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Edgar Filing: TIDELANDS OIL & GAS CORP/WA - Form 10-K - page 31 / 83

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Edgar Filing: TIDELANDS

OIL & GAS CORP/WA - Form 10-K

conversion feature the debentures and date and subsequent

represents the diffe the fair market valu

quarterly

measureme

e of the common

stock at

the

commitment

nt

dates.

This

discount

was

charged to

rence

between the conversion price for

expense because

the

conversion

exercised

at

any

time. The

interest and can be

interest

expense

in

its

restated

Decembe

r

feature is at the option of the holder

Company 31, 2004

has

accordingly

recognized

financial

statements

in

the

amount of

$3,092,105 and

2005. The

negative figure

($756,329) fo for 2005 intere

r the twelve

st

expense

months ended

December 31,

recognizes

the

fluctuation

in the market the quarterly and conversio

n

price of the common

measurement

dates.

of

these

debentures

stock into

The

interest

due

to

this

which the notes

are

converted at

cost associated

with

the issuance

beneficial

conversion

feature

is

the comp

leted

quarter o

f 2005.

conversion of

limited to the relevant 2004 and 2005 years all the debentures into common stock in the

due to fourth

SALES, GENERAL AND ADMINISTRATIVE: Sales, Ge the restated twelve months ended December 31

includes

restated

amounts for stock

associated with International LLC

the valuation of acquisition in 2004.

issue stoc Sales

for

the

twelve

months

ended

December

31,

200

of

$2,988,770

as

compared

to

the

twelve

mont

neral and Admini

strative expense for

, d k , 5

hs

issued as p

art of the

Impact

General & Admi

nistrative

expenses

was $11,0

22,019. This

services

and finance

2004

amount

for

costs

was $8,033,249

ended

Decemb

which er 31,

is a decrease

2004.

During

2005,

the

Company

recognized

significant

finance

costs which

were offset

by incr

director

compensation,

and overhead

from ful

Corporation in 2005.

decreases

in

eased

employee

l year

operation

consulting

fees and

expenses,

board of

s

of

Sonterra

Energy

IMPAIRMENT LOSSES:

As

described

in Footnote

1, the

Company has

recognized

impairment of goodwill recorded in conne acquisition in the amount of $5,200,000

ction with the Impact and the impairment of

International LLC the carrying value

of the system

Chittim

gas plant

connecting

to

the

owned

Chittim

by Rio gas pl

Bravo

Energy LLC and the gas

ant

owned

by

Sonora

Pipeline

pipeline

LLC

in

the

amount of $392,000 for the twelve months

ended December 31, 2005.

GAIN ON REDU acquisition a conversion upon the exe December 31, and the re evaluation warrant exer on Reduction 2004 financi

CTION OF WARRANT L in the year ended price less than t rcise of those war 2004 financial st

lated

warrant li

of the

difference

cise

price

of

Warrant

on

a

qu

Liabi

al

statements

($15

IABILITY: December 3 he fair ma rants. Ac atements t ability a between arterly ba lity amou ,390,000)

As part 1, 2004,

of the Impact International LLC

the

Company

issued

warrants

at

rket value cordingly,

of the common stock issueable the Company has restated its

  • o

    recognize both

the additional goodwill

ssociated

with

that

acquisition.

An

the price of the

common

stock and the

sis nts

was performed shown in the

resulting

restated

in

the

December

Gain

31,

and the amount shown in the December 31,

2005 financial connection with related to their 2005.

statements ($5,168,000 this acquisition have exercise has been issue

). The been

d

as

of

warrants exercised

the

end

of

originally

issued in

and

all

common

stock

the

year

December

31,

NET LOSS FROM OPERATIONS:

Net loss of (

$14,302,037) for the twelve months ended

December 31,

31,

2005,

a

2004 decreased to ($7,662,9 decrease in the amount of l

04) oss

for of

the twelve months ended December

$6,639,133.

Included

in

the

net

loss from

relations

operations is $4,022,525

of

fees,

legal fees,

director

expenses fees and

for financing

costs,

employee

compensation

investor paid by

issuance

of

common

stock.

YEAR ENDED DECEMBER 31, 2004 COMPARED WI

TH YEAR ENDED DECEMBER 31, 2003

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

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

REVENUES: The

Company

ended December

31, 2004

reported

revenues of

$1,883,838

for the

as

compared

with

revenues

from

continuing

twelve months operations of

$178,856

for the twelve

resulted

primarily from

months ended

the

acquisition

December 31, 2003.

of

a

98%

interest

The revenue

increase

in

Reef

Ventures,

L.P.

which owns and

operates

Coahuila

market.

Natural

a natural gas

pipeline

gas

sold

($1,323,459)

and

serving

the

Piedras

transportation

fees

Negras,

($76,767)

charged from these

December

31,

2004.

operations totaled Sales of propane by

$1,400,227 Sonterra

for the Energy

twelve months ended

Corporation

to

its

residential

customer

base

($363,413),

service call income for its

customers

31

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