Item 1. Business 1. Item 2.
Item 2. Properties 1. Item 3.
Item 3. Legal Proceedings.
Imperial Petroleum, Inc. versus Ravello Capital LLC: The Company filed suit in Federal District Court in Tulsa County, Oklahoma against Ravello Capital LLC on November 20, 2000. The suit alleged breach of contract and sought to have the contract declared partially performed in the amount of $74,800 and sought relief in the amount of $488,390 for the unpaid consideration and punitive damages and attorneys fees. The Company received a judgement award against Ravello in the amount of $488,390 and subsequently collected and credited the judgement in the amount of $85,638.02 as a result of the re-issuance of certain of its shares in Warrior, held by Ravello in escrow and not released. The Company is pursuing the balance of the judgement against Ravello.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market For Registrant's Common Stock; and Related Stockholder Matters.
The Company's common stock is traded in the over-the-counter market. From 1984 to 1997 trading had been so limited and sporadic that it was not possible to obtain a continuing quarterly history of high and low bid quotations. Stock information is received from registered securities dealers and reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The Company was advised that trading in its shares resumed in September 1997 and the Company's stock was quoted at approximately $0.25 per share in sporadic trading. The approximate present bid price for the Company's common stock is $0. 40 per share and the approximate asked price is $0.45 per share.
No dividends have ever been paid by the Company on its common stock and it is not anticipated that dividends will be paid in the foreseeable future.
There are approximately 602 holders of record of the Company's common stock.
Item 6.
Item 6. Selected Financial Data
Item 7.
Item 7. Management's Discussion and Analysis of the Financial Condition and Results of Operations.
Results of Operations
The factors which most significantly affect the Company's results of operations are (i) the sale prices of crude oil and natural gas, (ii) the level of oil and gas sales., (iii) the level of lease operating expenses and (iv) the level of and interest rates on borrowings. The Company will need to rely on the initiation operations on its mining ventures and its oil and natural gas operations to generate cash flow and future profits. The same factors listed above will apply to the sale of minerals and metals mined by the Company as well as oil and natural gas produced by the Company. As the Company initiates production on its mining properties, results of operations will be affected by: (i) commodity prices for copper and gold. (ii) the quantity and quality of the ores recovered and processed and (iii) the level of operating expenses associated with the mining operations.
Prices for gold had remained relatively stable during the past several years and had generally reflected the relatively low inflation rates predominate in the economies of the industrialized nations. Recently, gold prices began a significant downward price adjustment, which may reflect a shift from the traditional dependence upon gold as a financial hedge against inflation. Current spot prices for gold are $310.00 per ounce and are expected to continue to remain at or near those levels. The Company does not expect to realize any substantial increase in the price of gold in the future.
Copper prices have fluctuated dramatically since the Company's acquisition of its copper property with prices ranging from a low of about $0.65 per pound in August 1993 to a high of $1.20 per pound in 1995 to current levels of about $0.80 per pound. Wide variations in copper prices have resulted from the increased demand for electrical wire and copper related products as a result of the continued high growth rate of the economies of the industrialized nations and as a result of periodic reductions in the availability of scrap copper for recycling. Continued fluctuations in the spot price for copper are expected to result from variations in the availability of scrap copper and the continued strong demand from emerging nations. Concerns regarding the economies of the Pacific Rim nations, and in particular Japan, have recently dampened demand for copper and will likely impact its price until such time as stability is achieved in those economies.
With the initiation of production from the Duke Gold Mine in Utah, the Company's principal source of cash flow will be the production and sale of gold. Cash flow from gold sales depends upon the quantity of production and the price obtained for such production. An increase in prices permits the Company to finance its operations to a greater extent with internally generated funds. A decline in gold prices reduces the cash flow generated by the Company's operations, which in turn reduces the funds available for servicing debt, acquiring additional mining properties and for developing and expanding its mining operations.
Development of its oil and natural gas leases will subject the Company's revenues to the fluctuations inherent in the energy business for the last several years. Crude oil and natural gas prices have reached record highs during the last several months and expectations are that prices for these commodities will remain above prior levels in the future. Current crude oil prices as posted on the New York Mercantile Exchange (NYMEX) are in the $21.00 to $25.00 per barrel range while natural gas prices reached highs of $9.00 per MMBTU during the winter months of 2000, but have settled into the $3.00-$3.50 range. The Company expects energy prices to continue to be volatile in the future.
Year ended July 31, 2002 compared to year ended July 31, 2001. The Company generated no revenues during the year ended July 31, 2002 or the year ended July 2001. The Company expects its revenues to remain marginal until it begins continuous operations on the Duke Mine planned for 2003.
Operating expenses for the year ended July 31, 2002 and for the year ended July 31, 2001 were both $0 the lack of any significant operations during the most recent fiscal year. The Company does not expect to incur substantial operating expenses until its mining or oil and natural gas operations are in continuous operation. General and administrative expenses increased to $466,875 for the year ended July 31, 2002 from $285,281 for the year ended July 31, 2001 and reflects the expenses associated with the purchase of control of Warrior, the development of the Rx Power business, the environmental business and funding of engineering and other overhead costs from the prior year. The Company expects the level of its general and administrative expenses to remain high during the period of high acquisition activity and until the Duke mine is in continuous operation.
The Company incurred an after tax net loss of $820,242 ($0.05 per share) for the year ended July 31, 2001 compared to an after tax net loss of $1,373,443 ($0.10 per share) for the prior year. The net loss is comprised of impairment losses as a result of the Warrior acquisition of $388,844 and $997,242 as of July 31, 2002 and July 31, 2001 respectively. The balance of the net loss is a result of general and administrative costs incurred. The Company does not expect to generate a profit until its mining operations are in continuous production or until it develops significant oil and gas operations.
Year ended July 31, 2001 compared to year ended July 31, 2000. The Company generated no revenues during the year ended July 31, 2001 or the year ended July 2000. The Company expects its revenues to remain marginal until it begins continuous operations on the Duke Mine planned for 2002.
Operating expenses for the year ended July 31, 2001 were $0 compared to $7,407 for the same period a year earlier and reflect the startup of operations in the environmental business during the prior year in contrast to the lack of any operations during the most recent fiscal year. The Company does not expect to incur substantial operating expenses until its mining or oil and natural gas operations are in continuous operation. General and administrative expenses decreased to $285,281 for the year ended July 31, 2001 from $570,012 for the year ended July 31, 2001 and reflects the reduced expenses associated with the environmental business, the Duke Gold Mine pilot plant operation and funding of engineering and other overhead costs from the prior year. The Company expects the level of its general and administrative expenses to remain high until advance studies and other planning is completed and the mine is in continuous operation.
The Company incurred an after tax net loss of $376,201 ($0.03 per share) for the year ended July 31, 2001 compared to an after tax net loss of $638,602 ($0.05 per share) for the prior year. The decrease in the loss is a result of the decrease in general and administrative expenses from the prior year. The Company does not expect to generate a profit until its mining operations are in continuous production.
Year ended July 31, 2000 compared to year ended July 31, 1999. Total revenues for the Company for the year ended July 31, 2000 were $0 compared to $53,744 for the year ended July 31, 1999 and reflects management fees as a result of the Company's subleases on its office space and revenues from the Company's environmental business. The Company expects its revenues to remain marginal until it begins continuous operations on the Duke Mine.
Operating expenses for the year ended July 31, 2000 were $7,407 compared to $119,649 for the same period a year earlier and reflect the operation of the company's environmental business in 1999. The Company does not expect to incur substantial operating expenses until one of its mining operations is in continuous operation. General and administrative expenses decreased dramatically from $839,393 for the year ended July 31, 1999 to $570,012 for the year ended July 31, 2000 and reflects the reduced level of the Company's operations during 2000. The Company expects the level of its general and administrative expenses to remain high until advance studies and other planning is completed and the Duke mine in continuous operation.
The Company incurred an after tax net loss of $638,602 ($0.05 per share) for the year ended July 31, 2000 compared to an after tax net loss of $1,006,421 ($0.10 per share) for the prior year. The decrease in the loss is a result of the lower level of general and administrative expenses for 2000 and the fact that the loss in 1997 was increased by impairment losses attributable to the Company's mining properties and equipment during 1999 of $1,329,474. The Company does not expect to generate a profit until its mining operations are in continuous operations.
Capital Resources and Liquidity.
The Company's capital requirements relate primarily to its mining activities and the expansion of those activities and the development of its oil and natural gas business. Prior to the change in control, the Company funded its very limited activities from cash flow. The Company, through its subsidiaries, had established credit facilities with a bank to facilitate the funding of its operations. As a result of the sale of its Premier Operating subsidiary in October, 1996, the Company retired its principal bank debt and no longer has access to financing from that source.
As a result of the inability of the Company to raise capital, Management decided to terminate all of the Company's mining lease commitments except the Duke Gold Mine in Utah during fiscal 2000. As a result, the Company is active in only one mine that will require significant capital expenditures. Management determined that the Company should position itself in a high-profile natural gas projects in an effort to attract capital and due to increasing natural gas prices. The Company completed the acquisition of control of Warrior Resources, Inc. on February 13, 2002. Warrior had experienced a considerable degree of decline in its operations and financial condition as a result of management and director disagreements that had led to lawsuits and disrupted the continuity of management of Warrior. The Company acquired approximately a 36% overall stock position in Warrior and assumed management control. In assuming management
control and consolidating Warrior's operations, the Company eliminated approximately $65,000 per month in Warrior's overhead and was able to complete a refinancing of Warrior's principal bank debt. In addition, the Company assisted Warrior in eliminating approximately $1.0 million in third party trade and note payables. Warrior has begun a work program on its properties to increase cash flow which, if successful, should allow it to re-pay its new bank facility, eliminate over time its remaining trade accounts payable and repay the Company. Due to the termination of the merger agreement with Warrior, the Company is entitled to receive compensation in the amount of $200,000 or an equivalent value of Warrior common stock issued at $0.02 per share. As a result of the refinancing of Warrior's debt, the Company ahs begun to invoice Warrior for use of its facilities and office space and for management time spent on Warrior at the rate of $10,000 per month.
The Company has a wide degree of discretion in the level of capital expenditures it must devote to the mining project on an annual basis and the timing of its development. The Company has primarily been engaged, in its recent past, in the acquisition and testing of mineral properties to be inventoried for future development. Because of the relative magnitude of the capital expenditures that may ultimately be required for any single mining venture as operations are achieved, Management has pursued a strategy of acquiring properties with significant mineral potential in an effort to create a mineral property base sufficient to allow the Company to access capital from external sources, either through debt or equity placements. In order to develop its properties in a continuous manner in the future, Management believes the Company will need to raise capital from outside sources during fiscal 2002. The Company has received two offers for equity lines, subject to the filing of a Regulation D private placement in the approximate amount of $5 million each. The Company has not accepted either offer at the present time, although management expects to complete one of the transactions during fiscal 2003.
The Company entered into negotiations in fiscal 2000 with Asia Pacific Capital Corporation, a merchant banking firm headquartered in Sydney, Australia, to provide an equity infusion of $12 million for the purchase of 20 million shares of the Company's restricted common stock and would provide project financing of up to $47 million. Asia Pacific has been unable to complete the transaction and the Company has terminated the negotiations.
As a result of the acquisition of control of Oil City and the subsequent sale of Oil City's assets to Comanche, the Company owned 5,481,901 shares of the restricted common stock of Comanche. The Company entered into a transaction with Ravello Capital LLC in order to raise cash to pay off a judgement creditor, its private, non-affiliate noteholders and to raise capital for its New Albany Shale Project. As discussed previously, Ravello paid the judgement creditor, however, it failed to complete the balance of the transaction and the Company filed suit against Ravello for breach of contract, among other things. The Company was awarded a monetary judgement in the amount of $448,390 against Ravello and subsequently received the reissued shares of common stock in Comanche (now Warrior) and credited the judgement in the amount of $85,638.02. The balance of the judgement remains unsatisfied.
The Company intends to continue to pursue each of the above transactions in an effort to finance its operations, however, in the event that additional capital is not obtained from other sources, it may become necessary to alter development plans or otherwise abandon certain ventures.
Although the timing of expenditures for the Company's mining and oil and natural gas activities are distributed over several months, the Company anticipates its current working capital will be insufficient to meet its capital expenditures. The Company believes it will be required to access outside capital either through debt or equity placements or through joint venture operations with other mining or oil and natural gas companies. There can be no assurance that the Company will be successful in its efforts to locate outside capital and as a result the level of the Company's planned mining and oil and natural gas activities may need to be curtailed, deferred or abandoned entirely. The level of the Company's capital expenditures will vary in the future depending on commodity market conditions and upon the level of and mining activity achieved by the Company. The Company anticipates that its cash flow will be insufficient to fund its operations at their current levels and that additional funds will be required.
The Company sold its oil and gas properties in October 1996 and its Premier Operating subsidiary and paid off its then existing credit facility with Bank of Oklahoma. As a result the Company presently has no credit facility available to fund its mining or oil and natural gas activities and will be required to rely on private debt placements or equity sales to fund any remaining capital expenditures. The Company has obtained certain unsecured loans from its Chairman and President, Jeffrey T. Wilson, which total in principal and accrued interest $641,094 as of July 31, 2002. These funds have been used to initiate the Company's mining activities and fund its overhead requirements. Management believes that the Company will not have sufficient borrowing capacity to fund its anticipated needs and will need to access outside capital.
At July 31, 2002, the Company had current assets of $48,624 and current liabilities of $2,021,088, which resulted in negative working capital of $1,972,464. The negative working capital position is comprised of accounts payable of $92,263, notes payable to shareholders and related parties totaling $765,817, accrued salaries and expenses totaling $1,083,008 and third party notes payable of $80,000. As discussed earlier, if the Company is unsuccessful in obtaining outside capital certain mining or oil and natural gas activities of the Company may be curtailed, postponed or abandoned. The Company believes that its cash flow from operations will continue to be insufficient to meet its ongoing capital requirements and short-term operating needs. As a result the Company plans to seek additional capital from outside sources through the placement of additional debt or equity during fiscal 2002. The previously discussed transactions regarding equity infusions, if successful, will provide the Company with sufficient funds to pursue its mining and oil and natural gas ventures on the timely basis as discussed herein. Because the availability of debt and equity financing are subject to a number of variables, there can be no assurance that the Company will be successful in attracting adequate financing and as a result may be required to curtail, postpone or abandon certain of its planned capital expenditures. If the Company is unable to attract adequate financing, management believes the Company may be compelled to sell or abandon certain of its assets to meet its obligations.
Seasonality
The results of operations of the Company are somewhat seasonal due to seasonal fluctuations in the ability to conduct mining operations in certain areas, resulting in lower production volumes and due to fluctuations in energy prices due to seasonal variations. To date these variations have been minimal. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of results, which may be realized on an annual basis. As operations commence and production is realized on its mining and oil and natural gas properties, these influences will become more significant.
Inflation and Prices
The Company's revenues and the value of its mining and oil and natural gas properties have been and will be affected by changes in copper and gold prices. And the prices for crude oil and natural gas. The Company's ability to obtain additional capital on attractive terms is also substantially dependent on the price of these commodities. Prices for these commodities are subject to significant fluctuations that are beyond the Company's ability to control or predict.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Audited Financial Statements of Imperial Petroleum, Inc.
Independent Auditor's Report.................................................F-1
Consolidated Balance Sheets as of July 31, 2002 and 2001.....................F-2
Consolidated Statements of Operations for the years ended July 31, 2002, 2001 and 2000.........................................F-3
Consolidated Statements of Stockholder's Equity for the years Ended July 31, 2002, 2001 and 2000.....................................F-4
Consolidated Statements of Cash flows for the years ended July 31, 2002, 2001 and 2000...........................................F-5
Notes to Consolidated Financial Statements......................F-7 through
Item9. Changes in and Disagreements with Accountants on Accounting And Financial Disclosure.
Not applicable.
Consolidated Financial Statements
IMPERIAL PETROLEUM, INC. and SUBSIDIARIES
July 31, 2002, 2001 and 2000
IMPERIAL PETROLEUM, INC.
and
SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JULY 31, 2002 and 2001
and
FOR THE YEARS ENDED
JULY 31, 2002, 2001 and 2000
and
INDEPENDENT AUDITOR'S REPORT
IMPERIAL PETROLEUM, INC.
July 31, 2002, 2001, and 2000
T A B L E O F C O N T E N T S -----------------------------
Page
Independent Auditor's Report
Consolidated Financial Statements:
Consolidated Balance Sheets 2&2A
Consolidated Statements of Operations 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5-6
Notes to Consolidated Financial Statements 7-27
INDEPENDENT AUDITOR'S REPORT
Board of Directors Imperial Petroleum, Inc. Evansville, Indiana
We have audited the accompanying consolidated balance sheets of Imperial Petroleum, Inc. (A Development Stage Company) as of July 31, 2002 and 2001 and the consolidated statements of operations, stockholders' equity, and cash flows for the years ended July 31, 2002, 2001 and 2000. 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Imperial Petroleum, Inc. (A Development Stage Company) as of July 31, 2002 and 2001 and the results of its operations and its cash flows for the years ended July 31, 2002, 2001 and 2000, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and substantial working capital deficiencies. These factors raise substantial doubt about its ability to continue as a going concern. Further, there can be no assurance, assuming the Company successfully raises additional funds, that it will be able to economically recover the value of its mining claims or achieve profitability. Management's plans in regard to these matters are also described in Note 1 to the financial statements.
BRISCOE, BURKE & GRIGSBY LLP
Certified Public Accountants
December 11, 2002
IMPERIAL PETROLEUM, INC. (A Development Stage Company) Consolidated Balance Sheets July 31, 2001 and 2000
ASSETS 2002 2001 --------- --------- Current assets: Cash $ 2,869 $ 1,074 Accounts receivable - other - - Accrued interest receivable 45,755 47,488 ------- ---- Total current assets 48,624 48,562
Property, plant and equipment (Notes 1, 2, and 4): Mining claims, options and development costs less impairment 41,760 41,760 Equipment 1,107 1,107 Acquisition in progress (Note 13) 4,000 4,000 ------ --------- 46,867 46,867
Less: accumulated depreciation 1,107 1,107
Net property, plant and equipment 45,760 45,760
Other assets: Notes receivable - related parties (Note 3) 192,408 330,261
Investments- Warrior Resources (Notes 2 and 11) 208,298 219,740 ------- ---------
Total other assets 400,706 550,001 ---------- ----------
TOTAL ASSETS $ 495,090 $ 644,323 ======= =========
LIABILITIES and STOCKHOLDERS' EQUITY 2002 2001 --------- ------
Current liabilities: Accounts payable $ 92,263 $ 188,399 Accrued expenses (Note 17) 1,083,008 958,806 Notes payable (Note 6) 80,000 80,000 Notes payable - related parties (Note 7) 765,817 789,813 ------- -------
Total current liabilities 2,021,088 2,017,018
Noncurrent liabilities: Unearned revenue - noncurrent (Note 16) 304,359 304,359 Deferred income taxes (Note 5) - - ------------- ----------
Total noncurrent liabilities 304,359 304,359
Stockholders' equity: Common stock of $0.006 par value, authorized 50,000,000 shares; 39,363,946 issued in 2002 and 13,925,276 shares in 2001 236,184 83,552 Paid-in capital 6,247,583 4,069,776 Accumulated deficit (6,070,820) (5,250,578) Treasury stock, at cost (21,368,957 shares in 2002 and 652,290 shares in 2001) (2,243,304) (579,804) ----------- -----------
Total stockholders' equity (deficit) (1,830,357) (1,677,054)
Commitments and contingencies (Note 9) - - -------------- -------------
TOTAL LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIT) $ 495,090 $ 644,323 ======= ============
The accompanying notes are an integral part of these consolidated financial statements
2A
IMPERIAL PETROLEUM, INC. (A Development Stage Company) Consolidated Statements of Operations For the Years Ended July 31, 2002, 2001 and 2000
2002 2001 2000 ------------ ------------ ------------ Operating income: Management fees $ - $ - $ - Environmental service revenues - - - ------------ ------------ -----------
Total operating income - - - ------------ ------------ -----------
Operating expenses: Cost of goods sold - - - Mining lease operating expense - Research and development - - 7,407 Impairment loss (Note 11) 388,844 997,242 374,697 General and administrative expenses 466,875 285,281 570,012 Depreciation, depletion and amortization (Note 2) - - ------------ ------------ ----------
Total operating expenses 855,719 1,282,523 952,854
Loss from operations (855,719) (1,282,523) (952,854) Other income and (expense): Interest expense (78,788) (74,548) (101,758) Interest income 25,433 25,172 11,213 Other income 88,832 12,000 30,100 Gain (loss) on sale of assets (Note 15) - (53,544) - - ----------- ------------ -----------
Net loss before income taxes (820,242) (1,373,443) (1,013,299) ----------- ------------ -----------
Provision for income taxes: (Note 5) Current - - - Deferred - - - ------------ ------------ -----------
Total benefit from income taxes - - - ------------ ------------ -----------
Net loss $ (820,242) $(1,373,443) $(1,013,299) ============ =========== ============
Loss per share (Note 2) $ (.05) $ (.10) $ (.08) ============ ============ ============ Weighted average shares outstanding 16,598,593 13,144,969 12,560,958 The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
For the Years Ended July 31, 2002, 2001, and 2000
The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended July 31, 2002, 2001 and 2000
2002 2001 2000 ---- ---- ---- Cash flows from operating activities: Historical net loss $(820,242) $(1,373,443) $(1,013,299) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion and amortization - - Expenses paid with common stock 242,554 40,000 - - Loss(Gain) on sale and disposal of assets - 4,060 - - Write-offs 59,427 - 49,484 Realized loss on marketable securities - 49,484 - Impairment 388,844 997,242 374,697 (Increase) Decrease in accounts receivable - other - - 3,000 (Increase) Decrease in notes receivable - related party - 11,213 (11,213) (Increase) Decrease in notes receivable - other 10,353 (37,115) (21,120) (Increase) Decrease in inventories - - - (Increase) Decrease in other current assets - - - Increase (Decrease) in accounts payable (9,542) 11,858 135,490 Increase (Decrease) in accrued expenses 195,190 203,346 297,746 Increase (Decrease) in unearned revenue - - 6,918 ------- ------- --------- Net cash used for operating activities (77,705) (112,872) (84,285)
Cash flows from investing activities: Acquisition in progress - - (4,000) Purchases of equipment - - - Sale of securities - 33,716 - ------- ------- --------
Net cash used for investing activities - 33,716 (4,000)
The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended July 31, 2002, 2001 and 2000
2002 2001 2000
Cash flows from financing activities: Increase (Decrease) in notes payable - 62,526 39,500 Increase (Decrease) in notes payable related parties 79,500 17,524 47,550 ------ ------ ------ Net cash provided by financing activities 79,500 80,050 87,050
Net increase (decrease) in cash and cash equivalents 1,795 894 (1,235)
Cash and cash equivalents at beginning of year 1,074 180 1,415 ----- ----- ------ Cash and cash equivalents at end of year 2,869 1,074 180
Supplemental disclosures of cash flow information: Cash paid during the period for Interest - - - Income taxes - - -
Supplemental schedule of noncash investing and financing activities:
Stock issued for mining equipment and mining claim options - - - - Stock issued for services 242,554 40,000 - Stock issued for investment 377,403 - - Stock subscribed - - 127,500 Stock cancelled - - 3,900 Notes receivable - (172,498) - Impairments (388,844) (997,242) (374,697) Write-down of mining claims - - - Write-offs 59,427 (4,060) 142,758 Stock issued to extinguish debt 103,496 74,284 208,273 --------- -------- ---------- Total 394,036 (1,059,516) 107,734 ========= ======== ==========
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
The accompanying notes are an integral part of these consolidated financial statements.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION
Organization
The Company is attempting to obtain capital, through its wholly owned subsidiary, Ridgepointe Mining Company, to continue testing, defining and developing mineral reserves on mining claims it owns or operates in the southwestern and western United States.
The Company is engaged, through its wholly owned subsidiary Imperial Environmental Company, in developing and marketing water filtration systems to municipalities.
Financial Condition
The Company's financial statements for the year ended July 31, 2002 have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss of $820,242 and $1,373,443 for the years ended July 31, 2002 and 2001, respectively, and as of July 31, 2002 has an accumulated deficit of $6,070,820 and a deficit working capital of $1,972,464.
Management Plans to Continue As A Going Concern
The Company believes that it will require outside capital to continue as a going concern. The Company has offers in hand from two independent groups, Cornell Capital and Joseph Stevens & Company, providing equity lines of credit of up to $5,000,000 each. The terms of each are similar and provide for the Company, subject to filing a Regulation D private placement memorandum, to sell registered shares of its common stock at or near the average "bid" price of the stock as quoted on the Bulletin Board. The Company will have the discretion and control over how much stock and when the shares are placed. The Company has not yet executed either of the offers, pending completion of their current filings.
The Company controls the efforts of Warrior Resources, Inc. as a result of the acquisition of control of Warrior during fiscal 2002. As a result of the refinancing of Warrior's senior debt, the Company has begun invoicing Warrior for management fees beginning in October 2002 at the rate of $10,000 per month to cover use of the Company's facilities and management time spent on Warrior's behalf. These fees, as paid by Warrior, will adequately cover overhead charges incurred by the Company. A potential sale of control of Warrior, as currently contemplated, will result in the infusion of approximately $1,200,000 in capital into the Company.
Management is currently in negotiations with other companies to acquire their operations and assets for stock of the Company.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Acquisition of Imperial Petroleum, Inc.
Pursuant to an Agreement to Exchange Stock and Plan of Reorganization dated August 27, 1993 (the "Stock Exchange Agreement"), between Imperial Petroleum, Inc. ("Imperial"), Glauber Management Company, ("Glauber Management"), Glauber Valve Co., Inc., ("Glauber Valve"), and the Ridgepointe Stockholders, the Ridgepointe Stockholders agreed to exchange (the "Ridgepointe Exchange Transaction") a total of 12,560,730 shares of the common stock of Ridgepointe Mining Company, representing 100% of the issued and outstanding common stock of Ridgepointe, for a total of 12,560,730 shares of newly issued shares of Imperial's common stock representing 59.59% of Imperial's resulting issued and outstanding common stock. The one-for-one ratio of the number of shares of Imperial's common stock exchanged for each share of Ridgepointe common stock was determined through arms length negotiations between Imperial and the majority stockholders of Ridgepointe. As a result, Ridgepointe became a wholly owned subsidiary of Imperial.
As a condition to the Ridgepointe Exchange Transaction, Imperial received and canceled 7,232,500 shares of its Common Stock from Glauber Management and received 100,000 shares of the common stock of Tech-Electro Technologies, Inc. from an affiliate of Glauber Management and Glauber Valve. In addition, Glauber Management or Glauber Valve, or their affiliates, transferred to Imperial 75,000 shares of common stock of Chelsea Street Holding Company, Inc.
Acquisition of Premier Operating Company
Pursuant to a Stock Exchange Agreement dated October 4, 1993 (the "Stock Exchange Agreement") between Imperial Petroleum, Inc. and the Premier Stockholders, the Premier Stockholders agreed to exchange (the "Premier Exchange Transaction") an aggregate of 749,000 shares of the common stock of Premier Operating Company ("Premier"), consisting of 252,000 shares of Class A voting common stock and 497,000 shares of non-voting Class B common stock, representing 100% of the issued and outstanding common stock of Premier, for a total of 749,000 shares of newly issued shares of the Company's common stock representing 3.62% of the Company's resulting issued and outstanding common stock. The one-for-one ratio of the number of shares of the Company's common stock exchanged for each share of Premier common stock was determined through arms length negotiations between the Company and a major shareholder of Premier, on behalf of the Premier Stockholders. The business combination was accounted for using the purchase method of accounting. As a result, Premier became a wholly owned subsidiary of the Company.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Development Stage Companies
A summary of the financial information of Ridgepointe Mining Company (A Development Stage Company), excluding its wholly owned subsidiary I. B. Energy, Inc., is as follows:
2002 2001 2000
Current assets $ - $ - $ - Net claims and equipment 41,760 41,760 41,760 Other assets - - -
Total assets 41,760 41,760 41,760 ====== ====== ======
2002 2001 2000
Current liabilities $ 663,512 $ 654,973 $ 646,694 Long-term liabilities - - - Common stock 125,107 125,107 125,107 Paid-in capital 1,343,886 1,343,886 1,343,886 Deficit accumulated before development stage (121,953) (121,953) (121,953) Deficit accumulated during development stage (1,968,792) (1,960,253) (1,951,974) ----------- ----------- -----------
Total liabilities and stockholders' deficit $ 41,760 $ 41,760 $ 41,760
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Cumulative 2002 2001 2000 From Inception ---- ---- ---- -------------- Operating Revenues - - - - Miscellaneous income - - - 96,579
Total income - - - 96,579
Lease operating expenses - - - 162,922 Impairment loss - - - 578,674 General and administrative 1,923 2,124 56,263 407,376 ----- ------ -------- --------
Total expenses 1,923 2,124 56,263 1,148,972
Net operating loss (1,923) (2,124) (56,263) (1,052,393)
Interest expense (6,616) (6,155) ( 6,479) (300,076) Gain (Loss) on sale/write-down of assets - - - (786,093) ------- -------- -------- -----------
Net income (loss) before income taxes (8,539) (8,279) (62,742) (2,138,562)
Income tax Benefit - - - - ------- -------- --------- ----------- Net loss (8,539) (8,279) (62,742) (2,138,562)
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Cumulative From Inception Cash flows from operating activities: Historical net loss $ (2,138,562) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and depletion - Non-cash impairment (578,674) Increase in current liabilities 749,762 ---------
Net cash used for operating activities (1,967,474) --------------
Cash flows from investing activities: Mining options, properties and equipment purchased - net 620,434 -------------
Net cash used for investing activities 620,434 -----------
Cash flows from financing activities: Stock issued for funding 1,347,040 ------------
Net cash provided by financing activities 1,347,040 -------------
Net increase in cash and cash equivalents -
Cash and cash equivalents at inception - -------------
Cash and cash equivalents at July 31, 2002 $ - ========
Supplemental disclosures of cash flow information: Cash paid during the period for Interest $ - Income taxes
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
A summary of the financial information of Imperial Environmental Company (formerly Phoenix Metals, Inc.) (A Development Stage Company) is as follows:
2002 2001 2000 ---- ---- ----
Current assets Inventories - - - Fixed assets - - 4,060 Other assets - - - ---- ------ ------- Total assets - - 4,060
Current liabilities 228,607 228,607 221,200 Long-term liabilities Common stock Paid-in capital Deficit accumulated during development stage (228,607) (224,547) (224,547) --------- --------- --------
Total liabilities and stockholders' deficit - - 4,060
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Cumulative 2002 2001 2000 From Inception ---- ---- ---- -------------- Operating revenues - - - 53,744 Miscellaneous Income - - - - ---- ---- ------ ------ Total income - 53,744
Operating expenses - - - 110,529 Research and development - - 7,407 7,407 General and administrative - - 142,757 149,842 Depreciation and amortization - - 738 10,513
Total expenses - - 150,902 278,291 ---- --------- -------- --------- Net operating loss - - (150,902) (224,547)
Gain(Loss) on sale of assets - (4,060) - (4,060)
Interest expense
Net income (loss) before income taxes - (4,060) (150,902) (228,607)
Income tax benefit ------- --------- -------- --------- Net loss - (4,060) (150,902) (228,607)
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. ORGANIZATION AND BUSINESS COMBINATION (continued)
Cumulative From Inception Cash flows from operating activities: Historical net loss (228,607) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,513 Increase in other assets Increase in current liabilities 228,607 (Gain)Loss on sale of assets 4,060 --------- Net cash used for operating activities 14,573
Cash flows from investing activities: Equipment purchased - net (14,573) -------- Net cash used for investing activities (14,573) -------------
Cash flows from financing activities:
Debt -
Net cash provided by financing activities -
Net increase in cash and cash equivalents -
Cash and cash equivalents at inception -
Cash and cash equivalents at July 31, 2002 -
Supplemental disclosures of cash flow information: Cash paid during the period for
Interest - Income taxes -
Disclosure of accounting policy: For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The July 31, 2002, 2001 and 2000 financial statements include the accounts of the Company and its wholly owned subsidiaries, Ridgepointe Mining Company, Premier Operating Company, I. B. Energy, Inc., LaTex Resources International, Inc., and Imperial Environmental Company(formerly Phoenix Metals, Inc.). All significant intercompany accounts have been eliminated.
Accounting Estimates
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments
The fair value of current assets and current liabilities are assumed to be equal to their reported carrying amounts due to the short maturities of these financial instruments.
The carrying value of all other financial instruments approximates fair value.
Investments
The equity method of accounting is used for all investments in associated companies in which the Company's interest is 20% or more. Under the equity method, the Company recognizes its share in the net earnings or losses of these associated companies as they occur rather than as dividends are received. Dividends received are accounted for as a reduction of the investment rather than as dividend income.
The investments are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the investment may not be recoverable.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high quality financial institutions and limits the amount of exposure to any one institution. In the case of default of any one financial institution, no cash exists that is not covered by the FDIC. The Company currently operates in the mining and environmental technologies industries. The concentration of credit risk in a single industry affects the Company's overall exposure to credit risk because customers may be similarly affected by changes in economic and other conditions. The Company is dependent on the continued financial support of its Chief Executive Officer through loans to the Company and salary deferral.
Development Stage Subsidiaries
Ridgepointe Mining Company, a wholly owned subsidiary, is in the process of defining mineral reserves and raising capital for operations. As such, Ridgepointe Mining Company is considered a development stage enterprise.
Imperial Environmental Company, a wholly owned subsidiary, is in the process of raising capital to continue developing its water filtration technology. As such, Imperial Environmental Company is considered a development stage enterprise.
Revenue Recognition
Mining and environmental technology revenues will be recognized in the month of sale.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
2. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, Equipment, Depreciation and Depletion
Property and equipment are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of assets. Expenditures which significantly increase values or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. Upon sale or retirement of property and equipment, the cost and related accumulated depreciation and depletion are eliminated from the respective accounts and the resulting gain or loss is included in current earnings.
Mining exploration costs are expensed as incurred. Development costs are capitalized. Depletion of capitalized mining costs will be calculated on the units of production method based upon current production and reserve estimates when placed in service.
Intangibles
The Company has capitalized the costs related to the organization of its development stage subsidiary Imperial Environmental Company. Amortization is computed by the straight-line method over 5 years.
The Company has implemented SOP 98-5, as required, for fiscal year July 31, 2001. SOP 98-5 requires that the intangible asset be charged against income rather than carried as an asset and amortized.
Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of change in tax rates is recognized in income in the period that includes the enactment date.
Loss Per Common Share
Loss per common share is computed based upon the weighted average common shares outstanding. Outstanding warrants are excluded from the weighted average shares outstanding since their effect on the earnings per share calculation is antidilutive.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
2. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
FASB Accounting Standards
The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 121 (SFAS 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. This Statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized.
Reclassification
Certain amounts in the 2001 and 2000 consolidated financial statements have been reclassified to conform with the 2002 presentation.
3. NOTES RECEIVABLE - RELATED PARTIES
Notes receivable from related parties was comprised of the following:
2002 2001 Common stock subscribed - officers - 6% demand note $ - $ 127,500 Warrior Resources (formerly Comanche Energy) - 9% demand note 110,795 151,396 AQ Technologies - 9% demand note 81,613 51,365
Total $ 192,408 $ 330,261
Notes for subscribed stock are from officers of the Company, Malcolm Henley and Stacey Smethers. The Company owns 36% of Warrior Resources and has control with Jeffrey Wilson as its CEO. The Company's CEO has guaranteed the note receivable from AQ Technologies (See Note 9).
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
4. PROPERTY, PLANT and EQUIPMENT
The Company's mining fixed assets consist of the following:
2002 2001
Mining claims $ 74,800 $ 74,800 Equipment 1,107 1,107 Mine development costs 32,634 32,634 Acquisition in progress 4,000 4,000 Impairment reserve (65,674) (65,674)
Total $ 46,867 $ 46,867
The Company has not completed or updated the necessary reserve studies to determine the metal content of the reserves and the related future production costs which affect the recoverability of the capitalized costs. In addition, the Company's going concern problem, lack of capital and other factors led management to recognize an impairment reserve to reduce the carrying value to management's estimate of the amount recoverable upon ultimate disposition. The Company intends to continue to hold and use the impaired assets.
5. INCOME TAXES
Provisions for income taxes are as follows:
2002 2001 2000 (in thousands) Current: Federal $ - $ - $ - State - - -
$ - $ - $ - Deferred: Federal $ - $ - $ - State - - -
$ - $ - $ -
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
5. INCOME TAXES (continued)
Income taxes differed from the amounts computed by applying the U.S. federal tax rate as a result of the following: 2002 2001 2000 (in thousands) Computed "expected" tax expense (benefit) $ (279) $ (467) $ (344) State income taxes net of federal benefit - - - Increase(Decrease) in valuation allowance for deferred tax assets 279 467 478 Other - - (134)
Actual income tax expense $ - $ - $ -
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: 2002 2001 (in thousands) Deferred tax liabilities: Property, plant and equipment $ - $ - Other - -
Total deferred tax liabilities - -
Deferred tax assets: Unrealized loss on securities - - Net operating losses 2,064 1,785 Other - -
Total deferred tax assets 2,064 1,785
Valuation allowance (2,064) (1,785)
Net deferred tax assets - -
Net deferred tax asset (liability) $ - $ -
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
5. INCOME TAXES (continued)
A valuation allowance is required when it is more likely than not that all or a portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon future profitability. Accordingly, a valuation allowance has been established to reduce the deferred tax assets to a level which, more likely than not, will be realized.
The Company has net operating loss (NOL) carryforwards to offset its earnings of approximately $3,000,000. If not previously utilized, the net operating losses will expire in varying amounts from 2013 to 2022.
Due to recurring losses and a lack of funding the Company has not been filing its tax returns. Provisions for current and deferred taxes are estimated using known facts. Any differences from actual are outside of the scope of our examination.
6. NOTES PAYABLE 2002 2001 Gary S. Williky, promissory note, dated November 24, 1997, principal due on demand plus interest at 9.0% $ 40,000 $ 40,000
Thomas J. Patrick, promissory note, dated December 18, 1997, principal due on demand plus interest at 9.0% 40,000 40,000
Total 80,000 80,000
Less: current portion 80,000 80,000
Long-term notes payable $ - $ -
During the year, the Company issued its restricted common stock to extend due dates and partially satisfy principal and accrued interest. However, the notes payable are currently in default. The Company is currently negotiating with the parties to extend or renew notes payable.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTES PAYABLE - RELATED PARTY
2002 2001
H. N. Corporation - 9.0% demand note $ 124,723 $ 102,026 Officer - 10.0% demand note 111,845 111,845 Officer - 7.5% demand note 82,900 129,593 Officer - 9.0% demand note 446,349 446,349
$ 765,817 $ 789,813
8. RELATED PARTY TRANSACTIONS
The Company has entered into transactions with its chief executive officer, Jeffrey T. Wilson. For 2002 and 2001 the Company has accrued an annual salary of $118,500 and $125,000, respectively, for Mr.Wilson. The Company, from time to time, has also entered into loans with its directors, stockholders and related companies (See Notes 3 and 7).
These transactions were consummated on terms equivalent to those that prevail in arm's length transactions.
9. LITIGATION, COMMITMENTS AND CONTINGENCIES
Contingencies
The Company is a named defendant in lawsuits, is a party in governmental proceedings, and is subject to claims of third parties from time to time arising in the ordinary course of business. While the outcome of lawsuits or other proceedings and claims against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse effect on the financial position of the Company.
Commitments (See Note 16)
The Company's Chief Executive Officer is a guarantor of a note payable of AQ Technologies. The approximate amount of this guarantee is $90,000. The Company has been servicing the note due to AQ Technoligies' inability to do so. These payments have been recorded as a note receivable (See Note 3).
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
10. BUSINESS SEGMENTS
The Company's operations involve mining and environmental operations. The following table sets forth information with respect to the industry segments of the Company.
2002 2001 2000 Revenues: (in thousands)
Mining $ - $ - $ - Environmental - - - Other - - -
Total revenues $ - $ - $ -
2002 2001 2000 Identifiable assets: (in thousands)
Mining $ 42 $ 42 $ 46 Environmental 1 1 4 Other 452 601 1,377
$ 495 $ 644 $ 1,427
Depreciation and depletion: Mining $ - $ - $ - Environmental - - 1
$ - $ - $ 1
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
INVESTMENTS IN WARRIOR RESOURCES, INC.
During 1999 the Company acquired a stake in Warrior Resources, Inc. which was recorded as an investment under the cost method. Through an exchange transaction in 2002 the Company now has a 36% interest (34,716,471 shares with an undiscounted trading value of $347,165), exceeded the 20% ownership threshold and has the ability to significantly influence the investee, requiring a change to the equity method of accounting.
A change to the equity method of accounting from the cost method of accounting for an investment requires a retroactive adjustment by the investor to its investment, results of operations, and retained earnings in a manner consistent with the step-by-step acquisition of a subsidiary.
Warrior Resources common stock is traded publicly on over-the-counter markets. Recurring losses and management representations of the investee provide evidence of impairment of this equity investment. Therefore, the impairment allowance required for equity investments under APB Opinion 18 yields a result which reduces the carrying amount of the equity investment to the lower market value as per quoted market prices (currently $.01) discounted for large block and lack of marketability discounts as applicable. Thus the carrying value is unchanged from that when carried using the cost method of accounting for the investment but the results of operations are restated to reflect the change in the carrying value of the investment. The investment presentation has been changed to reflect the change from the cost method to the equity method. An impairment loss of $388,844, $997,242 and $374,697 were recognized in 2002, 2001, and 2000, respectively. The carrying amount of the investment is as follows:
July 31, July 31, 2002 2001
Equity in investee net assets $ 10,560,869 $ 862,530 Impairment allowance 10,352,571 642,790
Net carrying amount $ 208,298 $ 219,740
Condensed selected financial data of Warrior Resources is as follows:
July 31, July 31, 2002 2001
Assets $ 34,404,629 $ 9,562,773 Liabilities 5,258,950 6,232,409
Net assets $ 29,145,679 $ 3,330,364
Net income (loss) $ (5,048,842) $ (1,072,628)
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
12. WARRANTS
The Company has the following warrants outstanding:
200,000 @ $.25, expiring 11/03/02 750,000 @ $.25, expiring 1/30/03 200,000 @ $.50, expiring 1/30/03 150,000 @ $.75, expiring 1/30/03
13. ACQUISITION IN PROGRESS
The Company is currently negotiating to acquire mining claims in New Mexico.
14. LEASE OBLIGATIONS
The Company has a noncancelable operating lease agreement for office space. Total rental expense was $7,953, $24,128, and $24,128 in 2002, 2001 and 2000, respectively. The Company currently offices in Mr. Wilson's home.
15. GAIN ON SALE OF ASSETS
During the year ended July 31, 2001, the Company sold 250,000 shares of its Warrior Resources, Inc. (formerly Comanche Energy) common stock. This transaction resulted in a loss of $49,484. The Company's subsidiary, Imperial Environmental, also wrote off equipment which resulted in a loss of $4,060.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
16. UNEARNED REVENUE
The Company has received advances for future delivery of silica ore. Total advances as of July 31, 2002 and 2001 were $0 and $0, respectively. The Company's commitments under these agreements mature as follows for the years ended July 31:
2003 $ 166,567 2004 107,079 2005 30,713 2006 - Thereafter -
$ 304,359
The Company has allowed its silica ore mining claims to lapse, resulting in the default of these agreements.
17. ACCRUED EXPENSES
The Company has accrued expenses as of July 31 as follows:
2002 2001
Accrued officer salary - CEO $ 808,508 $ 690,008 Accrued interest on notes 274,500 195,710 Accrued damage award (Note 19) - 70,988 Accrued rent - 2,100
$ 1,083,008 $ 958,806
During the year ended July 31, 2002 and 2001 the Company issued 1,053,491 and 1,421,111 shares, respectively, of its restricted common stock to pay accrued interest, pay for services, and extend maturities of notes payable.
IMPERIAL PETROLEUM, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
PART III
Item 10. Directors and Executive Officers of Registrant.
Directors and Executive Officers
The following table sets forth certain information regarding the directors, executive officers and key employees of the Company. (Mr. Malcolm W. Henley and Mrs. Stacey D. Smethers, former directors of the Company resigned their director positions effective August 15, 2001 to pursue other interests. As a result, Annalee C. Wilson and Aaron M. Wilson were appointed as directors of the Company until independent directors are elected at the next shareholder's meeting.)
Name Age Position ---- --- -------- Jeffrey T. Wilson 49 Director, Chairman of the Board, President and Chief Executive Officer
Annalee C. Wilson 45 Director
Aaron M. Wilson 23 Director, Secretary
Jeffrey T. Wilson has been Director, Chairman of the Board, President and Chief Executive Officer of the Company since August 1993. Mr. Wilson was a Director, Chairman and President of LaTex Resources, Inc., an affiliate of the Company, and was the founder of its principal operating subsidiary, LaTex Petroleum Corporation. Prior to his efforts with LaTex, Mr. Wilson was Director and Executive Vice President of Vintage Petroleum, Inc. and was employed by Vintage in various engineering and acquisition assignments from 1983 to 1991. From August 1980 to May 1983 Mr. Wilson was employed by Netherland, Sewell & Associates Inc., a petroleum consulting firm. Mr. Wilson began his career in the oil and gas business in June 1975 with Exxon Company USA in various assignments in the Louisiana and South Texas areas. Mr. Wilson holds a Bachelor of Science Degree in Mechanical Engineering from Rose-Hulman Institute of Technology.
Annalee C. Wilson has been a Director of the Company since August 2001. Mrs. Wilson is the President of HN Corporation, an affiliate of the Company engaged in the operation of retail franchise outlets in malls selling motivation and inspiration material developed by Successories, Inc. and others and in the operation of a Christian restaurant and gift shop. Mrs. Wilson has an Associate Degree in Nursing from the University of Evansville.
Aaron M. Wilson has been a Director of the Company since August 2001. Mr. Wilson is a Vice president of HN Corporation and is the Manager of the Successories franchise store located at Castleton Square Mall owned by HN Corporation. Mr. Wilson received a dual degree in Business Economics and Political Science from the University of Kentucky in 2002.
Section 16(a) Reporting Deficiencies
Section 16(a) of the Securities and Exchange Act of 1934 ("Exchange Act") requires the Company's directors and officers and persons who own more than 10% of a registered class of the Company's equity securities, to file initial reports of ownership on Form 3 and reports of changes in ownership on Forms 4 and 5 with the Securities and Exchange Commission (the "SEC") and the National Association of Securities Dealers ("NASD"). Such persons are required by SEC regulation to furnish the company with copies of all Section 16(a) forms they file.
Based upon a review of From 3, 4 and 5 filings made by the Company's officers and directors during the past fiscal year ended July 31, 2002 under Section 16(a) of the Exchange Act, the Company believes that all requisite filings have been made timely.
Item 11. Executive Compensation.
The table below sets forth, in summary form, (1) compensation paid to Jeffrey T. Wilson, the Company's Chairman of the Board, President and Chief Executive Officer and (2) other compensation paid to officers and directors of the Company. Except as provided in the table below, during the three fiscal years ended July 31, 2002, 2001 and 2000 (I) no restricted stock awards were granted, (ii) no stock appreciation or stock options were granted, (iii) no options, stock appreciation rights or restricted stock awards were exercised, and (iv) except as provided below, no awards under any long term incentive plan were made to any officer or director of the Company.
The Company began accruing salary due to Jeffrey T. Wilson in January 1994. To date no actual salary payments have been made to Mr. Wilson.
SUMMARY COMPENSATION TABLE
Long Term Awards Annual Compensation Warrants ------------------- --------
Name and Principal Position Year Salary Bonus # shares
Jeffrey T. Wilson 2002 $ 125,000 ----- -------- 2001 $ 125,000 ----- 200,000 2000 $ 125,000 ----- --------
Annalee C. Wilson 2002 ------- ----- -------- 2001 ------- ----- -------- 2000 ------- ----- --------
Aaron M. Wilson 2002 ------- ----- -------- 2001 ------- ----- -------- 2000 ------- ----- --------
None of the executive officers listed received perquisites or other personal benefits that exceeded the lesser of $50,000 or 10% of the salary and bonus for such officers. Annalee C. Wilson Aaron M. Wilson were not directors of the Company during fiscal 2002, and neither received any compensation from the Company during that period.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of July 31, 2002, the Company has 19,363,946 issued and outstanding shares of common stock. (Excluding 20,000,000 shares issued but held pending the completion of the Asia Pacific transaction. These shares were subsequently cancelled) The following table sets forth, as of July 31, 2002, the number and percentage of shares of common stock of the Company owned beneficially by (I) each director of the Company, (ii) each executive officer of the Company, (iii) all directors and officers as a group, and (iv) each person known to the Company to own of record or beneficially own more than 5% of the Company's common stock. Except as otherwise listed, the stockholders listed in the table have sole voting and investment power with respect to the shares listed. As of July 31,2002, the Company had approximately 602 holders of common stock of record.
Number of Shares Name of Beneficial Owner Beneficially Owned Percent of Class
Jeffrey T. Wilson (1) 4,451,377 23.0%
Annalee C. Wilson(2) 1,341,792 6.9%
Aaron M. Wilson (3) 119,834 0.6%
All officers and directors as a Group (3 people) at 7/31/2002 5,913,003 30.5%
HN Corporation(4) 1,127,747 5.8%
Gene Moser(5) 1,148,521 5.9%
Estate of Luther Henderson(6) 2,266,457 11.7%
Total officers, directors and 5% shareholders 6,241,237 42.2%
(1) The mailing address of Mr. Wilson is 11600 German Pines, Evansville, IN 47725. Includes 589,584 shares held jointly with Mrs. Wilson; includes 375,540 shares owned by HN Corporation in which Mr. Wilson owns 33.3%. Does not include 50,000 shares held in Trust by Old National Bank for Mr. Wilson's children.
(2) The mailing address of Mrs. Wilson is 800 N. Green River Road, Evansville, IN 47715. Includes 589,584 shares held jointly with Mr. Wilson; includes 752,208 shares owned by HN Corporation in which Mrs. Wilson owns 66.7%. Does not include 50,000 shares held in Trust by Old national Bank for Mrs. Wilson's children.
(3) The mailing address for Mr. Wilson is 11600 German Pines Drive, Evansville, IN 47725. Includes 16,500 shares held in Trust by Old National Bank.
(4) The mailing address of HN Corporation is 800 N. Green River Rd., Evansville, IN 47715. Mrs. Annalee Wilson is the President of HN Corporation, Jeffrey T. Wilson is the Vice President of HN Corporation and Aaron M. Wilson is a Vice President of HN Corporation.
(5) Mr. Moser's mailing address is PO Box 476, Bluffton, IN 47614.
(6) The Executor of Mr. Henderson's Estate is Mr. Ajit Jhangiani. The address is 5608 Malvey, Suite 104, Fort Worth, TX 76107.
Item 13. Certain Relationships and Related Transactions.
Jeffrey T. Wilson, Chairman, President and Chief Executive Officer of the Company has made unsecured loans to the Company which total $644,094 in principal as of July 31, 2002.
HN Corporation, a private retail company owned by Mr. Wilson and his wife, has made unsecured loans to the Company which total $124,723 in principal as of July 31, 2002. Annalee Wilson serves as the President of HN Corporation and owns 66.7% of its common stock, Jeffrey T. Wilson serves as the Vice President and Secretary of HN Corporation and owns 33.3% of its stock and Aaron M. Wilson serves as a Vice President of HN Corporation.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. ---------------------------------------------------------------
(a) Financial Statements (See Item 8. Financial Statements and Supplementary Data)
Financial Statements of Imperial Petroleum, Inc.
Reports of Independent Public Accountants; Consolidated Balance Sheets as of July 31, 2000 and 1999; Consolidated Statements of Operations for the years ended July 31, 2000, 1999, and 1998; Consolidated Statements of Stockholder Equity for the years ended July 31, 2000, 1999, and 1998; Consolidated Statements of Cash Flows for the years ended July 31, 2000, 1999, and 1998; Notes to Consolidated Financial Statements.
Supplemental Financial Information
Schedule II - Amounts Receivable from Related Parties. Other Schedules are omitted as they are not required.
(b) Reports on Form 8-K.
Report on Form 8-K filed February 13, 2002 with the Securities and Exchange Commission.
(c) Exhibits. None.
3.1 Certificate of Incorporation of the Registrant incorporated herein by reference to Exhibit -~ of the Form 10.
3.2 Bylaws of the Registrant incorporated herein by reference to Exhibit B of the Form 10.
4. Instruments defining the rights of security holders, including indentures. Not applicable.
9. Voting Trust Agreement. Not applicable.
11 Statement re: computation of per share earnings. Not applicable.
12 Statement re: computation of ratios. Not applicable.
13 Annual Report to security holders, Form 10-Q, or quarterly report to security holders. Not applicable.
16 Letter re change in certifying accountant. Not applicable.
18 Letter re: change in accounting principles. Not applicable.
21 Subsidiaries of the Registrant.
22 Published report regarding matters submitted to vote of security holders. Included by reference.
23 Consents of experts and counsel. Not applicable.
24 Power of Attorney. Not applicable.
27 Financial Data Schedule. Not applicable.
28 Information from reports furnished to state insurance regulatory authorities. Not applicable;
99 Additional Exhibits; Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Imperial Petroleum, Inc. Date: December 17, 2002 /s/ Jeffrey T. Wilson ---------------------- Jeffrey T. Wilson, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jeffrey T. Wilson President and Chief Executive - ---------------------- Officer (Principal Executive Jeffrey T. Wilson Officer) and Director December 17, 2002
CERTIFICATION
I, Jeffrey T. Wilson (President) certify that:
1. I have reviewed this annual report on Form l0-K of Imperial Petroleum, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Act of 1934 Rules 13a-l4 and 15d-l4) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report are my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: 12/17/02 By: /s/ Jeffrey T. Wilson, President & CEO
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
In connection with the annual report of Imperial Petroleum, Inc. (the "Company") on Form l0-K for the year ended July 31, 2002, Jeffrey T. Wilson hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SARBANES - OXLEY Act of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section 13(a) of the Securities Act of 1934; and
2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: 12/17/02 By: /s/ Jeffrey T. Wilson, President & CEO
Item 10. Directors and Executive Officers of Registrant.
Directors and Executive Officers
The following table sets forth certain information regarding the directors, executive officers and key employees of the Company. (Mr. Malcolm W. Henley and Mrs. Stacey D. Smethers, former directors of the Company resigned their director positions effective August 15, 2001 to pursue other interests. As a result, Annalee C. Wilson and Aaron M. Wilson were appointed as directors of the Company until independent directors are elected at the next shareholder's meeting.)
Name Age Position ---- --- -------- Jeffrey T. Wilson 49 Director, Chairman of the Board, President and Chief Executive Officer
Annalee C. Wilson 45 Director
Aaron M. Wilson 23 Director, Secretary
Jeffrey T. Wilson has been Director, Chairman of the Board, President and Chief Executive Officer of the Company since August 1993. Mr. Wilson was a Director, Chairman and President of LaTex Resources, Inc., an affiliate of the Company, and was the founder of its principal operating subsidiary, LaTex Petroleum Corporation. Prior to his efforts with LaTex, Mr. Wilson was Director and Executive Vice President of Vintage Petroleum, Inc. and was employed by Vintage in various engineering and acquisition assignments from 1983 to 1991. From August 1980 to May 1983 Mr. Wilson was employed by Netherland, Sewell & Associates Inc., a petroleum consulting firm. Mr. Wilson began his career in the oil and gas business in June 1975 with Exxon Company USA in various assignments in the Louisiana and South Texas areas. Mr. Wilson holds a Bachelor of Science Degree in Mechanical Engineering from Rose-Hulman Institute of Technology.
Annalee C. Wilson has been a Director of the Company since August 2001. Mrs. Wilson is the President of HN Corporation, an affiliate of the Company engaged in the operation of retail franchise outlets in malls selling motivation and inspiration material developed by Successories, Inc. and others and in the operation of a Christian restaurant and gift shop. Mrs. Wilson has an Associate Degree in Nursing from the University of Evansville.
Aaron M. Wilson has been a Director of the Company since August 2001. Mr. Wilson is a Vice president of HN Corporation and is the Manager of the Successories franchise store located at Castleton Square Mall owned by HN Corporation. Mr. Wilson received a dual degree in Business Economics and Political Science from the University of Kentucky in 2002.
Section 16(a) Reporting Deficiencies
Section 16(a) of the Securities and Exchange Act of 1934 ("Exchange Act") requires the Company's directors and officers and persons who own more than 10% of a registered class of the Company's equity securities, to file initial reports of ownership on Form 3 and reports of changes in ownership on Forms 4 and 5 with the Securities and Exchange Commission (the "SEC") and the National Association of Securities Dealers ("NASD"). Such persons are required by SEC regulation to furnish the company with copies of all Section 16(a) forms they file.
Based upon a review of From 3, 4 and 5 filings made by the Company's officers and directors during the past fiscal year ended July 31, 2002 under Section 16(a) of the Exchange Act, the Company believes that all requisite filings have been made timely.
Item 11.
Item 11. Executive Compensation.
The table below sets forth, in summary form, (1) compensation paid to Jeffrey T. Wilson, the Company's Chairman of the Board, President and Chief Executive Officer and (2) other compensation paid to officers and directors of the Company. Except as provided in the table below, during the three fiscal years ended July 31, 2002, 2001 and 2000 (I) no restricted stock awards were granted, (ii) no stock appreciation or stock options were granted, (iii) no options, stock appreciation rights or restricted stock awards were exercised, and (iv) except as provided below, no awards under any long term incentive plan were made to any officer or director of the Company.
The Company began accruing salary due to Jeffrey T. Wilson in January 1994. To date no actual salary payments have been made to Mr. Wilson.
SUMMARY COMPENSATION TABLE
Long Term Awards Annual Compensation Warrants ------------------- --------
Name and Principal Position Year Salary Bonus # shares
Jeffrey T. Wilson 2002 $ 125,000 ----- -------- 2001 $ 125,000 ----- 200,000 2000 $ 125,000 ----- --------
Annalee C. Wilson 2002 ------- ----- -------- 2001 ------- ----- -------- 2000 ------- ----- --------
Aaron M. Wilson 2002 ------- ----- -------- 2001 ------- ----- -------- 2000 ------- ----- --------
None of the executive officers listed received perquisites or other personal benefits that exceeded the lesser of $50,000 or 10% of the salary and bonus for such officers. Annalee C. Wilson Aaron M. Wilson were not directors of the Company during fiscal 2002, and neither received any compensation from the Company during that period.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of July 31, 2002, the Company has 19,363,946 issued and outstanding shares of common stock. (Excluding 20,000,000 shares issued but held pending the completion of the Asia Pacific transaction. These shares were subsequently cancelled) The following table sets forth, as of July 31, 2002, the number and percentage of shares of common stock of the Company owned beneficially by (I) each director of the Company, (ii) each executive officer of the Company, (iii) all directors and officers as a group, and (iv) each person known to the Company to own of record or beneficially own more than 5% of the Company's common stock. Except as otherwise listed, the stockholders listed in the table have sole voting and investment power with respect to the shares listed. As of July 31,2002, the Company had approximately 602 holders of common stock of record.
Number of Shares Name of Beneficial Owner Beneficially Owned Percent of Class
Jeffrey T. Wilson (1) 4,451,377 23.0%
Annalee C. Wilson(2) 1,341,792 6.9%
Aaron M. Wilson (3) 119,834 0.6%
All officers and directors as a Group (3 people) at 7/31/2002 5,913,003 30.5%
HN Corporation(4) 1,127,747 5.8%
Gene Moser(5) 1,148,521 5.9%
Estate of Luther Henderson(6) 2,266,457 11.7%
Total officers, directors and 5% shareholders 6,241,237 42.2%
(1) The mailing address of Mr. Wilson is 11600 German Pines, Evansville, IN 47725. Includes 589,584 shares held jointly with Mrs. Wilson; includes 375,540 shares owned by HN Corporation in which Mr. Wilson owns 33.3%. Does not include 50,000 shares held in Trust by Old National Bank for Mr. Wilson's children.
(2) The mailing address of Mrs. Wilson is 800 N. Green River Road, Evansville, IN 47715. Includes 589,584 shares held jointly with Mr. Wilson; includes 752,208 shares owned by HN Corporation in which Mrs. Wilson owns 66.7%. Does not include 50,000 shares held in Trust by Old national Bank for Mrs. Wilson's children.
(3) The mailing address for Mr. Wilson is 11600 German Pines Drive, Evansville, IN 47725. Includes 16,500 shares held in Trust by Old National Bank.
(4) The mailing address of HN Corporation is 800 N. Green River Rd., Evansville, IN 47715. Mrs. Annalee Wilson is the President of HN Corporation, Jeffrey T. Wilson is the Vice President of HN Corporation and Aaron M. Wilson is a Vice President of HN Corporation.
(5) Mr. Moser's mailing address is PO Box 476, Bluffton, IN 47614.
(6) The Executor of Mr. Henderson's Estate is Mr. Ajit Jhangiani. The address is 5608 Malvey, Suite 104, Fort Worth, TX 76107.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Jeffrey T. Wilson, Chairman, President and Chief Executive Officer of the Company has made unsecured loans to the Company which total $644,094 in principal as of July 31, 2002.
HN Corporation, a private retail company owned by Mr. Wilson and his wife, has made unsecured loans to the Company which total $124,723 in principal as of July 31, 2002. Annalee Wilson serves as the President of HN Corporation and owns 66.7% of its common stock, Jeffrey T. Wilson serves as the Vice President and Secretary of HN Corporation and owns 33.3% of its stock and Aaron M. Wilson serves as a Vice President of HN Corporation.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. ---------------------------------------------------------------
(a) Financial Statements (See Item 8. Financial Statements and Supplementary Data)
Financial Statements of Imperial Petroleum, Inc.
Reports of Independent Public Accountants; Consolidated Balance Sheets as of July 31, 2000 and 1999; Consolidated Statements of Operations for the years ended July 31, 2000, 1999, and 1998; Consolidated Statements of Stockholder Equity for the years ended July 31, 2000, 1999, and 1998; Consolidated Statements of Cash Flows for the years ended July 31, 2000, 1999, and 1998; Notes to Consolidated Financial Statements.
Supplemental Financial Information
Schedule II - Amounts Receivable from Related Parties. Other Schedules are omitted as they are not required.
(b) Reports on Form 8-K.
Report on Form 8-K filed February 13, 2002 with the Securities and Exchange Commission.
(c) Exhibits. None.
3.1 Certificate of Incorporation of the Registrant incorporated herein by reference to Exhibit -~ of the Form 10.
3.2 Bylaws of the Registrant incorporated herein by reference to Exhibit B of the Form 10.
4. Instruments defining the rights of security holders, including indentures. Not applicable.
9. Voting Trust Agreement. Not applicable.
11 Statement re: computation of per share earnings. Not applicable.
12 Statement re: computation of ratios. Not applicable.
13 Annual Report to security holders, Form 10-Q, or quarterly report to security holders. Not applicable.
16 Letter re change in certifying accountant. Not applicable.
18 Letter re: change in accounting principles. Not applicable.
21 Subsidiaries of the Registrant.
22 Published report regarding matters submitted to vote of security holders. Included by reference.
23 Consents of experts and counsel. Not applicable.
24 Power of Attorney. Not applicable.
27 Financial Data Schedule. Not applicable.
28 Information from reports furnished to state insurance regulatory authorities. Not applicable;
99 Additional Exhibits; Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Imperial Petroleum, Inc. Date: December 17, 2002 /s/ Jeffrey T. Wilson ---------------------- Jeffrey T. Wilson, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jeffrey T. Wilson President and Chief Executive - ---------------------- Officer (Principal Executive Jeffrey T. Wilson Officer) and Director December 17, 2002
CERTIFICATION
I, Jeffrey T. Wilson (President) certify that:
1. I have reviewed this annual report on Form l0-K of Imperial Petroleum, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Act of 1934 Rules 13a-l4 and 15d-l4) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report are my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: 12/17/02 By: /s/ Jeffrey T. Wilson, President & CEO
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
In connection with the annual report of Imperial Petroleum, Inc. (the "Company") on Form l0-K for the year ended July 31, 2002, Jeffrey T. Wilson hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SARBANES - OXLEY Act of 2002, that to the best of his knowledge:
1. The annual report fully complies with the requirements of Section 13(a) of the Securities Act of 1934; and
2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: 12/17/02 By: /s/ Jeffrey T. Wilson, President & CEO