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Star Energy Corp – ‘8-K/A’ for 9/29/06

On:  Friday, 12/8/06, at 1:45pm ET   ·   For:  9/29/06   ·   Accession #:  1144204-6-51821   ·   File #:  0-29323

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/08/06  Star Energy Corp                  8-K/A:9     9/29/06    1:40K                                    Vintage/FA

Amendment to Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Amendment to Current Report                           21     76K 

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (Amendment No.1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 29, 2006 STAR ENERGY CORPORATION ----------------------- (Exact name of Registrant as specified in its charter) Nevada 000-29323 87-0643634 ------ --------- ---------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 245 Park Avenue, 24th and 39th Floors New York, New York 10167 ------------------------ (Address of principal executive offices) 212-792-4334 (Registrant's telephone number, including area code) ------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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EXPLANATORY NOTE: This Amendment No. 1 on Form 8-K/A amends and supplements the Current Report on Form 8-K of Star Energy, Inc., a Nevada corporation (the "Registrant"), dated September 29, 2006 and filed with the Securities and Exchange Commission (the "Commission") on October 6, 2006 (the "Initial Form 8-K"), to include financial statements and pro forma financial information permitted pursuant to Item 9.01 of Form 8-K to be excluded from the Initial Form 8-K and filed by amendment to the Initial Form 8-K no later than 71 days after the date on which the Initial Form 8-K was required to be filed. As previously reported in the Initial Form 8-K, on October 6, 2006, the Registrant completed the acquisition of Volga-Neft Limited Company, a corporation formed under the laws of the Russian Federation, pursuant to a Stock Purchase Agreement dated October 6, 2006. Section 9-Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (a) Financial Statements of business acquired. The following financial statements of the Registrant are being filed with this report: Report of Independent Registered Public Accounting Firm Balance Sheets Statements of Stockholders' Equity Statements of Operations Statements of Cash Flows Notes to Financial Statements (b) Pro forma financial information. Pro-forma Consolidated Balance Sheet Pro-forma Consolidated Statement of Deficit Pro-forma Consolidated Statement of Operations Notes to Pro-forma Consolidated Financial Statements (c) Exhibits. None. 2
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Star Energy Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. STAR ENERGY CORPORATION (Registrant) By: /s/ Patrick Kealy ------------------------------------- Name: Patrick Kealy Title: Chief Executive Officer and President Date: December 7, 2006 3
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VOLGA-NEFT LIMITED LIABILITY COMPANY FINANCIAL STATEMENTS DECEMBER 31, 2005 (EXPRESSED IN U.S. DOLLARS) CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM {1} BALANCE SHEETS {2} STATEMENTS OF STOCKHOLDERS' EQUITY {3} STATEMENTS OF OPERATIONS {4} STATEMENTS OF CASH FLOWS {5} NOTES TO FINANCIAL STATEMENTS {6-11}
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Volga-Neft Limited Liability Company We have audited the accompanying balance sheets of Volga-Neft Limited Liability Company as of October 6, 2006 and December 31 2005, and the related statements of income, stockholders' equity and, and cash flows for the period and year ended October 6, 2006 and December 31, 2005. These financial statements are the responsibility of the company's management. 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 Volga-Neft Limited Liability Company as of October 6 ,2006 and December 31, 2005, and the results of its operations and its cash flows for the ten months and year ended October 6, 2006 and December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. RSM "Top - Audit" Firm's Signature 119717, Moscow, B.Ordynka, 57,bl.2 City, State 10,November,2006 Report Date General Director Bodrov V. 1
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VOLGA- NEFT LIMITED LIABILITY COMPANY BALANCE SHEET (EXPRESSED IN U.S. DOLLARS) OCTOBER, 6, DECEMBER,31, 2006 2005 ------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and Cash Equivalents (note 3) 15 683 598 Accounts and notes receivables (note 4) (net of Allowance for doubtful accounts $ NIL) 2 965 952 251 829 Inventories (note 5) 3 432 764 721 774 Current deferred income tax assets (note 9) 378 849 -- Other 636 366 -- ------------------------------------------------------------------------------- Total Current Assets 7 429 614 974 201 Property, plant and equipment (note 6) 22 827 591 24 591 988 Deferred income tax assets (note 9) 232 240 -- ------------------------------------------------------------------------------- Total Assets 30 489 445 25 566 189 =============================================================================== LIABILITIES CURRENT LIABILITIES Short - term debt and current portion of long - term loans (note 7) 1 365 556 844 873 Trade accounts and notes payable 24 976 460 8 325 826 Other accounts payable and accrued liabilities (note 8) 2 050 784 1 526 739 Taxes Payable 161 313 7 883 Current deferred income tax liabilities (note 9) 9 437 -- ------------------------------------------------------------------------------- Total Current Liabilities 28 563 550 10 705 321 Loans payable - Long term portion (note 7) 1 202 264 14 670 984 Deferred income tax liabilities (note 9) 369 410 -- ------------------------------------------------------------------------------- Total Liabilities 30 135 224 25 376 305 ------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common Stock (note 10) Authorized authorized and issued at October 06, 2006 and December 31, 2005 - 5,010,000 shares; nominal value - US $0.035 per share) 175 350 175 350 Retained Earnings 178 871 14 534 ------------------------------------------------------------------------------- Total Stockholders' Equity 354 221 189 884 ------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity 30 489 445 25 566 189 ------------------------------------------------------------------------------- 2
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Volga - Neft Limited Liability Company Statements of Stockholders' Equity Years Ended December 31, 2005 and period ended October 6, 2006 (Expressed in U.S. Dollars) [Enlarge/Download Table] Cumulative Additional Other Number of Capital Paid in Comprehensive Retained Stockholders' Shares Stock Capital Income Earnings Equity ----------------------------------------------------------------------------------- Balance, begining -- -- -- -- -- -- ----------------------------------------------------------------------------------- Common shares issued for cash 5 010 000 175 350 -- -- -- 175 350 Net income -- -- -- -- 14 534 14 534 Balance, December 31, 2005 5 010 000 175 350 -- -- 14 534 189 884 ----------------------------------------------------------------------------------- Balance, begining 5 010 000 175 350 -- -- 14 534 189 884 ----------------------------------------------------------------------------------- Net income -- -- -- -- 164 337 164 337 Cumulative Other Comprehensive Income -- -- -- -- -- -- ----------------------------------------------------------------------------------- Balance, October 6, 2006 5 010 000 175 350 -- -- 178 871 354 221 =================================================================================== 3
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VOLGA-NEFT LIMITED LIABILITY COMPANY STATEMENTS OF OPERATIONS. (EXPRESSED IN U.S. DOLLARS) For the period JANUARY 1, 2006 TO YEAR ENDED OCTOBER, 6, DECEMBER,31, 2006 2005 ------------------------------- Revenue 83 084 954 98 365 572 Cost of sales (61 161 563) (69 952 725) ------------------------------- Gross Profit 21,923,391 28,412,847 ------------------------------- Expenses Transportation (17 822 188) (21 441 229) Salary of the industrial personnel (2 565 000) (2 695 480) Staff costs (140 800) (146 670) Distribution (261 553) (506 164) Amortization/Depreciation (829 421) (3 600 324) ------------------------------------------------------------------------------ Total operating expenses (21 618 962) (28 389 867) ------------------------------------------------------------------------------ Other income(expense) Interest expense (Loss) (32 956) (3 871) Other Income (Expense) (5 879) -- ------------------------------------------------------------------------------ Other Income/Expenses Net (38 835) (3 871) ------------------------------------------------------------------------------ Income before income tax 265 594 19 109 ------------------------------------------------------------------------------ Income Tax Current income tax expense (note 9) (86 257) (4 575) Deferred income tax expense (note 9) (15 000) -- ------------------------------------------------------------------------------ Total income tax expense (101 257) (4 575) ------------------------------------------------------------------------------ Net Income 164 337 14 534 ------------------------------------------------------------------------------ Total Comprehensive Income 164 337 14 534 ------------------------------------------------------------------------------ Basic and Diluted Income per Share 0, 03 0, 00 (Note 10) Basic and Diluted Weighted Average Number of Shares Outstanding during The year 5 010 000 5 010 000 4
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VOLGA-NEFT LIMITED LIABILITY COMPANY STATEMENTS OF CASH FLOWS (expressed in U.S. Dollars) [Download Table] FOR THE PERIOD YEAR JANUARY 1, 2006 ENDED OCTOBER, 6, DECEMBER,31, 2006 2005 ----------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income 164 337 14 534 Items not affecting cash: Depreciation and amortization 829 421 3 600 324 Adjustments to reconcile net income to Net cash (used in) operating activities: Changes in Receivables (2 714 123) (251 829) Changes Inventories (2 710 990) (721 774) Changes in other (636 366) -- Deferred income tax expense 15 000 -- Changes in Trade accounts and notes payable 21 173 768 8 324 832 Changes in Taxes Payable 153 430 7 883 ---------------------------------------------------------------------------------- Net cash and cash equivalents provided by OPERATING ACTIVITIES 16 274 477 10 973 970 ---------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant, and equipment (17 501 412) (10 621 254) ---------------------------------------------------------------------------------- NET CASH USED FOR INVESTING ACTIVITIES (17 501 412) (10 621 254) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of capital stock -- 175 350 Long-term loan 1 242 020 (527 468) ---------------------------------------------------------------------------------- Net cash from Financing Activities 1 242 020 (352 118) ---------------------------------------------------------------------------------- Net (Decrease) Increase in Cash 15 085 598 Cash- Beginning of Period 598 -- ---------------------------------------------------------------------------------- Cash - End of Period 15 683 598 ---------------------------------------------------------------------------------- Interest and Income Taxes Paid Interest paid $ 32,956 $ 3,871 Income taxes paid $ 80,135 $ 4,575 5
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VOLGA-NEFT LIMITED LIABILITY COMPANY NOTES TO THE FINANCIAL STATEMENTS CLOSED AT OCTOBER 06, 2006 ------------------------------------------------------------ (EXPRESSED IN U.S. DOLLARS) 1. Operations and Business Volga - Neft Limited Liability Company, (the Company), was incorporated on January 25, 2005 in accordance to the Federal Law No 14 - Federal Law, from February 08,1998 " About societies with limited liability " in Samara region, Privolzhsky district, v. Obsharovka of Russian Federation. The Company's main activity is the trading of oil products (oil and naphtha) The Company has set up a representative office in the city of Samara. 2. Summary of Significant Accounting Policies The accounting policies of the Company are in accordance with generally accepted accounting principles of the United States of America, and their basis of application is consistent with that of the previous year. Outlined below are those policies considered particularly significant: a) Cash and Cash Equivalents For purposes of the statement reporting within the statement of cash flows, cash includes currency, cheques issued by others, other currency equivalents and current deposits. Cash equivalents include securities and short-term money market instruments that can be easily converted into cash. Investments that mature within three months from the investment date, are also included as cash equivalents. b) Inventories. Crude oil and petroleum products inventories are valued at the lower of cost, using the first-in first-out method, or net realisable value. Costs include applicable purchase costs and operating expenses. Materials and supplies inventories are recorded at the lower of average cost or net realisable value. c) Property, Plant and Equipment Property, plant and equipment are stated at historical costs. Major renewals and betterments are capitalized and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided at the following rates, using the straight-line method, which are formulated to charge operations with the cost of the equipment over their estimated useful lives as follows: Buildings and constructions 5-33 years Machinery and equipment 5-15 years Computer and telecommunication Equipment 2-5 years d) Revenue Recognition Revenues from the production and sale of crude oil and petroleum products are recognised when deliveries to customers are made, title has transferred and collectibility is reasonably assured. 6
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e) Use of Estimates Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes to financial statements. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from estimates, although management does not believe such changes will materially affect the financial statements in any individual year. f) Foreign Currency Translation The Company accounts for foreign currency translation pursuant to SFAS No. 52, "Foreign Currency Translation" ("SFAS 52"). The Company's functional currency is the Russian Rouble. Under SFAS 52, all assets and liabilities are translated into United States dollars using the current exchange rate at the end of each fiscal period. Revenues and expenses are translated using the average exchange rates prevailing throughout the respective periods. Translation adjustments are included in other comprehensive income (loss) for the period. Certain transactions of the Company are denominated in United States dollars. Translation gains or losses related to such transactions are recognized for each reporting period in the related statement of operations and comprehensive income (loss). g) Environmental liabilities Liabilities for environmental remediation are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. h) Pension and post-employment benefits The Group's mandatory contributions to the governmental pension plan are expensed when incurred. Discretionary pensions and other post-employment benefits are not material. i) Income Tax The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes". Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. j) Comprehensive Income The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is presented in the statements of stockholders' equity, and consists of net earnings and unrealized gains (losses) on available for sale marketable securities; foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments recognized in accordance with SFAS No. 87. SFAS No. 130 requires only additional disclosures in the financial statements and does not affect the Company's financial position or results of operations. 7
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k) Financial Instruments Fair Value Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of the financial instruments approximates their carrying values, unless otherwise noted. Foreign Currency Risk Exchange restrictions and controls exist relating to converting Russian Roubles to other currencies. At present, the Russian Rouble is not a convertible currency outside the Russian Federation. Future movements in the exchange rates between the Russian Rouble and the US dollar will affect the carrying value of the Company's Russian Rouble denominated monetary assets and liabilities. Such movements may also affect the Group's ability to realise non-monetary assets represented in US dollars in these consolidated financial statements. At 06 October 2006 and 31 December 2005 exchange rates were 26.78 and 28.78 Russian Roubles to the US dollar, respectively. Any translation of Russian Rouble amounts to US dollars should not be construed as a representation that such Russian Rouble amounts have been, could be, or will in the future be converted into US dollars at the exchange rate shown or at any other exchange rate. Concentration of Credit Risk SFAS No. 105, "Disclosure of Information About Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk", requires disclosure of any significant off-balance sheet risk and credit risk concentration. The Company does not have significant off-balance sheet risk. The Company provides credit to its clients in the normal course of its operations. It carries out, on a continuing basis, credit checks of its clients, and maintains provisions for contingent credit losses that, once they materialize, are consistent with management's forecasts. For other debts, the Company determines, on a continuing basis, the probable losses and sets up a provision for losses based on the estimated realizable value. l) Impairment of Long-Lived Assets The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the periods ended December 31, 2005 and 2004, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required. m) Earnings per Share The Company adopted FAS No.128, "Earnings per Share" which requires disclosure on the financial statements of "basic" and "diluted" earnings per share. Basic earnings per share, which does not include any dilutive securities, is computed by dividing the earnings available to common stockholders by the weighted average number of common shares outstanding for the year. In contrast, diluted earnings per share considers the potential dilution that could occur from other financial instruments that would increase the total number of outstanding shares of common stock. 8
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n) Recent Accounting Pronouncements In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140" ("SFAS No. 156"). SFAS No. 156 simplifies the accounting for loan servicing rights and the financial instruments used to hedge risks associated with those rights. SFAS No. 156 requires that servicing rights be valued initially at fair value, and subsequently accounted for at either fair value, or amortized over the economic life of the related lease. SFAS No. 156 is effective for fiscal years beginning after September 15, 2006. The implementation of SFAS No. 156 is not expected to have a material impact on the Company's results of operations and financial position. In April 2006, the FASB issued FASB Staff Position ("FSP"), FASB Interpretation No. ("FIN") 46(R)-6, "Determining the Variability to be Considered in Applying FASB Interpretation No. 46(R)" ("FSP FIN 46(R)-6"). FSP FIN 46(R)-6 provides accounting guidance on how to distinguish between arrangements that create variability (i.e., the risks and rewards) within an entity and arrangements that are subject to that variability (i.e., variable interests). FSP FIN 46(R)-6 is responding to a need for accounting guidance on arrangements that can be either assets or liabilities (i.e., derivative financial instruments). FSP FIN 46(R)-6 is effective for the first fiscal period that begins after June 15, 2006. In June 2006, the FASB issued FIN No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides accounting guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. 3. Cash and Cash Equivalents Cash balances of 6 October 2006 and 31 December 2005 included accounts denominated in Russian Roubles equivalent to $15,683 and $ 598, respectively. 4. Accounts and Notes Receivable, Net October 06, December,31 ----------------------------- 2006 2005 ---- ---- Trade accounts and notes receivable 1 172 018 149 995 Recoverable value - added tax 293 488 26 722 Advances to suppliers 517 395 -- Other receivables 983 051 75 112 ----------------------------------------------------------------------------- Total accounts and notes receivable, net 2 965 952 251 829 ============================================================================= 9
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Prepaid and recoverable value-added and other taxes includes value-added tax from purchases that will be recoverable only when the underlying accounts payable have been settled. 5. Inventories October 06, December,31 ----------------------------- 2006 2005 ---- ---- Crude oil and petroleum products 2 153 606 574 002 Materials and supplies 1 279 158 147 772 -------------------------------------------------------------------- Total Inventories 3 432 764 721 774 ==================================================================== 6. Property, Plant and Equipment [Enlarge/Download Table] 2006 2005 Accumulated Accumulated Cost Depreciation Cost Depreciation --------------------------------------------------------------------------------------------- Machinery and equipment 16 290 124 483 220 20 825 424 2 097 548 Buildings and constructions 7 195 564 338 985 7 195 564 1 471 452 Computer and telecommunication 171 324 7 216 171 324 31 324 --------------------------------------------------------------------------------------------- 23 657 012 829 421 28 192 312 3 600 324 --------------------------------------------------------- Net carrying amount 22 827 591 24 591 988 ---------- ---------- The Company obtains licenses from the governmental authorities for the right of realization of activity in the field of storage, processings and transportations of crude oil and petroleum products, on operation of explosive industrial objects, on operation of oil and gas extraction productions, on application of explosive materials of industrial purpose. These licenses expire between 2006 and 2009; however, they may be extended at the initiative of the Company provided it is in compliance with the license terms. 7. Loans payable [Enlarge/Download Table] 2006 2005 Current Long-term Current Long-term Portion Portion Portion Portion --------------------------------------------------------------------------------------------- Samara branch of the Sberbank of the Russian Federation 1 139 829 1 006 775 686 543 11 374 352 "Levko" Corp. 225 727 195 489 158 330 760 046 --------------------------------------------------------------------------------------------- Total 1 365 556 1 202 264 844 873 14 670 984 --------------------------------------------------------------------------------------------- 10
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The Company's significant outstanding short-term borrowing agreements bear interest at 7 percent are repayable over 5 years, and are secured by property, plan and equipment as per note 6.. 8. Other Accounts Payable and Accrued Liabilities [Enlarge/Download Table] October 06, December,31 ----------------------------- 2006 2005 ---- ---- Promissory notes payable -- -- Advances from customers 2 033 670 1 512 957 Salaries payable 7 973 6 528 Other 9 141 7 254 ------------------------------------------------------------------------------------------- Total Other Accounts Payable and Accrued Liabilities 2 050 784 1 526 739 =========================================================================================== 9. Taxes The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes". This Standard prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated. Corporate income tax rates applicable in 2005 and 2004 are 24% percent of taxable income. Under SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. The reconciliation between total tax expense and the expected income tax is as follows: [Enlarge/Download Table] October, 06, 2006 December,31, 2005 Accounting income $ 265 594 $ 19 109 Non-deductible expenses -- -- Items deductible for tax, not for accounting 156 310 -- ------------------------- $ 421 904 $ 19 109 Applicable tax rate 24% 24% ------------------------- Less: Russian small/medium business credit (if applicable) -- -- Income tax expense(should agree with the income statement) $ 101 257 $ 4 575 Income tax expense ------------------------- 10. Common Stock [Enlarge/Download Table] Authorized October,6, 2006 December,31 5 010 000 common shares, par value $ 0.03 per share Issued 5 010 000 common shares $ 175,350 $ 175,350 (December 31, 2005 5,010,000) 11
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STAR ENERGY CORPORATION PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2006 UNAUDITED CONTENTS Pro-forma Consolidated Balance Sheet 1 Pro-forma Consolidated Statement of Deficit 2 Pro-forma Consolidated Statement of Operations 3 Notes to Pro-forma Consolidated Financial Statements 4 - 5
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STAR ENERGY CORPORATION Pro-forma Consolidated Balance Sheet September 30, 2006 Unaudited [Enlarge/Download Table] Star Energy Volga-Neft Star Energy Star Energym Corporation LLC Corporation Corporation (US) (Russia) (US) (US) Sept. 30, Sept. 30, Pro-Forma Pro-Forma Dec. 31, 2006 2006 Adjustments Sept. 30, 2006 2005 ------------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 268 $ 15,683 $ -- $ 15,951 $ 13,975 Accounts and notes receivable 7,968 2,965,952 -- 2,973,920 8,291 Inventory -- 3,432,764 6,707,814 10,140,578 -- Other current assets -- 636,366 -- 636,366 -- Prepaid -- -- -- -- 1,900 Deferred Taxes -- 378,849 -- 378,849 -- ------------------------------------------------------------------------------- Total current assets 8,236 7,429,614 6,707,814 14,145,664 24,166 Properties, Plant and Equipment 45,730 27,350,725 69,101 27,465,556 48,341 Deferred Taxes -- 232,240 -- 232,240 -- ------------------------------------------------------------------------------- TOTAL ASSETS $ 53,966 $ 35,012,579 $ 6,776,915 $ 41,843,460 $ 72,507 ------------------------------------------------------------------------------- LIABILITIES Current Accounts payable and accrued liabilities $ 6,347 $ 27,108,422 $ -- $ 27,114,769 $ 1,565 Short -term debt and current portion of long-term debt -- 1,365,556 -- 1,365,556 -- Income taxes payable -- 80,135 -- 80,135 -- Deferred taxes -- 9,437 -- 9,437 -- Related party payable 2,785 -- -- 2,785 -- Note payable 30,000 -- -- 30,000 -- ------------------------------------------------------------------------------- Total current liabilities 39,132 28,563,550 -- 28,602,682 1,565 Asset Retirement Obligation 1,357 -- -- 1,357 1,327 Long Term Debt -- 1,202,264 -- 1,202,264 -- Deferred taxes -- 369,410 -- 369,410 -- ------------------------------------------------------------------------------- TOTAL LIABILITIES 40,489 30,135,224 -- 30,175,713 2,892 ------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Capital Stock 31,563 187,079 (180,329) 38,313 31,563 Additional Paid in Capital 77,363 4,511,551 7,135,969 11,724,883 77,363 Accumulated Deficit (95,449) 178,725 (178,725) (95,449) (39,311) ------------------------------------------------------------------------------- 13,477 4,877,355 6,776,915 11,667,747 69,615 ------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 53,966 $ 35,012,579 $ 6,776,915 $ 41,843,460 $ 72,507 =============================================================================== -1-
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STAR ENERGY CORPORATION Pro-Forma Consolidated Statement of Deficit Nine Months Ended September 30, 2006 Unaudited [Enlarge/Download Table] Star Energy Volga-Neft Star Energy Star Energy Corporation LLC Corporation Corporation (US) (Russia) (US) (US) Sept. 30, Sept. 30, Pro-Forma Pro-Forma Dec. 31, 2006 2006 Adjustments Sept. 30, 2006 2005 ---------------------------------------------------------------------------------------- Accumulated Deficit - beginning of period $ (39,311) $ 14,569 $ (14,569) $ (39,311) $ (3,478) Net (Loss) earnings (56,138) 164,156 (164,156) (56,138) (35,833) ---------------------------------------------------------------------------------------- (Accumulated Deficit) Retained Earnings - end of period $ (95,449) $ 178,725 $(178,725) $ (95,449) $ (39,311) ======================================================================================== -2-
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STAR ENERGY CORPORATION Pro-Forma Consolidated Statement of Operations Nine Months Ended September 30, 2006 Unaudited [Enlarge/Download Table] Star Energy Volga-Neft Star Energy Star Energy Corporation LLC Corporation Corporation (US) (Russia) (US) (US) Sept. 30, Sept. 30, Pro-Forma Pro-Forma Dec. 31, 2006 2006 Adjustments Sept. 30, 2006 2005 ---------------------------------------------------------------------------------------- Revenue Oil and gas revenues $ 33,431 $ 83,084,954 $(83,084,954) $ 33,431 $ 55,852 ---------------------------------------------------------------------------------------- Expenses Production and operating costs 13,849 81,548,751 (81,548,751) 13,849 26,298 Depreciation 2,611 829,421 (829,421) 2,611 6,111 Selling, general and administrative 73,109 402,535 (402,535) 73,109 29,564 ---------------------------------------------------------------------------------------- 89,569 82,780,707 (82,780,707) 89,569 61,973 ---------------------------------------------------------------------------------------- Operating Loss (56,138) 304,247 (304,247) (56,138) (6,121) ---------------------------------------------------------------------------------------- Other Income (Expense) Other -- 38,834 (38,834) -- -- Loss on disposition of property -- -- -- -- (29,712) ---------------------------------------------------------------------------------------- -- 38,834 (38,834) -- (29,712) ---------------------------------------------------------------------------------------- Loss Before Income Taxes (56,138) 265,413 (265,413) (56,138) (35,833) Income taxes - current -- (86,257) 86,257 -- -- Income taxes - deferred -- (15,000) 15,000 -- -- ---------------------------------------------------------------------------------------- Net Loss $ (33,431) $ 164,156 $ (164,156) $ (56,138) $ (35,833) ======================================================================================== -3-
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STAR ENERGY CORPORATION Notes to Pro-Forma Consolidated Financial Statements September 30, 2006 Unaudited 1. Basis of Presentation: These unaudited pro-forma consolidated financial statements have been prepared to give effect to the following: The acquisition on October 6, 2006 whereby Star Energy Corporation ("Star") issued 10,000,000 restricted common shares valued at $11,700,000 (representing 26.1% of the issued and outstanding shares of the company) in return for 100% of all outstanding common shares of Volga-Neft Limited Company ("Volga") a Russian company. On October 6, 2006, an Assignment and Bill of sale was entered into between Star and Ruairidh Campbell, a former officer and director of Star. Pursuant to such assignment, Mr. Campbell agreed to transfer to Star his 3,250,000 shares of Star's common stock held by him for cancellation and return to Star's authorized but unissued common shares. In consideration thereof, Star agreed to assign to Mr. Campbell all of Star's interest in a 15% working interest (12% net revenue interest) in and to certain oil and gas wells known as the Galvan Ranch Gas Wells, which are located in Webb County, Texas. After these transactions, Star has 38,312,500 common shares issued and outstanding. The pro-forma consolidated financial statements are based on the balance sheets of the following: a) Star as at September 30, 2006 (unaudited) and December 31, 2005 (audited). b) Volga as at September 30, 2006 (unaudited). The pro-forma consolidated financial statements include the statement of earnings for the following: a) Star for the nine months ended September 30, 2006 (unaudited) and for the year ended December 31, 2005 (audited).. b) Volga for the nine months ended September 30, 2006 (unaudited). The pro-forma consolidated balance sheet as at September 30, 2006 gives effect to the transactions as at October 6, 2006 and the pro-forma statement of earnings for the nine months ended September 30, 2006 gives effect to the transactions as if they had taken place at the beginning of the period. The pro-forma consolidated financial statements are not necessarily indicative of the actual results that would have occurred had the proposed transactions occurred on the dates indicated and not necessarily indicative of future earnings or financial position. -4-
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STAR ENERGY CORPORATION Notes to Pro-Forma Consolidated Financial Statements September 30, 2006 Unaudited 2. Pro-Forma Adjustments: To record the consolidation of Star with Volga including: a) The merger of Star and Volga was accounted for by purchase method, with the net assets of Volga brought forward at their fair market value basis. b) To eliminate the pre-acquisition shareholders' equity of Volga at September 30, 2006. -5-

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘8-K/A’ Filing    Date First  Last      Other Filings
12/15/0613
Filed on:12/8/06
12/7/063
10/6/062208-K
9/30/06162110QSB
For Period End:9/29/06128-K
9/15/0613
6/15/0613
1/1/0689
12/31/0542010KSB,  5
1/25/0510
12/31/041210KSB
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