclosure controls and procedures were not effective at the reasonableassurance level due to the material weaknesses described below.

 

In light of the material weaknessesdescribed below, we performed additional analysis and other post-closingprocedures to ensure our financial statements were prepared in accordance withgenerally accepted accounting principles.  Accordingly, we believethat the financial statements included in this report fairly present, in allmaterial respects, our financial condition, results of operations and cashflows for the periods presented.

 

A material weakness is a controldeficiency (within the meaning of the Public Company Accounting Oversight Board(PCAOB) Auditing Standard No. 2) or combination of control deficiencies, thatresult in more than a remote likelihood that a material misstatement of theannual or interim financial statements will not be prevented ordetected.  Management has identified the following two materialweaknesses which have caused management to conclude that, as of December 31,2008, our disclosure controls and procedures were not effective at thereasonable assurance level:

 

1.           Wedo not have written documentation of our internal control policies andprocedures.  Written documentation of key internal controls overfinancial reporting is a requirement of Section 404 of the Sarbanes-Oxley Actwhich is applicable to us for the year ending December 31,2008.  Management evaluated the impact of our failure to have writtendocumentation of our internal controls and procedures on our assessment of ourdisclosure controls and procedures and has concluded that the controldeficiency that resulted represented a material weakness.

 

                 2.           Wedo not have sufficient segregation of duties within accounting functions, whichis a basic internal control.  Due to our size and nature, segregationof all conflicting duties may not always be possible and may not beeconomically feasible.  However, to the extent possible, theinitiation of transactions, the custody of assets and the recording oftransactions should be performed by separate individuals.  Managementevaluated the impact of our failure to have segregation of duties on ourassessment of our disclosure controls and procedures and has concluded that thecontrol deficiency that resulted represented a material weakness.

 

To address these material weaknesses,management performed additional analyses and other procedures to ensure thatthe financial statements included herein fairly present, in all materialrespects, our financial position, results of operations and cash flows for theperiods presented.

 

4

----

**Management'sReport on Internal Control Over Financial Reporting**

 

Our management is responsible forestablishing and maintaining adequate internal control over financialreporting.  Internal control over financial reporting is defined inRule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a processdesigned by, or under the supervision of, the issuer’s principal executive andprincipal financial officers and effected by the issuer’s board of directors,management and other personnel, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with accounting principles generallyaccepted in the United States of America and includes those policies andprocedures that:

 
|   |  | Pertain to the maintenance of records that in reasonable detail accurately	and fairly reflect the transactions and dispositions of the assets of the	issuer; |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 
|   |  | Provide reasonable assurance that transactions are recorded as  necessary to permit preparation of financial statements in accordance with  accounting principles generally accepted in the United States of America and  that receipts and expenditures of the Company are being made only in  accordance with authorizations of management and directors of the issuer; and |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
 



Provide reasonable assurance regarding prevention or timely  detection of unauthorized acquisition, use or disposition of the issuer’s  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 detectmisstatements.  Projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.  All internal control systems,no matter how well designed, have inherent limitations.  Therefore,even those systems determined to be effective can provide only reasonableassurance with respect to financial statement preparation andpresentation.  Because of the inherent limitations of internalcontrol, there is a risk that material misstatements may not be prevented ordetected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financialreporting process.  Therefore, it is possible to design into theprocess safeguards to reduce, though not eliminate, this risk.

 

As of the end of our most recent fiscalyear, management assessed the effectiveness of our internal control overfinancial reporting based on the criteria for effective internal control overfinancial reporting established in Internal Control—Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway Commission("COSO") and SEC guidance on conducting such assessments.  Basedon that evaluation, they concluded that, as of December 31, 2008, suchinternal control over financial reporting was not effective.  Thiswas due to deficiencies that existed in the design or operation of our internalcontrol over financial reporting that adversely affected our internal controlsand that may be considered to be material weaknesses.

 

The matters involving internal controlover financial reporting that our management considered to be materialweaknesses under the standards of the Public Company Accounting Oversight Boardwere: (1) lack of a functioning audit committee due to a lack of a majority ofindependent members and a lack of a majority of outside directors on our boardof directors, resulting in ineffective oversight in the establishment andmonitoring of required internal controls and procedures; and (2) inadequatesegregation of duties consistent with control objectives of having segregationof the initiation of transactions, the recording of transactions and thecustody of assets.  The aforementioned material weaknesses wereidentified by our Chief Financial Officer in connection with the review of ourfinancial statements as of December 31, 2008.

 

5

 

Management believes that the materialweaknesses set forth in items (1) and (2) above did not have an effect on ourfinancial results.  However, management believes that the lack of a functioningaudit committee and the lack of a majority of outside directors on our board ofdirectors results in ineffective oversight in the establishment and monitoringof required internal controls and procedures, which could result in a materialmisstatement in our financial statements in future periods.

 

This annual report does not include anattestation report of the Company's registered public accounting firm regardinginternal control over financial reporting.  Management's report wasnot subject to attestation by the Company's registered public accounting firmpursuant to temporary rules of the SEC that permit the Company to provide onlythe management's report in this annual report.

 

**Management'sRemediation Initiatives**

 

In an effort to remediate the identifiedmaterial weaknesses and other deficiencies and enhance our internal controls,we have initiated, or plan to initiate, the following series of measures:

 

We will increase our personnel resourcesand technical accounting expertise within the accounting function when fundsare available to us. First, we will create a position to segregate dutiesconsistent with control objectives of having separate individuals perform (i)the initiation of transactions, (ii) the recording of transactions and (iii)the custody of assets. Second, we will create a senior position to focuson financial reporting and standardizing and documenting our accounting procedureswith the goal of increasing the effectiveness of the internal controls inpreventing and detecting misstatements of accounting information. Third, weplan to appoint one or more outside directors to our board of directors whoshall be appointed to an audit committee resulting in a fully functioning auditcommittee who will undertake the oversight in the establishment and monitoringof required internal controls and procedures such as reviewing and approvingestimates and assumptions made by management when funds are available to us. Weanticipate the costs of implementing these remediation initiatives will beapproximately $50,000 to $100,000 a year in increased salaries, legal andaccounting expenses.

 

Management believes that the appointmentof one or more outside directors, who shall be appointed to a fully functioningaudit committee, will remedy the lack of a functioning audit committee and alack of a majority of outside directors on our Board.

 

We anticipate that these initiatives willbe at least partially, if not fully, implemented by December 31, 2010.  Additionally,we plan to test our updated controls and remediate our deficiencies by December31, 2009.

 

**Changes in Internal Control over Financial Reporting**

 

There have been no changes in our internalcontrol over financial reporting (as such term is defined in Rules 13a-15(f)and 15d-15 (f) under the Exchange Act) during the fourth quarter of 2008 thathave materially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

 

 

 6

 

**PART IV**

 

**Item 15.Exhibits, Financial Statement Schedules**

 

31.1

Certification  Pursuant to Rule 13a-14(a) and 15d-14(a) (4)*

31.2

Certification  Pursuant to Rule 13a-14(a) and 15d-14(a) (4)*

32

Certification  Pursuant to Section 1350 of Title 18 of the United States Code*

 

*Filed herewith.

 

 

**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

Date:  March  19, 2010

**Petrocorp Inc**.

 

 

 

 

By:

/s/ James  Fitzsimons

 

 

     James Fitzsimons

 

 

     Chief Executive Officer

 

 

 

 

By:

/s/ Stephen M.  Siedow

 

 

     Stephen M. Siedow

 

 

     Chief Financial Officer

 

 

 

 

 

7

**Item8. Financial Statements and Supplementary Data**

** **

Petrocorp Inc. 

 

(An Exploration Stage Company)

 

December 31, 2008 and2007

 

Index to ConsolidatedFinancial Statements

 

 

 

Contents

Page(s)

 

 

Report  of Independent Registered Public Accounting Firm

F-2

 

 

Balance  Sheets at December 31, 2008 and 2007

F-3

 

 

Consolidated  Statements of Operations for the year ended December 31, 2008 and 2007 and  for the period 

F-4

     June 19, 2006 (inception) through December 31, 2008

 

 

 

Consolidated  Statement of Stockholders’ Equity for the period June 19, 2006 (inception)  through

F-5

     December 31, 2008

 

 

 

Consolidated  Statements of Cash Flows for the year ended December 31, 2008 and 2007 and  for the period 

F-6

    June 19, 2006 (inception) through December 31, 2008

 

 

 

Notes  to the Consolidated Financial Statements

F-7  to F-17
 
F-1

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

 

Tothe Board of Directors and Stockholders of

PetrocorpInc.

White Plains , New York

 

Wehave audited the accompanying consolidated balance sheets of Petrocorp Inc. and subsidiaries (an exploration stage company)(collectively, “Petrocorp” or the “Company”) as of December 31, 2008 and2007 and the related statements of operations, stockholders’ equity and cashflows for the years then ended, and for theperiod June 19, 2006 (inception) through December 31, 2008.  These consolidatedfinancial statements are the responsibility of the Company’s management.  Ourresponsibility is to express an opinion on these financial statements based onour audits.

 

Weconducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States).  Those standards require that weplan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement.  The Company is not required tohave, nor were we engaged to perform, an audit of its internal control overfinancial reporting. Our audit included consideration of internal control overfinancial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company's internal control over financialreporting.  Accordingly, we express no such opinion.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements.  An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluatingthe overall financial statement presentation.  We believe that our auditsprovide a reasonable basis for our opinion.

 

The Company’s consolidated balance sheet as of December 31,2008, and the related statements of operations, stockholders’ equity and cashflows for the year then ended have been restated.  The restatements of thefinancial statements are described in Note 3.

 

Inour opinion, the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of the Company at December31, 2008 and 2007 and the results of its operations and its cash flows for theyears then ended, and for the period June 19,2006 (inception) through December 31, 2008, in conformity with accountingprinciples generally accepted in the United States of America.

 

Theaccompanying consolidated financial statements have been prepared assuming thatthe Company will continue as a going concern.  As discussed in Note 3 to theconsolidated financial statements, the Company had a deficit accumulated duringthe exploration stage, a net loss from operations and net cash used inoperations for the year ended December 31, 2008.  These factors raisesubstantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3.  Thefinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

 

 

* /s/Li & Company, PC*

Li & Company, PC

 

 

Skillman, New Jersey

April3, 2009

(Exceptfor Notes 2, 3 and 5, which were March 15, 2010)

 

 

F-2

 

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Balance Sheets**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December  31, 2008

 

December  31, 2007

 

 

 

(As  Restated)

 

 

 

 

 

 

 

 

 

 

 

 

** Assets**

 

 

 

 

 

 

 

 Current  Assets: 

 

 

 

 

 

 

 

     Cash 

 

 $  

            556,035 

 

 $  

             827,755 

 

     Revenue receivables 

 

 

              33,962 

 

 

                        - 

 

        Total Current Assets 

 

 

            589,997 

 

 

             827,755 

 

** **

 

 

 

 

 

 

 

 Oil  and Gas Properties (successful efforts method): 

 

 

 

 

 

 

 

     Undeveloped acreage 

 

 

         1,497,643 

 

 

             385,286 

 

     Less	depletion, depreciation and amortization 

 

 

               (3,750)

 

 

                        - 

 

     	 Total undeveloped acreage 

 

 

         1,493,893 

 

 

             385,286 

 

** **

 

 

 

 

 

 

 

        Total Assets 

 

 $  

         2,083,890 

 

 $  

          1,213,041 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

** Liabilities  and Stockholders' Equity **

 

 

 

 

 

 

 

 Current  Liabilities: 

 

 

 

 

 

 

 

     Accrued expenses 

 

 $  

              71,317 

 

 $  

               18,886 

 

     State of Alaska lease payable 

 

 

 -  

 

 

             279,500 

 

     Notes payable to majority stockholder 

 

 

            734,058 

 

 

             440,000 

 

        Total Current Liabilities 

 

 

            805,375 

 

 

             738,386 

 

** **

 

 

 

 

 

 

 

 Stockholders  Equity:  

 

 

 

 

 

 

 

    Preferred  stock; $.0001 par value; 1,000,000 shares authorized: 

 

 

 

 

 

 

 

        none issued or outstanding 

 

 

 -  

 

 

                        - 

 

    Common  stock; $.0001 par value; 100,000,000 shares authorized,  

 

 

 

 

 

 

 

        22,680,000 and 21,880,000 shares issued and outstanding, respectively 

 

 

                2,268 

 

 

                    547 

 

    Additional  paid-in capital 

 

 

         1,711,182 

 

 

             562,629 

 

    Deficit  accumulated during the development stage 

 

 

           (434,935)

 

 

             (88,521)

 

        Total Stockholders' Equity  

 

 

         1,278,515 

 

 

             474,655 

 

** **

 

 

 

 

 

 

 

             Total Liabilities and Stockholders' Equity  

 

 $  

         2,083,890 

 

 $  

          1,213,041 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-3

 

 

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Statements of Operations**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For  the Period from 

 

 

 

 For  the Year 

 

 For  the Year 

 

June  19, 2006

 

 

 

 Ended  

 

 Ended  

 

 (inception)  through 

 

 

 

December  31, 2008

 

December  31, 2007

 

December  31, 2008

 

 

 

 (As  Restated) 

 

 

 

 

(As  Restated)

 

 

 

 

 

 

 

 

 

 

 

 

 OIL  AND GAS REVENUES EARNED 

 

 

 

 

 

 

 

 

 

 

     DURING THE EXPLORATION STAGE 

 

 $  

                     24,151 

 

 $  

                           - 

 

 $  

                     24,151 

 

 

 

 

 

 

 

 

 

 

 

 

 COST  OF REVENUES 

 

 

 

 

 

 

 

 

 

 

     DURING THE EXPLORATION STAGE 

 

 

 

 

 

 

 

 

 

 

      Oil and gas 

 

 

                     18,838 

 

 

                           - 

 

 

                     18,838 

 

      Depletion, depreciation and amortization 

 

 

                       3,750 

 

 

                   1,071 

 

 

                       4,821 

 

      Exploration costs 

 

 

                       5,709 

 

 

                           - 

 

 

                       5,709 

 

      Production taxes

 

 

                       7,386 

 

 

                           - 

 

 

                       7,386 

 

    

 

 

                     35,683 

 

 

                   1,071 

 

 

                     36,754 

 

 

 

 

 

 

 

 

 

 

 

 

 GROSS  PROFIT (LOSS) 

 

 

                    (11,532)

 

 

                 (1,071)

 

 

                   (12,603)

 

 

 

 

 

 

 

 

 

 

 

 

 OPERATING  EXPENSES 

 

 

 

 

 

 

 

 

 

 

     Salary - president and majority stockholder 

 

 

                   120,000 

 

 

                 10,000 

 

 

                   130,000 

 

     Professional fees - CFO and secretary 

 

 

                   104,200 

 

 

                           - 

 

 

                   104,200 

 

     Professional fees 

 

 

                     52,168 

 

 

                 20,600 

 

 

                     72,768 

 

     General and administrative 

 

 

                     29,599 

 

 

                   5,648 

 

 

                     61,844 

 

     Impairment of equipment 

 

 

                               - 

 

 

                 16,929 

 

 

                     16,929 

 

            

 

 

                   305,967 

 

 

                 53,177 

 

 

                   385,741 

 

 

 

 

 

 

 

 

 

 

 

 

 LOSS  FROM OPERATIONS 

 

 

                  (317,499)

 

 

               (54,248)

 

 

                 (398,344)

 

 

 

 

 

 

 

 

 

 

 

 

 OTHER  (INCOME) EXPENSES 

 

 

 

 

 

 

 

 

 

 

     Interest income 

 

 

                      (1,718)

 

 

                           - 

 

 

                     (1,718)

 

     Interest expense 

 

 

                          359 

 

 

                           - 

 

 

                          359 

 

     Interest expense - related parties 

 

 

                     30,274 

 

 

                   6,076 

 

 

                     36,350 

 

             

 

 

                     28,915 

 

 

                   6,076 

 

 

                     34,991 

 

 

 

 

 

 

 

 

 

 

 

 

 LOSS  BEFORE TAXES 

 

 

                  (346,414)

 

 

               (60,324)

 

 

                 (433,335)

 

 

 

 

 

 

 

 

 

 

 

 

 INCOME  TAX PROVISION 

 

 

 -  

 

 

                      800 

 

 

                       1,600 

 

 

 

 

 

 

 

 

 

 

 

 

 NET  LOSS 

 

 $  

                  (346,414)

 

 $  

               (61,124)

 

 $  

                 (434,935)

 

 

 

 

 

 

 

 

 

 

 

 

 NET  LOSS PER COMMON SHARE -  

 

 

 

 

 

 

 

 

 

 

   	BASIC AND DILUTED 

 

 $  

                        (0.02)

 

 $  

                   (0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Weighted Common Shares Outstanding -  

 

 

 

 

 

 

 

 

 

 

       basic and diluted 

 

 

              22,680,000 

 

 

          20,342,500 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-4

 

 

 

**Petrocorp  Inc.**

**(An  Exploration Stage Company)**

**Consolidated  Statement of Stockholders' Equity**

**For  the Period from June 19, 2006 (inception) through December 31, 2008**

** **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Additional  

 

 Deficit  accumulated 

 

 Total  

 

 

 Number  of 

 

 

 

 

 Paid-in  

 

 During  the 

 

 Stockholders'  

 

 

 Shares  

 

 Amount  

 

 Capital  

 

 Exploration  Stage 

 

 Equity   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance,  June 19, 2006 (inception) 

 

                            - 

 

 $  

                            - 

 

 $  

                            - 

 

 $  

                            - 

 

 $  

                            - 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares  issued to President for cash 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      at $0.01 per share 

 

           20,000,000 

 

 

                    2,000 

 

 

                   (1,900)

 

 

 

 

 

                       100 

 Shares  issued to President for cash 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      at $0.01 per share 

 

                600,000 

 

 

                         60 

 

 

                  29,940 

 

 

 

 

 

                  30,000 

 Net  loss 

 

 

 

 

 

 

 

 

 

 

                 (27,397)

 

 

                 (27,397)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance,  December 31, 2006 

 

           20,600,000 

 

 

                    2,060 

 

 

                  28,040 

 

 

                 (27,397)

 

 

                    2,703 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares  issued to President for cash 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      at $0.01 per share 

 

                480,000 

 

 

                         48 

 

 

                  23,952 

 

 

 

 

 

                  24,000 

 Contributed  capital 

 

 

 

 

 

 

 

                    3,000 

 

 

 

 

 

                    3,000 

 Shares  issued to President for cash 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      at $0.01 per share 

 

                800,000 

 

 

                         80 

 

 

                499,920 

 

 

 

 

 

                500,000 

 Interest  contribution 

 

 

 

 

 

 

 

                    6,076 

 

 

 

 

 

                    6,076 

 Net  loss 

 

 

 

 

 

 

 

 

 

 

                 (61,124)

 

 

                 (61,124)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance,  December 31, 2007 

 

           21,880,000 

 

 

                    2,188 

 

 

                560,988 

 

 

                 (88,521)

 

 

                474,655 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Shares  issued for cash at $0.10 per share 

 

                800,000 

 

 

                         80 

 

 

                999,920 

 

 

 

 

 

             1,000,000 

 Salary  contribution 

 

 

 

 

 

 

 

                120,000 

 

 

 

 

 

                120,000 

 Interest  contribution 

 

 

 

 

 

 

 

                  30,274 

 

 

 

 

 

                  30,274 

 Net  loss 

 

 

 

 

 

 

 

 

 

 

               (346,414)

 

 

               (346,414)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance,  December 31, 2008 

 

           22,680,000 

 

 $  

                    2,268 

 

 $  

             1,711,182 

 

 $  

               (434,935)

 

 $  

             1,278,515 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-5

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Statements of Cash Flows**

 

 

 

 

 

 

 

 

 

 For  the Period from 

 

 

 

 For  the Year 

 

 For  the Year 

 

June  19, 2006

 

 

 

 Ended  

 

 Ended  

 

 (inception)  through 

 

 

 

December  31, 2008

 

December  31, 2007

 

December  31, 2008

 

 

 

 (As  Restated) 

 

 

 

 

(As  Restated)

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM OPERATING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

 Net  Loss 

 

 $  

                (346,414)

 

 $  

                (61,124)

 

 $  

              (434,935)

 

 Adjustments  to reconcile net loss to net cash 

 

 

 

 

 

 

 

 

 

 

      provided by (used in) operating activities 

 

 

 

 

 

 

 

 

 

 

      Depletion, depreciation and amortization 

 

 

                      3,750 

 

 

                    1,071 

 

 

                    4,821 

 

      Impairment of equipment 

 

 

 -  

 

 

                  16,929 

 

 

                  16,929 

 

      Capital contribution 

 

 

 -  

 

 

                    3,000 

 

 

                    3,000 

 

      Salary contribution 

 

 

                  120,000 

 

 

                           - 

 

 

                120,000 

 

      Interest contribution 

 

 

                    30,274 

 

 

                    6,076 

 

 

                  36,350 

 

      Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

 

 

          Revenue receivable 

 

 

                  (33,962)

 

 

                           - 

 

 

                (33,962)

 

          Accrued expenses 

 

 

                    52,431 

 

 

                     (943)

 

 

                  71,317 

 

          State of Alaska lease payable

 

 

                (279,500)

 

 

                279,500 

 

 

 -  

 

 NET  CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 

 

 

                (453,421)

 

 

                244,509 

 

 

              (216,480)

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM INVESTING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

      Purchase of equipment 

 

 

 -  

 

 

                (18,000)

 

 

                (18,000)

 

      Investment in gas and oil properties 

 

 

                (728,299)

 

 

              (385,286)

 

 

           (1,113,585)

 

 NET  CASH USED IN INVESTING ACTIVITIES 

 

 

                (728,299)

 

 

              (403,286)

 

 

           (1,131,585)

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM FINANCING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

      Proceeds from notes payable - majority stockholder 

 

 

 -  

 

 

                440,000 

 

 

                440,000 

 

      Repayment of notes payable - majority stockholder 

 

 

                  (90,000)

 

 

                           - 

 

 

                (90,000)

 

      Proceeds from sale of common stock 

 

 

               1,000,000 

 

 

                524,000 

 

 

             1,554,100 

 

 NET  CASH PROVIDED BY FINANCING ACTIVITIES 

 

 

                  910,000 

 

 

                964,000 

 

 

             1,904,100 

 

 

 

 

 

 

 

 

 

 

 

 

 NET  CHANGE IN CASH 

 

 

                (271,720)

 

 

                805,223 

 

 

                556,035 

 

 Cash,  Beginning of Period 

 

 

                  827,755 

 

 

                  22,532 

 

 

                           - 

 

** **CASH, END OF PERIOD 

 

 $  

                  556,035 

 

 $  

                827,755 

 

 $  

                556,035 

 

 

 

 

 

 

 

 

 

 

 

 

 SUPPLEMENTAL  DISCLOSURE OF 

 

 

 

 

 

 

 

 

 

 

      CASH FLOWS INFORMATION: 

 

 

 

 

 

 

 

 

 

 

      Interest paid 

 

 $  

                         359 

 

 $  

                           - 

 

 $  

                       359 

 

      Income tax paid 

 

 $  

 -  

 

 $  

                           - 

 

 $  

 -  

 

 

 

 

 

 

 

 

 

 

 

 

** **NON-CASH FINANCING AND INVESTING TRANSACTIONS: 

 

 

 

 

 

 

 

 

 

 

      Salary contribution 

 

 $  

                  120,000 

 

 $  

                           - 

 

 $  

                120,000 

 

      Interest contribution 

 

 $  

                    30,274 

 

 $  

                    6,076 

 

 $  

                  36,350 

 

      Issuance of notes payable - majority stockholder in exchange 

 

 

 

 

 

 

 

 

 

 

          for oil and gas properties 

 

 $  

                  384,058 

 

 $  

                           - 

 

 $  

                384,058 

 

 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-6

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

** **

 

**Note 1 - Organization and Operations**

 

Petrocorp,Inc., an exploration stage company, was incorporated on June 19, 2006 under thelaws of the State of Delaware.  Prior to September 2007, the Company’s businessmodel provided telephonic conferencing services to businesses, organizationsand individuals in North America.  Due to capitalconstraints and because its executives could no longer serve the Companywithout compensation, the Company decided to change its business directions.

 

On September 20, 2007, the Company entered the oil and gasexploration and production business with the acquisition of three separatefarm-out agreements from James Fitzsimons.  Mr. Fitzsimons also purchased17,800,000 shares of the Company’s common stock from certain shareholders,resulting in him owning 84.5% of the Company’s then outstanding shares for$454,000.  Mr. Fitzsimons was elected a director of the Company.

 

On October 19, 2007, the Company amended its certificate ofincorporation changing its name to “Petrocorp Inc.” and effectuated a five for one forward stock split which increased theauthorized common stock to 100,000,000 shares at $.0001 par value.

 

OnAugust 13, 2008, the Company’s board of directors approved a stock dividend onits outstanding common stock.  The ratio for the stock dividend was four sharesto each share owned (4:1).

 

Allshare and per share amounts have been restated to reflect these common stocktransactions.

 

**Note 2 - Summary of Significant Accounting Policies**

 

*Basis of presentation*

 

TheCompany’s consolidated financial statements have been prepared in accordancewith accounting principles generally accepted in the United States of America(“U.S. GAAP”).

* *

The consolidated financial statements include theaccounts of Petrocorp Inc. and its wholly-owned subsidiaries: Petrocorp (Oklahoma) Inc., Union Energy (Alaska) LLC, Mac Oil SpA and Petrocorp Italia SRL(collectively, “Petrocorp” or the “Company”).  All intercompany accounts andtransactions have been eliminated.

 

*Explorationstage company*

 

The Company is an exploration stage company as defined byStatement of Financial Accounting Standards No. 7*“Accounting and Reportingby Development Stage Enterprises”*(“SFAS No. 7”).  Although the Company hasrecognized some nominal amount of revenue, the Company is still devoting substantiallyall of its efforts on establishing the business and, therefore, still qualifiesas a development stage company.  All losses since inception have beenconsidered part of the Company’s exploration stage activities.

* *

*Useof estimates*

 

Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

*Reclassification*

 

Certain amounts in the prior periods consolidated financialstatements have been reclassified to conform to the current periodpresentation.   These reclassifications had no effect on reportedlosses.

 

*Cashequivalents*

 

TheCompany considers all highly liquid investments with a maturity of three monthsor less when purchased to be cash equivalents.

 

F-7

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

*Oiland gas properties*

* *

TheCompany’s oil and gas exploration and production activities are accounted forusing the successful efforts method. Under this method, all propertyacquisition costs and costs of exploratory and development wells arecapitalized when incurred, pending determination of whether the well has foundproved reserves.  If an exploratory well does not find proved reserves, thecosts of drilling the well are charged to expense and included within cashflows from investing activities in the Consolidated Statements of Cash Flowspursuant to Statement of Financial AccountingStandards No. 19 “*Financial Accounting and Reporting by Oil and GasProducing Companies”* (“SFAS No. 19”).  The costs of development wells arecapitalized whether productive or nonproductive.  Oil and gas lease acquisitioncosts are also capitalized.  Interest cost is capitalized as a component ofproperty cost for significant exploration and development projects that requiregreater than six months to be readied for their intended use.

 

Otherexploration costs, including certain geological and geophysical expenses anddelay rentals for oil and gas leases, are charged to expense as incurred.  Thesale of a partial interest in a proved property is accounted for as a costrecovery and no gain or loss is recognized as long as this treatment does notsignificantly affect the unit-of-production amortization rate.  A gain or lossis recognized for all other sales of proved properties and is classified in otheroperating revenues.  Maintenance and repairs are charged to expense, andrenewals and betterments are capitalized to the appropriate property andequipment accounts.

 

Unevaluatedproperties are assessed periodically on a property-by-property basis and anyimpairment in value is charged to expense.  If the unevaluated properties aresubsequently determined to be productive, the related costs are transferred toproved oil and gas properties.  Proceeds from sales of partial interests inunproved leases are accounted for as a recovery of cost without recognizing anygain until all costs are recovered.

 

The Company reviews its provedoil and gas properties for impairment whenever events and circumstancesindicate a decline in the recoverability of their carrying value may haveoccurred. The Company estimates the expected undiscounted future cash flows ofits oil and gas properties and compares such undiscounted future cash flows tothe carrying amount of the oil and gas properties to determine if the carryingamount is recoverable. If the carrying amount exceeds the estimatedundiscounted future cash flows, the Company will adjust the carrying amount ofthe oil and gas properties to fair value.  The factors used to determine fairvalue include, but are not limited to, recent sales prices of comparableproperties, estimates of proved reserves, future commodity pricing, futureproduction estimates, anticipated capital expenditures, and a discount ratecommensurate with the risk associated with realizing the expected cash flowsprojected.

 

The provision for depreciation,depletion and amortization (“DD&A”) of oil and gas properties is calculatedon a field-by-field basis using the unit-of-production method.  Oil isconverted to natural gas equivalents, Mcfe, at the rate of one barrel to sixMcf.  Taken into consideration in the calculation of DD&A are estimatedfuture dismantlement, restoration and abandonment costs, which are net ofestimated salvage values.

*** ***

*Furniture, equipment andother*

 

Furnitureand other office and field equipment are recorded at cost.  Costs of renewalsand improvements that substantially extend the useful lives of the assets arecapitalized.  Leasehold improvements are amortized over the lesser of fiveyears or the life of the lease.  Maintenance and repairs are expensed whenincurred. Depreciation of other property and equipment is computed using thestraight-line method over their estimated useful lives of three to ten years. Upon retirement or disposition of assets, the costs and related accumulateddepreciation are removed from the accounts with the resulting gains or losses,if any, reflected in results of operations.

 

InSeptember 2007, the Company recorded an impairment charge of $16,929 related toits telephonic equipment when the Company changed the direction of its effortsfrom telephonic conferencing services to the oil and gas sector.

 

*Fairvalue of financial instruments*

 

The fair value of a financial instrument is the amount atwhich the instrument could be exchanged in a current transaction betweenwilling parties.  The carrying amounts of financial assets and liabilities,such as cash, revenue receivables, accounts payable, accrued expenses, and theState of Alaska payable approximate their fair values because of the shortmaturity of these instruments.  The notespayable to majority stockholder approximate the fair value of suchinstruments based upon management’s best estimate of interest rates that wouldbe available to the Company for similar financial arrangements at December 31, 2008and 2007.

 

*Revenuerecognition*

 

The Company follows the guidance of the United StatesSecurities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 101 *“Revenue Recognition”* (“SAB No. 101”), as amended by SAB No. 104 (“SAB No. 104”) for revenue recognition.  The Company recognizes revenue when it is realized or realizableand earned less estimated future doubtfulaccounts.  The Company considers revenuerealized or realizable and earned when all of the following criteria are met:(i) persuasive evidence of an arrangement exists, (ii) the product has beenshipped or the services have been rendered to the customer, (iii) the sales price is fixed ordeterminable, and (iv) collectability is reasonably assured.  TheCompany derives revenue primarily from the sale of produced natural gas andcrude oil.  The Company reports revenue as the gross amount received beforetaking into account production taxes and transportation costs, which arereported as separate expenses.  Revenue is recorded in the month the Company’sproduction is delivered to the purchaser, but payment is generally receivedbetween thirty (30) and ninety (90) days after the date of production.  Norevenue is recognized unless it is determined that title to the product has transferredto the purchaser.  At the end of each month, the Company estimates the amountof production delivered to the purchaser and the price the Company willreceive.

 

F-8

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

*Incometaxes*

 

TheCompany recognizes deferred income tax liabilities and assets for the expectedfuture tax consequences of events that have been recognized in the financialstatements or tax returns.  Under this method, deferred tax liabilities andassets are determined based on the differences between the financial statementcarrying amounts and the tax basis of assets and liabilities using enacted taxrates in effect in the years in which the differences are expected to reverse.

 

*Netloss per common share*

 

Statementof Financial Accounting Standards No. 128 “*Earnings per Share”* (“SFASNo. 128”), requires dual presentation of basic and diluted earnings or loss pershare (“EPS”) for all entities with complex capital structures and requires areconciliation of the numerator and denominator of the basic EPS computation tothe numerator and denominator of the diluted EPS computation.  Basic EPSexcludes dilution; diluted EPS reflects the potential dilution that could occurif securities or other contracts to issue common stock were exercised orconverted into common stock or resulted in the issuance of common stock thatthen shared in the earnings of the entity.

 

Basicloss per share is computed by dividing net loss applicable to commonshareholders by the weighted average number of common shares outstanding duringthe period.  Diluted loss per share reflects the potential dilution that couldoccur if dilutive securities and other contracts to issue common stock wereexercised or converted into common stock or resulted in the issuance of commonstock that then shared in the earnings of the Company, unless the effect isanti-dilutive.  The Company had no potentially dilutive securities for theyears ended December 31, 2008 or 2007.

 

*Recentlyissued accounting pronouncements*

 

In June 2003, the Securities and Exchange Commission(“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002(“Section 404”), as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with its annual report for the year ending December 31, 2009, theCompany will be required to include a report of management on its internalcontrol over financial reporting.  The internal control report must include astatement

 

•

Of management’s responsibility for establishing and  maintaining adequate internal control over its financial reporting;

 

•

Of management’s assessment of the effectiveness of its  internal control over financial reporting as of year end; and

 

•

Of the framework used by management to evaluate the  effectiveness of the Company’s internal control over financial reporting.

 

Furthermore,in the following fiscal year, it is required to file the auditor’s attestationreport separately on the Company’s internal control over financial reporting onwhether it believes that the Company has maintained, in all material respects,effective internal control over financial reporting.

 

In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007)*“Business Combinations”*(“SFAS No. 141(R)”), which requires the Company to record fair value estimatesof contingent consideration and certain other potential liabilities during theoriginal purchase price allocation, expense acquisition costs as incurred anddoes not permit certain restructuring activities previously allowed underEmerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchaseaccounting.  SFAS No. 141(R) applies prospectively to business combinations forwhich the acquisition date is on or after the beginning of the first annualreporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements,which shall be applied retrospectively for all periods presented.  The Companyhas not determined the effect that the adoption of SFAS No. 141(R) will have onits financial statements.

 

In December 2007, the FASB issued FASB Statement No. 160*“Non-controlling Interests in ConsolidatedFinancial Statements - an amendment of ARB No. 51”* (“SFAS No. 160”), whichcauses non-controlling interests in subsidiaries to be included in the equitysection of the balance sheet.  SFAS No. 160 applies prospectively to businesscombinations for which the acquisition date is on or after the beginning of thefirst annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements,which shall be applied retrospectively for all periods presented.  The Companyhas not determined the effect that the adoption of SFAS No. 160 will have onits financial statements.

 

In March 2008, the FASB issued FASB Statement No. 161,*Disclosures about Derivative Instruments andHedging Activities an amendment of FASB Statement No. 133* (“SFAS No. 161”). This statement changes the disclosure requirements for derivative instrumentsand hedging activities.  Pursuant to SFAS No. 161, Entities are required toprovide enhanced disclosures about (a) how and why an entity uses derivativeinstruments, (b) how derivative instruments and related hedged items areaccounted for under Statement 133 and its related interpretations, and (c) howderivative instruments and related hedged items affect an entity’s financialposition, financial performance, and cash flows.  SFAS No. 161 is effective forfinancial statements issued for fiscal years and interim periods beginningafter November 15, 2008 with early application encouraged.  SFAS No. 161 encouragesbut does not require disclosures for earlier periods presented for comparativepurposes at initial adoption.  In years after initial adoption, this statementrequires comparative disclosures only for periods subsequent to initialadoption.  The Company does not expect the application of SFAS No. 161 to havea material effect on its financial statements.

 

Managementdoes not believe that any other recently issued, but not yet effectiveaccounting pronouncements, when adopted, will have a material effect on itsfinancial statements.

 

F-9

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

 

**Note 3 - Restatements of Previously Issued Financial Statements**

 

Subsequentto the original issuance of the Company’s consolidated financial statements forthe year ended December 31, 2008 as included in its annual report on Form 10-Kfiled with the United States Securities and Exchange Commission on April 9,2009, the Company’s management identified certain accounting misstatementsduring the period.  As a result of issues identified in the review of itsconsolidated financial statements for the year ended December 31, 2008, itsBoard of Directors, in consultation with management and Li & Company, PC,its independent registered public accounting firm, concluded that itspreviously issued consolidated financial statements for the year then ended,should no longer be relied upon because of certain accounting misstatements inthose financial statements.  Accordingly, the Company has restated its previously issued consolidated financialstatements for the period.  Details of the misstatements are set out below:

 

*Misstatementsfor the year ended December 31, 2008:*

 

 

 

 

 

 

 

 

 

 

 

Misstatements

Dr (Cr)

 

 

Impact to Statement of Operations

 

 

 

 

 

 

 

 

 

 

(i) To reclassify undeveloped acreage previously  misclassified as  developed acreage

 

 

 

 

 

 

 

 

Developed acreage

 

$

(307,803

)

 

 

 

 

Undeveloped  acreage

 

 

307,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ii) To reclassify accumulated amortization -  undeveloped acreage previously misclassified as 

     accumulated amortization - developed acreage

 

 

 

 

 

 

 

 

Accumulated amortization - undeveloped acreage

 

$

(3,750

)

 

 

 

 

Accumulated  amortization - developed acreage

 

 

3,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(iii) To separate professional fees - officers from  professional fees

 

 

 

 

 

 

 

 

Professional fees - officers

 

$

104,200

 

 

 

 

 

Professional  fees

 

 

(104,200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(iv) To separate interest expense - related parties  from interest expense

 

 

 

 

 

 

 

 

Interest expense - related parties

 

$

30,274

 

 

 

 

 

Interest  expense

 

 

(30,274

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(iv) To reclassify issuance of notes payable -  majority stockholder in exchange for oil and gas properties in statement of  cash flows

 

 

 

 

 

 

 

 

Investment in gas and oil properties

 

$

384,058

 

 

 

 

 

Proceeds  from notes payable - majority stockholder

 

 

(384,058

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

-  

 

 

 

 

 

 

 

 

F-10

Thefollowing tables present the impact of the above mentioned adjustments to thefinancial information

 

*Balancesheet information:*

 

The restated balance sheet is set out as follows:

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Balance Sheets**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December  31, 2008

 

December  31, 2008

 

December  31, 2008

 

 

(As  Previously 

 

(Adjustments)

 

(As  Restated)

 

 

	Reported)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

** Assets**

 

 

 

 

 

 

 

 

 

 Current  Assets: 

 

 

 

 

 

 

 

 

 

      Cash 

 

 $  

                 556,035 

 

 $  

 

 

 $  

                 556,035 

      Revenue receivables 

 

 

                   33,962 

 

 

 

 

 

                   33,962 

           Total Current Assets 

 

 

                 589,997 

 

 

                             - 

 

 

                 589,997 

** **

 

 

 

 

 

 

 

 

 

 Oil  and Gas Properties (successful efforts method): 

 

 

 

 

 

 

 

 

 

      Developed acreage 

 

 

                 307,803 

 

 

               (307,803)

 

 

                             - 

      Less depletion, depreciation	and amortization 

 

 

                   (3,750)

 

 

                     3,750 

 

 

                             - 

        	Total Developed Acreage

 

 

                 304,053 

 

 

               (304,053)

 

 

                             - 

 

 

 

 

 

 

 

 

 

 

      Undeveloped acreage 

 

 

              1,189,840 

 

 

                 307,803 

 

 

              1,497,643 

     	Less depletion, depreciation and amortization

 

 

                             - 

 

 

                   (3,750)

 

 

                   (3,750)

        	Total Undeveloped Acreage 

 

 

              1,189,840 

 

 

                 304,053 

 

 

              1,493,893 

** **

 

 

 

 

 

 

 

 

 

            Total Oil and Gas Properties 

 

 

              1,493,893 

 

 

                             - 

 

 

              1,493,893 

 

 

 

 

 

 

 

 

 

 

            Total Assets 

 

 $  

              2,083,890 

 

 $  

                             - 

 

 $  

              2,083,890 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

** Liabilities  and Stockholders' Equity **

 

 

 

 

 

 

 

 

 

 Current  Liabilities: 

 

 

 

 

 

 

 

 

 

      Accrued expenses 

 

 $  

                   71,317 

 

 $  

 

 

 $  

                   71,317 

      State of Alaska lease payable 

 

 

                             - 

 

 

 

 

 

                             - 

      Notes payable to majority stockholder 

 

 

                 734,058 

 

 

 

 

 

                 734,058 

          Total Current Liabilities 

 

 

                 805,375 

 

 

                             - 

 

 

                 805,375 

** **

 

 

 

 

 

 

 

 

 

 Stockholders  Equity:  

 

 

 

 

 

 

 

 

 

     Preferred  stock; $.0001 par value; 1,000,000 shares authorized: 

 

 

 

 

 

 

 

 

 

          none issued or outstanding 

 

 

                             - 

 

 

 

 

 

                             - 

     Common  stock; $.0001 par value; 100,000,000 shares authorized,  

 

 

 

 

 

 

 

 

 

          22,680,000 and 21,880,000 shares issued and outstanding, respectively 

 

 

                     2,268 

 

 

 

 

 

                     2,268 

    Additional  paid-in capital 

 

 

              1,711,182 

 

 

 

 

 

              1,711,182 

    Deficit  accumulated during the development stage 

 

 

               (434,935)

 

 

 

 

 

               (434,935)

         Total Stockholders' Equity  

 

 

              1,278,515 

 

 

                             - 

 

 

              1,278,515 

** **

 

 

 

 

 

 

 

 

 

            Total Liabilities and Stockholders' Equity  

 

 $  

              2,083,890 

 

 $  

                             - 

 

 $  

              2,083,890 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-11
****
*Statementsof operations information:*

 

The restated statement of operations is set out as follows:

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Statements of Operations**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For  the Year 

 

 For  the Year 

 

 For  the Year 

 

 

 

 Ended  

 

 Ended  

 

 Ended  

 

 

 

December  31, 2008

 

December  31, 2008

 

December  31, 2008

 

 

 

 (As  Previously Reported) 

 

 (Adjustments  

 

 (As  Restated) 

 

 

 

 

 

 

 

 

 

 

 

 

 OIL  AND GAS REVENUES EARNED 

 

 

 

 

 

 

 

 

 

 

     DURING THE EXPLORATION STAGE 

 

 $  

                   24,151 

 

 $  

                             - 

 

 $  

                   24,151 

 

 

 

 

 

 

 

 

 

 

 

 

 COST  OF REVENUES 

 

 

 

 

 

 

 

 

 

 

     DURING THE EXPLORATION STAGE 

 

 

 

 

 

 

 

 

 

 

     Oil and gas 

 

 

                   18,838 

 

 

                             - 

 

 

                   18,838 

 

     Depletion, depreciation and amortization 

 

 

                     3,750 

 

 

                             - 

 

 

                     3,750 

 

     Exploration costs 

 

 

                     5,709 

 

 

                             - 

 

 

                     5,709 

 

     Production taxes 

 

 

                     7,386 

 

 

                             - 

 

 

                     7,386 

 

	 

 

 

                   35,683 

 

 

                             - 

 

 

                   35,683 

 

 

 

 

 

 

 

 

 

 

 

 

 GROSS  PROFIT (LOSS) 

 

 

                 (11,532)

 

 

                             - 

 

 

                 (11,532)

 

 

 

 

 

 

 

 

 

 

 

 

 OPERATING  EXPENSES 

 

 

 

 

 

 

 

 

 

 

   	Salary - president and majority stockholder 

 

 

                 120,000 

 

 

                             - 

 

 

                 120,000 

 

     Professional fees - CFO and secretary 

 

 

 

 

 

                 104,200 

 

 

                 104,200 

 

     Professional fees 

 

 

                 156,368 

 

 

               (104,200)

 

 

                   52,168 

 

     General and administrative 

 

 

                   29,599 

 

 

                             - 

 

 

                   29,599 

 

 

 

 

                 305,967 

 

 

 -  

 

 

                 305,967 

 

	 

 

 

	 

 

 

	 

 

 

	 

 

 LOSS  FROM OPERATIONS 

 

 

               (317,499)

 

 

 -  

 

 

               (317,499)

 

 

 

 

 

 

 

 

 

 

 

 

 OTHER  (INCOME) EXPENSES 

 

 

 

 

 

 

 

 

 

 

     Interest income 

 

 

                   (1,718)

 

 

 

 

 

                   (1,718)

 

     Interest expense 

 

 

                   30,633 

 

 

                 (30,274)

 

 

                        359 

 

     Interest expense - related parties 

 

 

                             - 

 

 

                   30,274 

 

 

                   30,274 

 

 

 

 

                   28,915 

 

 

                             - 

 

 

                   28,915 

 

	 

 

 

	 

 

 

	 

 

 

	 

 

 LOSS  BEFORE TAXES 

 

 

               (346,414)

 

 

 -  

 

 

               (346,414)

 

 

 

 

 

 

 

 

 

 

 

 

 INCOME  TAX PROVISION 

 

 

                             - 

 

 

                             - 

 

 

                             - 

 

 

 

 

 

 

 

 

 

 

 

 

 NET  LOSS 

 

 $  

               (346,414)

 

 $  

 -  

 

 $  

               (346,414)

 

 

 

 

 

 

 

 

 

 

 

 

 NET  LOSS PER COMMON SHARE -  

 

 

 

 

 

 

 

 

 

 

   	BASIC AND DILUTED 

 

 $  

                     (0.02)

 

 $  

 -  

 

 $  

                     (0.02)

 

 

 

 

 

 

 

 

 

 

 

 

     Weighted Common Shares Outstanding -  

 

 

 

 

 

 

 

 

 

 

          basic and diluted 

 

 

            22,680,000 

 

 

            22,680,000 

 

 

            22,680,000 

 

 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-12
****
*Statementof cash flows information:*

 

The restated statement of cash flows is set out as follows:

 

**Petrocorp  Inc.**

** (An  Exploration Stage Company)**

** Consolidated  Statements of Cash Flows**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For  the Year 

 

 For  the Year 

 

 For  the Year 

 

 

 

 Ended  

 

 Ended  

 

 Ended  

 

 

 

December  31, 2008

 

December  31, 2008

 

December  31, 2008

 

 

 

 (As  Previously Reported) 

 

 (Adjustments)  

 

 (As  Restated) 

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM OPERATING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

 Net  Loss 

 

 $  

              (346,414)

 

 $  

                            - 

 

 $  

              (346,414)

 

 Adjustments  to reconcile net loss to net cash 

 

 

 

 

 

 

 

 

 

 

      provided by (used in) operating activities 

 

 

 

 

 

 

 

 

 

 

      Depletion, depreciation and amortization 

 

 

                    3,750 

 

 

                            - 

 

 

                    3,750 

 

      Impairment of equipment 

 

 

                            - 

 

 

                            - 

 

 

                            - 

 

      Capital contribution 

 

 

                            - 

 

 

                            - 

 

 

                            - 

 

      Salary contribution 

 

 

                120,000 

 

 

                            - 

 

 

                120,000 

 

      Interest contribution 

 

 

                  30,274 

 

 

                            - 

 

 

                  30,274 

 

      Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

 

 

          Revenue receivable 

 

 

                (33,962)

 

 

                            - 

 

 

                (33,962)

 

          Accrued expenses 

 

 

                  52,431 

 

 

                            - 

 

 

                  52,431 

 

          State of Alaska lease payable

 

 

              (279,500)

 

 

                            - 

 

 

              (279,500)

 

 NET  CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 

 

 

              (453,421)

 

 

                            - 

 

 

              (453,421)

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM INVESTING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

      Purchase of equipment 

 

 

                            - 

 

 

                            - 

 

 

                            - 

 

      Investment in gas and oil properties 

 

 

           (1,112,357)

 

 

                384,058 

 

 

              (728,299)

 

 NET  CASH USED IN INVESTING ACTIVITIES 

 

 

           (1,112,357)

 

 

                384,058 

 

 

              (728,299)

 

 

 

 

 

 

 

 

 

 

 

 

** **CASH FLOWS FROM FINANCING ACTIVITIES: 

 

 

 

 

 

 

 

 

 

 

      Proceeds from notes payable - majority stockholder 

 

 

                384,058 

 

 

              (384,058)

 

 

                            - 

 

      Repayment of notes payable - majority stockholder 

 

 

                (90,000)

 

 

                            - 

 

 

                (90,000)

 

      Proceeds from sale of common stock 

 

 

             1,000,000 

 

 

                            - 

 

 

             1,000,000 

 

 NET  CASH PROVIDED BY FINANCING ACTIVITIES 

 

 

             1,294,058 

 

 

              (384,058)

 

 

                910,000 

 

 

 

 

 

 

 

 

 

 

 

 

 NET  CHANGE IN CASH 

 

 

              (271,720)

 

 

                            - 

 

 

              (271,720)

 

 Cash,  Beginning of Period 

 

 

                827,755 

 

 

 

 

 

                827,755 

 

** **CASH, END OF PERIOD****

 

 $  

                556,035 

 

 $  

                            - 

 

 $  

                556,035 

 

 

 

 

 

 

 

 

 

 

 

 

 SUPPLEMENTAL  DISCLOSURE OF 

 

 

 

 

 

 

 

 

 

 

      CASH FLOWS INFORMATION: 

 

 

 

 

 

 

 

 

 

 

      Interest paid 

 

 $  

                       359 

 

 $  

 

 

 $  

                       359 

 

      Income tax paid 

 

 $  

                            - 

 

 $  

                            - 

 

 $  

                            - 

 

 

 

 

 

 

 

 

 

 

 

 

** **NON-CASH FINANCING AND INVESTING TRANSACTIONS: 

 

 

 

 

 

 

 

 

 

 

      Salary contribution 

 

 $  

                120,000 

 

 $  

                            - 

 

 $  

                120,000 

 

      Interest contribution 

 

 $  

                  30,274 

 

 $  

                            - 

 

 $  

                  30,274 

 

      Issuance of notes payable - majority stockholder in exchange 

 

 

 

 

 

 

 

 

 

 

          for oil and gas properties 

 

 $  

                            - 

 

 $  

                384,058 

 

 $  

                384,058 

 

 

 

 

 

 

 

 

 

 

 

 

* See  accompanying notes to the consolidated financial statements.*

F-13

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

**Note4 – Going Concern**

 

Theconsolidated financial statements have been prepared on a going concern basis,which assumes the Company will be able to realize its assets and discharge itsliabilities in the normal course of business.  At December 31, 2008, theCompany had a deficit accumulated during the exploration stage of $434,935, a net loss of $346,414 with revenues of $24,151and cash used in operations of $453,421 for the year then ended.  Theseconditions raise substantial doubt about the Company’s ability to continue as agoing concern.

 

Whilethe Company is attempting to generate measurable revenues, the Company’s cashposition may not be sufficient to support its daily operations.  Managementintends to raise additional capital through sales of its securities or loansfrom its majority shareholder.  The ability of the Company to continue as agoing concern is dependent upon its ability to further implement its businessplan, generate sufficient revenues and raise additional capital.  The financialstatements do not include any adjustments that might be necessary if theCompany is unable to continue as a going concern.

 

**Note5 - Oil and Gas Properties**

* *

*Leasehold Acreage*

 

Petrocorp owns interests inundeveloped oil and natural gas acreage in the locations set forth below as ofDecember 31, 2008 and 2007.  These ownership interests generally take the formof working interests in oil and natural gas leases or licenses that havevarying terms.

 

 

December 31, 2008

 

 

December 31, 2007

 

State or Country

Gross

 

 

Net

 

 

Gross

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaska

 

24,280

 

 

 

24,280

 

 

 

24,280

 

 

 

24,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oklahoma

 

6,379

 

 

 

2,809

 

 

 

6,379

 

 

 

2,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

286,713

 

 

 

286,713

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Italy (1)

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Netherlands (2)

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total undeveloped acreage

 

317,372

 

 

 

313,802

 

 

 

30,659

 

 

 

27,089

 

 

 

 

 

 

 

 

 

(1)   On January 20, 2009, the Governmentof Italy made the preliminary award of the competitive oil and gas explorationlicenses, “Fiorenzuola D'Arda” located in the Po Valley and “Montottone”located in the Marche region, in favor of Mac Oil SpA, our subsidiary.  OnMarch 24, 2009, the Government of Italy made the preliminary award of thecompetitive oil and gas exploration license, “Melzo” located in the Po Valley,again in favor of Mac Oil SpA. The three Italy licenses cover a net surfacearea of 115,760 hectares (285,827 acres).

 

The Companyalso has two competitive oil and gas exploration license applications pendingawaiting adjudication by the Ministry of Economic Development in Italy covering a net surface area of 27,240 hectares (67,259 acres).

 

(2)** **Onelicense application pending covering a net surface area of 68,284 hectares(168,602 acres).

 

F-14

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

 

*Leasehold Acreage Costs*

* *

Petrocorp has capitalizedleasehold acreage costs in undeveloped oil and natural gas acreage in thelocations set forth below as of December 31, 2008 and 2007:

 

 

December 31, 2008

 

 

December 31, 2007

 

State or Country

Developed acreage

 

 

Undeveloped acreage

 

 

Developed acreage

 

 

Undeveloped acreage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaska

 

-

 

 

 

442,086

 

 

 

-

 

 

 

369,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oklahoma

 

-

 

 

 

520,050

 

 

 

-

 

 

 

15,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

-

 

 

 

277,130

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Italy (1)

 

-

 

 

 

228,868

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Netherlands (2)

 

-

 

 

 

25,760

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capitalized leasehold costs

 

-

 

 

 

1,493,894

 

 

 

-

 

 

 

385,286

 

 

 

 

 

 

 

 

 

*Oil and Gas DrillingActivity*

 

The Company owns workinginterests in one gross (.5 net) producing oil well and two gross (1.0 net)producing gas wells at December 31, 2008.  Of the three gross productive wellsone had dual completions.  At December 31, 2008, Petrocorp had six gross wellsin progress.

 

**Note6 - Notes Payable to Majority Stockholder**

** **

AtDecember 31, 2007, the Company had $440,000 in unsecured, non-interest bearingnotes (two), payable on demand with its president and majority stockholderJames Fitzsimons.  In June 2008, the Company repaid a $90,000 unsecured,non-interest bearing note with Mr. Fitzsimons.

 

OnDecember 1, 2008, Mr. Fitzsimons transferred his 78.5% stock ownership inPetrocorp Inc. and three outstanding promissory notes (totaling $734,058) toSoladino Investments SA (“Soladino”), a Swiss corporation owned by Mr.Fitzsimons.  At December 31, 2008, the Company has a note payable to Soladinofor $734,058.  The note is secured by the Company’s oil and gas leases, is noninterest bearing and payable upon demand.

 

Duringthe years ended December 31, 2008 and 2007, the Company imputed interestexpense related to these notes of $30,274 and $6,076, respectively.  Interestwas imputed at an implied rate of 6% per annum and the amounts were recorded ascapital contributions by the Company.

 

**Note7 - Stockholders’ Equity**

* *

*Commonstock*

 

On September 30, 2006, the Company issued 20,000,000 shares of common stock to its founders atpar value ($.0001 per share).  During theperiod July 1 through December 31, 2006, the Company sold 600,000 shares of its common stock in a private placement at $0.05 per share (anaggregate of $30,000) to 16 individuals.  During theperiod from January 1 through September 30, 2007,the Company sold480,000shares of its common stock at $0.05 per share(an aggregate of $24,000) to 24 individuals.

 

OnDecember 27, 2007, the Company sold 800,000 shares of its common stock to oneinvestor at $.625 per share (an aggregate of $500,000).  On March 18, 2008, theCompany sold 800,000 shares of its common stock to one investor at $1.25 pershare (an aggregate of $1,000,000).  These shares were sold in transactionsexempt from registration under Regulation S of the Securities Act of 1933, asamended (the “Securities Act”).  These shares are not registered under theSecurities Act or any state securities laws and, unless so registered, may notbe offered or sold except pursuant to an applicable exemption from theregistration requirements of the Securities Act and applicable state securitieslaws.  The purchasers of these shares represented that they were acquiring theshares for their own account, for investment, and that the purchasers were notUS Persons within the meaning of Regulation S.  The Company has no obligationto register the resale of these shares under the Securities Act.  The proceedsfrom the sale of these shares will be used for working capital purposes.

 

F-15

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

 

**Note8 - Income Taxes**

 

*Deferredtax assets*

 

TheCompany incurred no income taxes for the years ended December 31, 2008 and2007.  The expected income tax benefit for the years ended December 31, 2008and 2007 was approximately $78,100 and $12,200, respectively.

 

The components of deferred tax assets at December 31, 2008and 2007 are:

 

 

 

 

 

 

 

 

 

 

 

December 31, 2008

 

 

December 31, 2007

 

 

 

 

 

 

 

 

 

 

Net deferred tax assets – Non-current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax benefit from NOL  carry-forwards

 

$

95,800

 

 

$

17,700

 

Less valuation allowance

 

 

(95,800

)

 

 

(17,700

)

 

 

 

 

 

 

 

Deferred tax assets, net of valuation  allowance

 

$

-

 

 

$

-

 

 

*Income taxes in the statements of operations*

 

Areconciliation of the federal statutory income tax rate and the effectiveincome tax rate as a percentage of income before income taxes is as follows:

 

 

 

For the Year

 

For the Year

 

 

December 31,

 

December 31,

 

 

2008

 

2007

 

 

 

 

 

 

 

Federal statutory income  tax rate

 

34

%

 

34

%

Change in valuation  allowance on net operating loss carry-forwards

 

(34)

%

 

(34)

%

Effective income tax rate

 

0

%

 

0

%

 

TheCompany’s net operating loss carry-forwards of approximately $275,600 atDecember 31, 2008 are available to offset future taxable income, if any, andexpire in 2028.

 

**Note9 - Related Party Transactions**

** **

OnAugust 12, 2008, the Company acquired from its president, James Fitzsimons, a50% working interest (41.25% net revenue interest) in the Snake Creek prospect,a 3,200 gross (3,022 net) acre gas development project located in northernOkmulgee County, Oklahoma.  The first well on this acreage, the Snake Creek #1,spaced on 160 acres, has been successfully drilled and completed.  The MiddleDutcher zone was fracture stimulated and is in production.  The Companyreimbursed Mr. Fitzsimons for his historic costs (acreage and drilling) byissuing a secured, non-interest bearing note, payable on demand for $210,917and assumed responsibility for all further costs.

** **

OnNovember 30, 2008, the Company acquired from Mr. Fitzsimons, a 100% workinginterest (81.25% net revenue interest) in the Spanish Peak prospect, a 2,041gross (900 net) acre gas development project located in Okmulgee County,Oklahoma.  The Company reimbursed Mr. Fitzsimons for his historic costs(acreage) by issuing a secured, non-interest bearing note, payable on demandfor $173,141 and assumed responsibility for all further costs.

 

OnDecember 1, 2008, James Fitzsimons transferred his 78.5% stock ownership inPetrocorp Inc. and three outstanding promissory notes (totaling $734,058) toSoladino Investments SA (“Soladino”), a Swiss corporation owned by Mr.Fitzsimons.  The Company issued Soladino a $734,058 note, which is secured bythe Company’s oil and gas leases, is non interest bearing and payable upondemand.

** **

TheCompany was provided management services by its president, Mr. Fitzsimonsduring 2008 at no cost.  The Company recorded the $120,000 estimated value ofthese services as compensation expense and as a capital contribution.

** **

TheCompany was provided accounting services by Mr. Siedow, its chief financialofficer.  Mr. Siedow was paid $77,700 in 2008 and $2,300 in 2007 for theseservices.

** **

TheCompany was provided legal and administrative services and office space by Mr.Hariton, our Corporate Secretary.  Mr. Hariton was paid $26,500 in 2008 and$16,000 in 2007 for these services.

 

F-16 

**Petrocorp, Inc.**

**(An Exploration Stage Company)**

**Notes to theConsolidated Financial Statements**

**December 31, 2008and 2007**

 

**Note10 - Subsequent Event**

 

OnMarch 31, 2009, the Company purchased 171 oil and gas lease interests totaling3,827 gross (2,666 net) acres in Okfuskee and Okmulgee Counties, Oklahoma from CH4 Energy, Inc., a company controlled by Soladino Investments SA at a costof $583,823.  The Company reimbursed Soladino for its historic costs (acreage)by issuing a secured, non-interest bearing note, payable on demand for $583,823and assumed responsibility for all further costs.  The leases are held in thename of Frontier Land, Inc. as fiduciary trustee for the benefit of theCompany’s subsidiary Petrocorp (Oklahoma) Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-17