Item 1. Business.
Overview
We are in the business of precious minerals exploration and oil and gas exploration and production. In March, 2011 Northumberland (NHUR) was a successful bidder at the Evenson Oil Production Auction in Wichita, Kansas. NHUR acquired a 100 percent working interest and a 70 percent net revenue interest in the Mason, Thompson, Keyes and Harrel leases inclusive of all production and improvements. The leases were purchased at auction from RehOil & Gas, LLC. The leases of 280 acres located in the Sawyer field in Pratt County Kansas and 120 acres located in the Wildcat field, filed in Pratt County Kansas, were purchased for $260,000, of which $111,000 was allocated to the existing well operating equipment.
On June 11, 2011, the Company purchased a 30 percent working interest on an 24.45 percent net revenue interest in an unproved oil and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre.
On July 7, 2011, the Company purchased a 20 percent working interest on an 16.41 percent net revenue interest in a proved and producing oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases.
In September, 2011 Northumberland Resources purchased at auction, two leases with the multiple acquisition of an additional 1,040 acres of productive oil and gas leases. The two leases located in Pratt County, KS consist of six wells with a 100% Working Interest of 70% Net Revenue Interest. These six wells leases are directly adjacent to our existing leases and will integrate the 6 fields and maximize efficiency and production. Included in the purchase is a gas compression station which will enhance flows from current operations. The purchase price of the Pratt County acquisition was $72,500, of which $50,000 was allocated to the existing well operating equipment.
On September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly more than 564 net acres.
On December 19, 2011, the Company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125 percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres.
The Company currently has 33Oil, Gas and SWD wells, with interests in 2160 acres of leaseholds.
Management did not renew four mineral claims, collectively named the “BARD 1-4 Property,” situated in the Paymaster Canyon area of Esmeralda County in west-central Nevada. We do not have any current plans to acquire interests in additional mineral properties, though we may consider such acquisitions in the future.
There was no assurance that a commercially viable precious minerals deposit existed on the BARD 1-4 Property and further development was abandoned.
Plan of Operation
Our plan of operations is to further develop our recent oil and gas acquisitions in Kansas and carry out further exploration and acquisition in the oil and gas sectors. NHUR has upgraded the facilities on its acquired Mason, Thompson, Keyes and Harrell leases with the objective to improve current oil and gas production.
To date, we have raised $1,796,050 through the offer and sale of shares of our common stock pursuant to an exemption from registration provided by Regulation S promulgated under the Exchange Act. The following table summarizes the date of the offerings, the price per share paid, the number of shares sold and the amount raised for each offering.
(1) 5% debenture due 9/24/12 convertible at the average of three lowest trades during five trading days previous to conversion date.
(2) The Company forward split the common shares 20:1 by means of a 19:1 dividend to shareholders of record 9/26/11
Competition
The oil and gas industry is highly competitive. Our competitors and potential competitors include major oil companies and independent producers of varying sizes which are engaged in the acquisition of producing properties and the exploration and development of prospects. Most of our competitors have greater financial, personnel and other resources than we do and therefore have greater leverage in acquiring prospects, hiring personnel and marketing oil and gas.
Government Regulations
The production and sale of oil and gas is subject to regulation by state, federal and local authorities. In most areas there are statutory provisions regulating the production of oil and natural gas under which administrative agencies may set allowable rates of production and promulgate rules in connection with the operation and production of such wells, ascertain and determine the reasonable market demand of oil and gas, and adjust allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal regulation under the Energy Policy and Conservation Act of 1975 which amended various acts, including the Emergency Petroleum Allocation Act of 1973. These regulations and controls included mandatory restrictions upon the prices at which most domestic and crude oil and various petroleum products could be sold. All price controls and restrictions on the sale of crude oil at the wellhead have been withdrawn. It is possible, however, that such controls may be re-imposed in the future but when, if ever, such re-imposition might occur and the effect thereof is unknown.
The sale of certain categories of natural gas in interstate commerce is subject to regulation under the Natural Gas Act and the Natural Gas Policy Act of 1978 (“NGPA”). Under the NGPA, a comprehensive set of statutory ceiling prices applies to all first sales of natural gas unless the gas specifically exempt from regulation (i.e., unless the gas is deregulated). Administration and enforcement of the NGPA ceiling prices are delegated to the Federal Energy Regulatory Commission (“FERC”). In June 1986 the FERC issued Order No. 451, which in general is designed to provide a higher NGPA ceiling price for certain vintages of old gas. It is possible, though unlikely, that we may in the future acquire significant amounts of natural gas subject to NGPA price regulations and/or FERC Order No. 451.
Our operations are subject to extensive and continually changing regulation because of legislation affecting the oil and natural gas industry is under constant review for amendment and expansion. Many departments and agencies, both federal and state, are authorized by statute to issue and have issued rules and regulations binding on the oil and natural gas industry and its individual participants. The failure to comply with such rules and regulations can result in large penalties. The regulatory burden on this industry increases our cost of doing business and, therefore, affects our profitability. However, we do not believe that we are affected in a significantly different way by these regulations than our competitors are affected.
Transportation and Production
Transportation and Sale of Oil and Natural Gas. We can make sales of oil, natural gas and condensate at market prices which are not subject to price controls at this time. The price that we receive from the sale of these products is affected by our ability to transport and the cost of transporting these products to market. Under applicable laws, FERC regulates:
● the construction of natural gas pipeline facilities, and
● the rates for transportation of these products in interstate commerce.
Our possible future sales of natural gas are affected by the availability, terms and cost of pipeline transportation. The price and terms for access to pipeline transportation remain subject to extensive federal and state regulation. Several major regulatory changes have been implemented by Congress and FERC from 1985 to the present. These changes affect the economics of natural gas production, transportation and sales. In addition, FERC is continually proposing and implementing new rules and regulations affecting these segments of the natural gas industry that remain subject to FERC’s jurisdiction. The most notable of these are natural gas transmission companies.
FERC’s more recent proposals may affect the availability of interruptible transportation service on interstate pipelines. These initiatives may also affect the intrastate transportation of gas in some cases. The stated purpose of many of these regulatory changes is to promote competition among the various sectors of the natural gas industry. These initiatives generally reflect more light-handed regulation of the natural gas industry. The ultimate impact of the complex rules and regulations issued by FERC since 1985 cannot be predicted. In addition, some aspects of these regulatory developments have not become final but are still pending judicial and FERC final decisions. We cannot predict what further action FERC will take on these matters. However, we do not believe that any action taken will affect us much differently than it will affect other natural gas producers, gatherers and marketers with which we might compete.
Effective as of January 1, 1995, FERC implemented regulations establishing an indexing system for transportation rates for oil. These regulations could increase the cost of transporting oil to the purchaser. We do not believe that these regulations will affect us any differently than other oil producers and marketers with which we compete.
Regulation of Drilling and Production. Our proposed drilling and production operations are subject to regulation under a wide range of state and federal statutes, rules, orders and regulations. Among other matters, these statutes and regulations govern:
●the amounts and types of substances and materials that may be released into the environment,
●the discharge and disposition of waste materials,
●the reclamation and abandonment of wells and facility sites, and
●the remediation of contaminated sites,
and require:
●permits for drilling operations,
●drilling bonds, and
●reports concerning operations.
Environmental Regulations
General. Our operations are affected by the various state, local and federal environmental laws and regulations, including the:
●Clean Air Act,
●Oil Pollution Act of 1990,
●Federal Water Pollution Control Act,
●Resource Conservation and Recovery Act (“RCRA”),
●Toxic Substances Control Act, and
●Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).
These laws and regulations govern the discharge of materials into the environment or the disposal of waste materials, or otherwise relate to the protection of the environment. In particular, the following activities are subject to stringent environmental regulations:
●drilling,
●development and production operations,
●activities in connection with storage and transportation of oil and other liquid hydrocarbons, and
●use of facilities for treating, processing or otherwise handling hydrocarbons and wastes.
Violations are subject to reporting requirements, civil penalties and criminal sanctions. As with the industry generally, compliance with existing regulations increases our overall cost of business. The increased costs cannot be easily determined. Such areas affected include:
●unit production expenses primarily related to the control and limitation of air emissions and the disposal of produced water,
●capital costs to drill exploration and development wells resulting from expenses primarily related to the management and disposal of drilling fluids and other oil and natural gas exploration wastes, and
●capital costs to construct, maintain and upgrade equipment and facilities and remediate, plug and abandon inactive well sites and pits.
Environmental regulations historically have been subject to frequent change by regulatory authorities. Therefore, we are unable to predict the ongoing cost of compliance with these laws and regulations or the future impact of such regulations on our operations. However, we do not believe that changes to these regulations will have a significant negative effect on our operations.
A discharge of hydrocarbons or hazardous substances into the environment could subject us to substantial expense, including both the cost to comply with applicable regulations pertaining to the cleanup of releases of hazardous substances into the environment and claims by neighboring landowners and other third parties for personal injury and property damage. We do not maintain insurance for protection against certain types of environmental liabilities.
The Clean Air Act requires or will require most industrial operations in the United States to incur capital expenditures in order to meet air emission control standards developed by the EPA and state environmental agencies. Although no assurances can be given, we believe the Clean Air Act requirements will not have a material adverse effect on our financial condition or results of operations.
RCRA is the principal federal statute governing the treatment, storage and disposal of hazardous wastes. RCRA imposes stringent operating requirements, and liability for failure to meet such requirements, on a person who is either:
●a “generator” or “transporter” of hazardous waste, or
●an “owner” or “operator” of a hazardous waste treatment, storage or disposal facility.
At present, RCRA includes a statutory exemption that allows oil and natural gas exploration and production wastes to be classified as non-hazardous waste. As a result, we will not be subject to many of RCRA’s requirements because our operations will probably generate minimal quantities of hazardous wastes.
CERCLA, also known as “Superfund,” imposes liability, without regard to fault or the legality of the original act, on certain classes of persons that contributed to the release of a “hazardous substance” into the environment. These persons include:
●the “owner” or “operator” of the site where hazardous substances have been released, and
●companies that disposed or arranged for the disposal of the hazardous substances found at the site.
CERCLA also authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. In the course of our ordinary operations, we could generate waste that may fall within CERCLA’s definition of a “hazardous substance.” As a result, we may be liable under CERCLA or under analogous state laws for all or part of the costs required to clean up sites at which such wastes have been disposed.
Under such law we could be required to:
●remove or remediate previously disposed wastes, including wastes disposed of or released by prior owners or operators,
●clean up contaminated property, including contaminated groundwater, or
●perform remedial plugging operations to prevent future contamination.
We could also be subject to other damage claims by governmental authorities or third parties related to such contamination.
Market for oil and gas production
The market for oil and gas production is regulated by both the state and federal governments. The overall market is mature and with the exception of gas, all producers in a producing region will receive the same price. The major oil companies will purchase all crude oil offered for sale at posted field prices. There are price adjustments for quality differences from the Benchmark. Benchmark is Saudi Arabian light crude oil employed as the standard on which OPEC price changes have been based. Quality variances from Benchmark crude results in lower prices being paid for the variant oil. Oil sales are normally contracted with a purchaser or gatherer as it is known in the industry who will pick up the oil at the well site. In some instances there may be deductions for transportation from the well head to the sales point. At this time the majority of crude oil purchasers do not charge transportation fees unless the well is outside their service area. The service area is a geographical area in which the purchaser of crude oil will not charge a fee for picking upon the oil. The purchaser or oil gatherer as it is called within the oil industry, will usually handle all check disbursements to both the working interest and royalty owners. We will be a working interest owner. By being a working interest owner, we are responsible for the payment of our proportionate share of the operating expenses of the well. Royalty owners and overriding royalty owners receive a percentage of gross oil production for the particular lease and are not obligated in any manner whatsoever to pay for the costs of operating the lease. Therefore, we, in most instances, will be paying the expenses for the oil and gas revenues paid to the royalty and overriding royalty interests.
Gas sales are by contract. The gas purchaser will pay the well operator 100% of the sales proceeds on or about the 25th of each and every month for the previous month’s sales. The operator is responsible for all checks and distributions to the working interest and royalty owners. There is no standard price for gas. Price will fluctuate with the seasons and the general market conditions. It is our intention to utilize this market whenever possible in order to maximize revenues. We do not anticipate any significant change in the manner production is purchased, however, no assurance can be given at this time that such changes will not occur.
Employees
At present, we have no employees. We currently operate with two executive officers, who devote their time as required to our business operations. Our executive officers receive $1,000 per month as directors fees but do not have an employment agreement with us.
Item 1A
Item 1A Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 1B.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2
Item 2 Properties.
Principal Office
Our principal office is located at 701 N Green Valley Pkwy., Ste. 200-258, Henderson, NV 89074. Our telephone number is (702) 335-0356. On January 1, 2012 we entered into an office rent agreement at $500 per month for the principal office space. The term of the agreement is for twelve months starting from January 1, 2012. We believe that the condition of our principal office is satisfactory, suitable and adequate for our current needs.
Our Mineral Properties
We formerly owned a 100% interest in a mineral claim known as the BARD 1-4 Property, located in Nevada. The BARD 1-4 Property was without known reserves. Mineral property exploration is typically conducted in phases. Each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of exploration. Management has determined that no further work on the Bard 1-4 properties is warranted and the leases have not been renewed and the properties were abandoned.
On March 1, 2011, the Company purchased a 100 percent working interest on a 70 percent net revenue interest in certain oil and gas leases and related well operating equipment in Pratt County, Kansas for $260,000. Of this total, $149,000 was allocated to oil and gas leases, and the remaining $111,000 was allocated to the purchased well operating equipment.
On June 11, 2011, the Company purchased a 30 percent working interest on an 24.45 percent net revenue interest in an unproved oil and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre.
On July 7, 2011, the Company purchased a 20 percent working interest on an 16.41 percent net revenue interest in a proved and producing oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases.
On September 27, 2011, the Company purchased two leases and related well operating equipment located in Pratt County for $72,500. Of this total, $22,500 was allocated to oil and gas leases, and the remaining $50,000 was allocated to the purchased well operating equipment. The leases carry a 100 percent working interest of 70 percent net revenue interest.
On September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly more than 564 net acres.
On December 19, 2011, the Company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125 percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres.
About Our Mineral Claims
Our oil and gas leases are unencumbered and in good standing and there are no third party conditions which affect them other than conditions defined by the federal government. We have no insurance covering the claim.
Previous operations
The Company acquired the Harrel D oil lease located on 160 acres in Pratt County KS. The Harrel D wells # 3, 7 and 9 from which two barrels of oil per day have been pumped for the past 20 years. The Company also purchased the Keyes # 1 well producing 2.5 BOPD; the Thompson #1 well that is currently shut-in, but formerly produced 0.75 BOPD and will need to be re-opened; and the Mason #1, 2a, 3 and 4 wells that produce a cumulative 3 BOPD.
The Company currently has 33Oil, Gas and SWD wells, with interests in 2,160 acres of leaseholds.
Plant and equipment
There are pumping units, battery units, pipes and tubing adequate for maintaining continuous flow on the properties.
Agreements
We have a 100% Working Interest (WI) and a 70% Net Revenue Interest (NRI) in the Harrel D and Larrisonwells. We have the same 100% WI and 70% NRI in the Keyes A, Keyes B, Mason and Thompson wells. We have a working interests and net revenue interests in the Lester, Moon, Brenn, Dannebohn, Welsch Beaver, and Carver leases ranging from 15% to 30% and from 12.675% to 24.45, respectively. Our operators and pumpersareRehOil and Gas, LLC in Pratt KS, and Lasso Energy, Inc. in Chase KS. The purchaser of our crude oil production is Parnon Gathering Inc.
Item 3.
Item 3. Legal Proceedings.
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to Northumberland.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
Effective September 24, 2011 the Company effected a 20:1 forward split of its common stock to holders of record by means of a 19:1 dividend. Also, the Board approved the change in its authorized common stock from 100,000,000 to 2,000,000,000 common shares. Both these submissions were approved by shareholders holding more than 51% of the issued and outstanding common shares of the Company.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our shares of common stock are quoted on the OTC Bulletin Board under the symbol “NHUR”. Our CUSIP number is 667133-102. The quotation was first posted at the opening on July 16, 2010 with an opening bid of $0.50.The following table shows the high and low trading prices for the past two years.
We did not make any dividend payments during the fiscal years ended December 31, 2011 or 2010 and have no plans to pay dividends in the foreseeable future. We did not repurchase any shares of our common stock during the fiscal year ended December 31, 2011 or 2010.
Transfer Agent: Empire Stock Transfer Co., 1859 Whitney Mesa Dr., Henderson, NV 89014
The Company did not make any repurchases of its securities during the year ended December 31, 2011.
Holders of our Common Stock
As of February 10, 2012 the shareholders' list of our common shares showed 26 registered shareholders holding 162,159,100 common shares and no preferred shares.
Dividends
We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Although there are no restrictions that limit the ability to pay dividends on our common shares, our intention is to retain future earnings for use in our operations and the expansion of our business.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any equity compensation plans in place.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
During the past five years, Northumberland resources Inc. has sold the following securities which were not registered under the Securities Act:
We issued 70,000,000 (post-split) shares of restricted common stock at a price of $0.0001 per share through a Section 4(2) exemption to Geoffrey Scales our founder, officer and director on September 8, 2009 for cash consideration of $3,500.
Mr. Scales is a sophisticated investor and was in possession of all material information relating to the Company. Further, no commissions were paid in connection with the sale of the shares and no general solicitation was made.
On November 30, 2009 the Company issued 42,550,000 (post-split) of its common stock for $42,550 cash.
On January 17, 2011 the Company issued 7,200,000 (post-split) shares of its common stock to a consulting company for services provided valued at $7,200. The fair value of the shares was determined based on the most recent cash sale price of common stock of $0.001 per share
On February 8, 2011 the Company issued 400,000 (post-split) shares of its common stockeach to two officers of the Company for services provided valued at $800. The fair value of the shares was determined based on the most recent cash sale price of common stock of $0.001 per share
On March 20, 2011 the Company issued 10,909,100 (post-split) shares of its common stockwith proceeds to the Company of $300,000.
On April 1, 2011 the Company issued 7,200,000 (post-split) shares of its common stock to a consulting company for services provided valued at $198,000. The fair value of the shares was determined based on the most recent cash sale price of common stock of $0.0275 per share
On May 28, 2011 the Company issued 1,818,180 (post-split) shares of its common stockwith proceeds to the Company of $50,000.
On June 10, 2011 the Company issued 18,181,120 (post-split) shares of its common stockwith proceeds to the Company of $500,000.
On September 28, 2011 the Company entered into a convertible debenture agreement with anunafilliated corporation at five percent and due September 24, 2012. The conversion is at the average of the lowest price the company’s share trade five days previous to the date of the conversion. The face value of the debenture is $100,000.
On October 3, 2011 the Company issued 2,666,667 shares of its common stock with proceeds to the Company of $400,000.
On March 21, 2012 the Company issued 833,333 shares of its common stock with proceeds to the Company of $500,000.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 6.
Item 6. Selected Financial Data.
Not applicable.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to audited financial statements included elsewhere in this report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.
We are a start-up, exploration stage company engaged in the search for oil and gas. Our business plan is to proceed with exploration of the Pratt and Cowley County Oil &Gas projects to determine if further drilling and/or using techniques to increase the flow of crude oil from our existing wells. Determination of whether or not to proceed will be provided by Melland engineering LLC of McPherson KS.
Employees
We intend to continue to use the services of subcontractors for manual labor work and an engineer or geologist to manage the development program. We have retained James Melland P.E., P.G. as senior geological/engineering consultant.
At present, we have no employees. We currently operate with two executive officers, who devote their time as required to our business operations. Our executive officers receive a directors fee of $1,000 per month. But do not have an employment agreement with us.
We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to employees.
Results of Operations
Revenue
During the year ended December 31, 2011 the Company earned its first revenues from oil and gas production. Revenues for the year totaled $82,603, compared to $-0- for the 2010 fiscal year.
Expenses
Our operating expenses for the years ended December 31, 2011 and 2010 are outlined in the table below:
Operating expenses for the year ended December 31, 2011, increased by $683,914 as compared to 2010, primarily as a result of the commencement of our business plan.
During the year ended December 31, 2011, Northumberland incurred operating expenses of $719,111 as compared to $35,197 for 2010 and a total of $765,161 for the period from inception on June 22, 2009, to December 31, 2011. The costs incurred can be further subdivided into the following categories.
PROFESSIONAL FEES: Northumberland incurred $468,282 in professional fees for the fiscal year ended on December 31, 2011, as compared to $13,629 for the previous fiscal year. From inception to December 31, 2011, we have incurred $481,911 in professional fees mainly spent on legal, accounting, and consulting matters. This expense category will vary annually depending on corporate capital raising activities.
LEASE OPERATING EXPENSES: Northumberland incurred $100,199 in lease operating expenses for the fiscal year ended on December 31, 2011, as compared to $-0- for the previous fiscal year. From inception to December 31, 2011, we have incurred $104,499 in lease operating expenses. This expense category will likely increase as the Company expands its oil and gas production operations.
DEPLETION, DEPRECIATION, AMORTIZATION AND ACCRETION (“DDA”): Northumberland incurred $76,187 in DDA expenses for the fiscal year ended on December 31, 2011, as compared to $-0- for the previous fiscal year. From inception to December 31, 2011, we have incurred $76,187 in DDA expenses. This expense category will likely increase as the Company expands its oil and gas production operations.
GENERAL AND ADMINISTRATIVE EXPENSES: Northumberland incurred $74,443 in general and administrative expenses during the fiscal year ended December 31, 2011 as compared to $21,568 in 2010. Since inception through December 31, 2011 the Company has incurred a total of $99,064.
RESEARCH AND DEVELOPMENT: Northumberland has not incurred any expenses for research and development since inception on June 22, 2009.
COMPENSATION: No compensation costs were incurred for the fiscal year ended on December 31, 2011, and none were incurred in the previous fiscal year which ended on December 31, 2010. From inception to December 31, 2011, there have been no charges to the compensation account.
INCOME TAX PROVISION: As a result of operating losses, there has been no provision for the payment of income taxes to date or from the date of inception.
At the end of the fiscal year under review, December 31, 2011, and as of the date of this report, Northumberland had 161,325,766 and 162,159,100 common shares issued and outstanding, respectively.
Liquidity and Financial Condition
Working Capital
Cash Flows
Since inception we have used common stock to raise money for our oil and gas acquisitions and corporate expenses. Net cash provided by financing activities in the most recent fiscal year ended December 31, 2011 was $1,350,124. In the fiscal year ended December 31, 2010, net cash flows from financing activities totaled $-0-. Net cash provided by financing activities from inception on June 22, 2009 through December 31, 2011 was $1,396,174.
Presently, our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and this is likely to continue through fiscal 2011- 2012. Management projects that we may require $500,000 to fund our ongoing operating expenses and working capital requirements for the next twelve months, broken down as follows:
As at December 31, 2011, we had a working capital deficit of $168,609. We plan to raise the additional capital required to meet the balance of our estimated funding requirements for the next twelve months primarily through the sale of equity based securities or loans from related parties. We do not anticipate that we will be able to satisfy any of these funding requirements internally until we significantly generate revenues.
Going Concern
We are in the exploration stage, have not yet achieved profitable operations and are dependent on our ability to raise capital from stockholders or other sources to meet obligations arising from normal business operations when they become due. Therefore, in their report on our audited financial statements for the year ended December 31, 2011, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosure describing the circumstances that lead to this disclosure.
Future Financings
We will require additional financing in order to enable us to proceed with our plan of operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due. We are pursuing various alternatives to meet our immediate and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of equity securities or arrange for debt or other financing to fund our planned business activities.
We presently do not have any arrangements for additional financing and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
The Reports of the Independent Registered Public Accounting firm by Sadler, Gibb & Associates LLC for the audited financial statements for the year ended December 31, 2011 and 2010 and are included herein immediately preceding the audited financial statements.
NORTHUMBERLAND RESOURCES, INC.
AUDIT REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL STATEMENTS
For the Years Ended December 31, 2011 and 2010 and
From Inception on June 22, 2009 through December 31, 2011
NORTHUMBERLAND RESOURCES, INC.
_______________________________________
SADLER, GIBB& ASSOCIATES, L.L.C.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Northumberland Resources, Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheets of Northumberland Resources, Inc. as of December 31, 2011 and 2010, and from inception on June 22, 2009 through December 31, 2011 and the related statements of operations, stockholders’ equity and cash flows for the periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Northumberland Resources, Inc. as of December 31, 2011 and 2010 and from inception on June 22, 2009 through December 31, 2011, and the results of their operations and their cash flows for the periods then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenue sufficient to cover its operating costs which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Sadler, Gibb & Associates, LLC
Salt Lake City, UT
April 16, 2012
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Balance Sheets
The accompanying notes are an integral part of these financial statements
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Statements of Operations
The accompanying notes are an integral part of these financial statements
NOTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Statements of Stockholders' Equity
The accompanying notes are an integral part of these financial statements
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 1 - NATURE OF BUSINESS
Northumberland Resources, Inc. (“the “Company”) is an oil and gas exploration and production company and was incorporated in the state of Nevada on June 22, 2009. Northumberland is an exploration stage company.
The Company is an “exploration stage company” as defined in the ASC Topic Accounting and Reporting by Development Stage Companies. The Company is devoting its resources to acquiring oil and gas properties and its planned operations have not yet commenced. Only minimal revenues have been earned during the period from June 22, 2009 (date of inception) to December 31, 2011.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $91,551 and $-0- of cash and cash equivalents at December 31, 2011 and 2010, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom and the assessment of asset retirement obligations.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or statements.
Reclassification of Financial Statement Accounts
Certain amounts in the December 31, 2010 financial statements have been reclassified to conform to the presentation in the December 31, 2011 financial statements.
Oil and Gas Properties
The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized.
Capitalized costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs, and asset retirement costs under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations” (FASB ASC 410), are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties. There are many factors, including global events that may influence the production, processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely impact depletion rates and capitalized cost limitations.
Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations. Costs of oil and gas properties are amortized using the units of production method.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Ceiling test
Under the full-cost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for cash flow hedges. Estimated future net cash flows exclude future cash outflows associated with settling accrued asset retirement obligations. The Company has adopted U.S. Securities and Exchange Commission (“SEC”) Release 33-8995 and the amendments to ASC 932, “Extractive Industries - Oil and Gas” (the Modernization Rules). Under the Modernization Rules, estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements.
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional depletion, depreciation and amortization expense (“DD&A”) in the accompanying statement of operations. Such limitations are tested quarterly. As of December 31, 2011 and 2010, capitalized costs did not exceed the ceiling limitation, and no write-down was indicated.
Revenue Recognition
Revenues from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has transferred, and collectability is reasonably. The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves.
Basic and Diluted Loss per Share
Basic and diluted loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were 250,160 such common stock equivalents outstanding as of December 31, 2011 and 2010 arising from a convertible note payable executed during the year ended December 31, 2011.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basic and Diluted Loss per Share (Continued)
NOTE 4 - OIL AND GAS PROPERTIES
Oil and gas properties are stated at cost. The Company recognized depletion expense totaling $57,054 and $-0- during the years ended December 31, 2011 and 2010, respectively. As of December 31, 2011 and 2010 oil and gas properties consisted of the following:
On March 1, 2011, the Company purchased a 100 percent working interest on a 70 percent net revenue interest in certain oil and gas leases and related well operating equipment in Pratt County, Kansas for $260,000. Of this total, $149,000 was allocated to oil and gas leases, and the remaining $111,000 was allocated to the purchased well operating equipment. During the period ended December 31, 2011 the Company incurred $23,310 of exploration costs and $33,711 of development costs which have been capitalized to the value of oil and gas properties. The Company also purchased an additional $2,968 in support equipment on these leases.
On June 11, 2011, the Company purchased a 30 percent working interest on an 24.45 percent net revenue interest in an unproved oil and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre. Subsequent to acquiring the interest in these wells the Company incurred an additional $119,350 of exploration costs and $110,531 of development costs on the property which have been capitalized to the value of oil and gas properties.
On July 7, 2011, the Company purchased a 20 percent working interest on an 16.41 percent net revenue interest in a proved and producing oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases and incurred an additional $26,881 of development costs which were capitalized to the value of oil and gas properties.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 4 - OIL AND GAS PROPERTIES (Continued)
On September 27, 2011, the Company purchased two leases and related well operating equipment located in Pratt County for $72,500. Of this total, $22,500 was allocated to oil and gas leases, and the remaining $50,000 was allocated to the purchased well operating equipment. The leases carry a 100 percent working interest of 70 percent net revenue interest. Subsequent to purchase the Company capitalized $990 in exploration costs and $17,533 in development costs relating to these leases.
On September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly more than 564 net acres. Subsequent to purchase the Company capitalized $2,326 in development costs relating to these leases.
On December 19, 2011, the Company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125 percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres. The Company has incurred no exploration or development costs with respect to these properties as of December 31, 2011.
During the year ended December 31, 2011, the Company established an asset retirement obligation of $116,586 for the wells acquired by the Company during the 2011 fiscal year, which was capitalized to the value of the oil and gas properties. The wells have an estimated useful life of 25 years. The accretion expense on the asset retirement obligation recorded for the year ended December 31, 2011 was $5,263, leaving an ending balance of $121,849.
NOTE 5 - RELATED PARTY PAYABLES
As of December 31, 2010 the Company owed $-0- to related parties. During the year ended December 31, 2011 the Company borrowed $200 and repaid $77 to a related party, leaving a balance of related party payables of $123 as of December 31, 2011. The liability is non-interest bearing, unsecured, and due upon demand.
NOTE 6 - CONVERTIBLE NOTE PAYABLE
On September 28, 2011 the Company borrowed $100,000 from an unrelated third party entity in the form of a convertible note. The note bears interest at a rate of five percent per annum, with principal and interest due in full on September 24, 2012. The note is convertible at any time, at the option of the note holder, into shares of the Company’s common stock, at ten percent below the current market price on the date of conversion. For purposes of the note, “current market price” is defined as the average of the lowest three daily closing prices per share for the five business days prior to the date of conversion.
Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $93,976 on the note date. As of December 31, 2011 the Company had amortized $24,649 of the debt discount to interest expense, leaving $69,327 in unamortized debt discount at December 31, 2011.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 7 - DERIVATIVE LIABILITY
On September 28, 2011 the Company executed a convertible note payable in the amount of $100,000 which is convertible at the holder’s option at 90 percent of the average of the lowest three daily closing prices per share for the five business days prior to the date of conversion.
The fair value of the conversion option of the convertible note of $93,976 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) - Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.
The Company uses the Black-Scholes options pricing model to value the derivative liability and subsequent remeasurement. Included in the models are the following assumptions: risk free rates ranging from 0.10% to 0.12%, and annual volatilities which ranged from 259% to 517%.
ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At December 31, 2011 the derivative liability was revalued at $103,581, which led to the Company recording a loss on derivative liability in the amount of $9,605.
NOTE 8 - INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, Income Taxes , which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.
ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 8 - INCOME TAXES (Continued)
Net deferred tax assets consist of the following components as of December 31, 2011 and 2010:
The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rates of 34 percent to pretax income from continuing operations for the year ended December 31, 2011 and 2010 due to the following:
At December 31, 2011, the Company had net operating loss carry forwards of approximately $244,163 through 2031. No tax benefit has been reported in the December 31, 2011 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 9 - STOCKHOLDERS’ EQUITY
The Company is authorized to issue 200,000,000 shares of common stock at a par value of $0.001. As of December 31, 2011 and 2010 the Company had 161,325,766 and 112,550,000 shares of common stock issued and outstanding, respectively. On August 25, 2011 the Company enacted a forward stock-split of the Company’s common stock on a twenty-shares-for-one-share basis. All discussion of common stock in these financial statements has been retroactively restated so as to show the effect of this forward stock-split.
For the year ended December 31, 2011 the Company issued 33,575,766 post-split shares of common stock (4,212,122 pre-split) at $0.04 per share for cash proceeds of $1,250,000. During the same fiscal period, the Company also issued 15,200,000 post-split shares of common stock (760,000 pre-split) at $0.01 per share for services valued at $206,000. The value of shares issued for services was based on the most-recent share price of stock issued for cash to non-related parties.
NOTE 10 - SUBSEQUENT EVENTS
In February, 2012 the Company purchased a 30 percent working interest in six oil and gas leases located in Cowley County, Kansas. The Company paid $140,400 for the leases.
On March 21, 2012 the Company issued 833,333 shares of common stock at $0.60 per share, yielding total cash proceeds of $500,000.
In accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material subsequent events to report.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
SUPPLEMENTAL INFORMATION TO
FINANCIAL STATEMENTS (Unaudited)
Oil and Gas Producing Activities
In January 2010, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) No. 2010-03, "Oil and Gas Reserve Estimations and Disclosures" (ASU No. 2010-03). This update aligns the current oil and gas reserve estimation and disclosure requirements of the Extractive Industries - Oil and Gas topic of the FASB Accounting Standards Codification (ASC Topic 932) with the changes required by the final rule of the Securities and Exchange Commission (the “SEC”), "Modernization of Oil and Gas Reporting." ASU No. 2010-03 must be applied prospectively as a change in accounting principle that is inseparable from a change in accounting estimate and is effective for entities with annual reporting periods ending on or after December 31, 2009.
Oil and Gas Reserves. Users of this information should be aware that the process of estimating quantities of "proved," "proved developed," "proved undeveloped" and "probable" crude oil, natural gas liquids and natural gas reserves is complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions (upward or downward) to existing reserve estimates may occur from time to time. Although reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. See ITEM 1A. Risk Factors.
Proved reserves represent estimated quantities of crude oil, natural gas liquids and natural gas that geoscience and engineering data can estimate, with reasonable certainty, to be economically producible from a given day forward from known reservoirs under economic conditions, operating methods and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
Proved developed reserves are proved reserves expected to be recovered under operating methods being utilized at the time the estimates were made, through wells and equipment in place or if the cost of any required equipment is relatively minor compared to the cost of a new well.
Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Estimates for proved undeveloped reserves are not attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
SUPPLEMENTAL INFORMATION TO
FINANCIAL STATEMENTS (Unaudited)
Oil and Gas Producing Activities (Continued)
Probable undeveloped reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.
No major acquisition or sale of oil and gas properties or other favorable or adverse event subsequent to December 31, 2011 is believed to have caused a material change in the estimates of proved developed or proved undeveloped or probable undeveloped reserves as of that date.
NET PROVED RESERVE SUMMARY
The following table sets forth the Company's net proved reserves, including proved developed and proved undeveloped reserves, at December 31, 2011, as pursuant to reserve reports prepared by the Company’s independent, certified petroleum engineer.
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
SUPPLEMENTAL INFORMATION TO
FINANCIAL STATEMENTS (Unaudited)
Capitalized Costs Relating to Oil and Gas Producing Activities. The following table sets forth the capitalized costs relating to the Company’s crude oil and natural gas producing activities at December 31, 2011 and 2010:
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities. The following table sets forth the costs incurred in the Company’s oil and gas property acquisition, exploration and development activities for the ended December 31, 2011 and 2010:
Results of Operations for Oil and Gas Producing Activities. The following table sets forth the results of operations for oil and gas producing activities for the year ended December 31, 2011 and 2010:
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
SUPPLEMENTAL INFORMATION TO
FINANCIAL STATEMENTS (Unaudited)
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves. The following information has been developed utilizing procedures prescribed by ASC Topic 932 and is based on crude oil and natural gas reserves and production volumes estimated by the Company’s independent petroleum consultants. The estimates were based on a $85.81/BO crude oil price, and a gas price of $4.18/MCF. The following information may be useful for certain comparison purposes, but should not be solely relied upon in evaluating the Company or its performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the Standardized Measure of Discounted Future Net Cash Flows be viewed as representative of the current value of the Company.
The future cash flows presented below are based on sales prices, cost rates and statutory income tax rates in existence as of the date of the projections. It is expected that material revisions to some estimates of crude oil and natural gas reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used.
Future production and development costs were computed by estimating those expenditures expected to occur in developing and producing the proved oil and natural gas reserves at the end of the year, based on year-end costs. Actual future cash inflows may vary considerably, and the standardized measure does not necessarily represent the fair value of the Company’s oil and natural gas reserves.
Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable and possible reserves as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated.
The following table sets forth the standardized measure of discounted future net cash flows from projected production of the Company’s oil and gas reserves as of December 31, 2011 and 2010:
NORTHUMBERLAND RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
SUPPLEMENTAL INFORMATION TO
FINANCIAL STATEMENTS (Unaudited)
Changes in Standardized Measure of Discounted Future Net Cash Flows. The following table sets forth the changes in the standardized measure of discounted future net cash flows for the year ended December 31, 2011 and 2010:
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
On January 19, 2011 our Board of Directors approved of the disengagement of LBB & Associates LLP and the engagement of Sadler Gibb & Associates LLC, PO Box 411, Farmington UT, 84025, as its independent auditor. None of the reports of LBB& Associates LLP on the Company's financial statements for either of the two most recent fiscal years, contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that the Registrant's audited financial statements contained in its Form 10-K for the fiscal year ended December 31, 2009, a going concern qualification in the registrant's audited financial statements. There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.
Item 9A(T).
Item 9A(T). Controls and Procedures.
As of Dec. 31, 2011, under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a - 15(e) under the Securities Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been found to be ineffective.
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Internal Control Over Financial Reporting
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of Dec. 31, 2011. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. In management’s assessment of the effectiveness of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) as required by Exchange Act Rule 13a-15(c), our management concluded as of the end of the fiscal year covered by this Annual Report on Form 10-K that our internal control over financial reporting has not been effective.
As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that results more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of Dec. 31, 2011:
i)Lack of segregation of duties. At this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management will periodically reevaluate this situation.
ii)Lack of an independent audit committee. Although we have an audit committee it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.
iii)Insufficient number of independent directors. At the present time, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate governance practices as set forth by the rules of various stock exchanges.
Our management determined that these deficiencies constituted material weaknesses. Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing to do so. We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, that has materially affected, or is reasonable likely to materially affect, our internal controls over financial reporting.
The Company has not taken any steps at this time to address these weaknesses but will formulate a plan before fiscal year ending December 31, 2012.
Item 9B.
Item 9B. Other Information.
At an shareholders meeting held in February 8, 2011, the stockholders approved the election of directors, FortunatoVillamagna and Peter Hewitt, to serve until the next Annual General Meeting of Shareholders or until their respective successors are elected or appointed;
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
The following individuals serve as the directors and executive officers of our company as of the date of this annual report. All directors of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.
Position Held with Our
Date First Elected
Name
Company
Age
or Appointed
FortunatoVillamagna
Chief Executive Officer
January 15, 2011
Peter Hewitt
President/Director
Chief Financial Officer
Director
February 8, 2011
Chris Knowles
Director
April 1, 2012
None of the directors or officers has professional or technical accreditation in the exploration, development or operations of mining or mining related projects. During the past year, our president, G. Scales, spent approximately 20% of his time (approximately 8 hours per week) on the affairs of Northumberland. Mr. Scales resigned on January 15, 2011. Dr. Villamagna our current President expects his commitment and requirement will remain approximately the same for the coming year.
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director and executive officer of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Dr. Fortunato, Chief Executive Officer, President, Director
Dr. FortunatoVillamagna, age 51, has over 25 years of domestic and international experience in the mining services, specialty and bulk chemicals, capital equipment, bioenergy, aerospace and energetic materials businesses. Dr. Villamagna holds a PhD in Chemistry and MBA in Global Management, and has worked throughout North America, Europe, Australia and West Africa. In addition to joining Northumberland Resources Inc. Dr. Villamagna is also secretary and Director of Lucky Boy Silver Corp., (symbol LUCB.OB). Dr. Villamagna also served as director and CEO of UTEC Inc. from January 7, 2007 to May 21, 2010. Prior to the role, Dr. Villamagna served as President of BioEnergy Systems, a technology company serving the biofuels industry. Prior to that Dr. Villamagna was Vice President - Business Development for American Pacific Corporation (AMPAC), a publically listed company with divisions and subsidiaries that manufacture active pharmaceutical ingredients and registered intermediates, energetic products used primarily in space flight, aerospace and defense systems, clean fire- extinguishing agents and water treatment equipment. Prior to that Dr. Villamagna was the Vice President Technology, Americas and Europe for Orica Inc., an Australian-owned, publicly-listed global company, and global leader in mining products and services. Prior to that Dr. Villamagna was the Director of Bulk Delivered Products for Energetic Solutions, Inc., a part of UK Based ICI Explosive.We believe Dr. Villamagna is qualified to serve on our board of directors because of his knowledge of our company’s history and current operations in addition to his education and business experiences as described above.
Peter Hewitt, Age 46, has over 20 years experience working within the Graphic Design and Print Industry. He has worked for blue chip companies such as TVR Sports Cars Ltd and FindelPlc. From 1998 to the present Peter has been with Express Gifts Ltd and is the Studio Manager running a team of 20 highly skilled Graphic Designers. He and his team are responsible for producing catalogues for the mail order and internet markets. Before joining Express Gifts Peter was the Studio Manager for TVR Sports Cars and was instrumental in the setting up and development of a successful PR and Marketing Company.We believe Mr. Hewitt is qualified to serve on our board of directors because of his knowledge of our company’s history and current operations in addition to his education and business experiences as described above.
Mr. Chris Knowles, age 53, has many years of experience in executive management, production, acquisition, operations, leasehold evaluation and development of drilling prospects in the oil & gas industry. From December 2008 to the present, Mr. Knowles has served as a senior partner with Redhawk Advisors, LLC based in Wichita, Kansas. Over that period he has assisted with the acquisition of over 95,000 acres in the premier Mississippi Lime Zones for his firm and clients. From January 2001 to November 2007, Mr. Knowles was a partner in Westside Energy Corporation of Dallas, Texas. Mr. Knowles was charged with managing a staff of field Landmen, developing drilling locations, and acquiring multiple lease properties (80,000 acres) in 12 counties. Westside Energy went public on the American Stock Exchange and has since been acquired. Mr. Knowles hold a degree in Petroleum Land Management from the University of Houston.
Mr. Knowles will receive a director’s fee of $1,000 per month and has been granted 10,000 shares of restricted common stock of the Company for agreeing to act as a director.
Family Relationships
There are no family relationships between any of our directors or executive officers.
Involvement in Certain Legal Proceedings
During the past ten years, none of our executive officers or directors have had any of the following events occur:
●a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
●conviction in a criminal proceeding or being subject to a pending criminal proceeding, excluding traffic violations and other minor offenses;
●being subject to any order, judgment or decree, not substantially reversed, suspended or vacated, of any court of competent jurisdiction, permanently enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking business;
●being found by a court of competent jurisdiction, in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;
●Being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
●being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of our common stock to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2010, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.
Code of Ethics
Our board of directors has not adopted a formal written Code of Business Conduct and Ethics and Compliance Program for all officers, directors and senior employees.
Audit Committee and Audit Committee Financial Expert
Our board of directors has determined that we do not have an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act.
We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have an audit committee or committee performing similar functions nor do we have a written audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committee can be adequately performed by our board of directors.
Nominating and Compensation Committees
We do not have nominating or compensation committees, or committees performing similar functions. Our board of directors believe that it is not necessary to have a compensation committee at this time because the functions of such committee are adequately performed by our board of directors. Our board of directors has not adopted a charter for the compensation committee.
Our board of directors also is of the view that it is appropriate for us not to have a nominating committee because our board of directors has performed and will perform adequately the functions of a nominating committee. Our board of directors has not adopted a charter for the nomination committee. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors. Our board of directors does not believe that a defined policy with regard to the consideration of candidates recommended by shareholders is necessary at this time because we believe that, given the early stages of our development, a specific nominating policy would be premature and of little assistance until our business operations are at a more advanced level. There are no specific, minimum qualifications that our board of directors believes must be met by a candidate recommended by our board of directors. The process of identifying and evaluating nominees for director typically begins with our board of directors soliciting professional firms with whom we have an existing business relationship, such as law firms, accounting firms or financial advisory firms, for suitable candidates to serve as directors. It is followed by our board of directors’ review of the candidates’ resumes and interview of candidates. Based on the information gathered, our board of directors then makes a decision on whether to recommend the candidates as nominees for director. We do not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee.
Item 11.
Item 11. Executive Compensation.
General
The particulars of the compensation paid to the following persons:
(a)our principal executive officer who was serving as the executive officer at the end of the years ended December 31, 2011 and 2010; and
(b)up to two additional individuals for whom disclosure would have been provided under (a) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2011, and 2010,
whom we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.
Notes:
(1)Dr. Villamagna was appointed as our President, Chief Executive Officer and a director of our company on January 15, 2011.
(2)Peter Hewitt was appointed as our Chief Financial Officer, Secretary and a director of our company on February 8, 2010.
(3)Mr. Scales resigned as our President, Chief Executive Officer, Chief Financial Officer and Secretary on December 14, 2009 and as a director of our company on January 15, 2011.
Options Grants During the Last Fiscal Year / Stock Option Plans
We do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or director since our inception; accordingly, no stock options have been granted or exercised by any of the officers or directors since we were founded.
Aggregated Options Exercises in Last Fiscal Year
No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any director since our inception; accordingly, no stock options have been granted or exercised by any of the officers or directors since we were founded.
Long-Tem Incentive Plans and Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by any of the officers or directors or employees or consultants since we were founded.
Compensation of Directors
On February 8, 2011, the Board approved a Directors fee of $1,000 each per month toFortunatoVillamgnaand Peter Hewitt as director compensation. On April 1, 2012 the Board approved a Directors fee of $1,000 per month to Chris Knowles as director compensation.
Except as disclosed above, the members of the Board of Directors are not compensated by Northumberland for acting as such. Directors are reimbursed for reasonable out-of-pocket expenses incurred. There are no arrangements pursuant to which directors are or will be compensated in the future for any services provided as a director.
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
On January 17, 2011, we entered into a business consulting agreement with Wannigan Consulting Corp., pursuant to which Wannigan Consulting agreed to, among other things, assist us in negotiating potential acquisitions and mergers, assist us in the implementation of short term and long term strategic planning, maintain our books and records, prepare all necessary regulatory and statutory filings required of our company, and act as liaison between our company and our auditor and our transfer agent. To compensate for these services, we agreed to pay Wannigan Consulting $10,000 per month and pre-approved expenses of $2,000 per month. We also agreed to issue 360,000 shares of our common stock for these services. This agreement was for a term of twelve months commencing on January 1, 2011 and will continue on a month to month basis. The parties agreed that either party has the right to terminate this agreement without cause and without notice or payment in lieu thereof upon the giving of the written notice of such termination.
There are no employment contracts or other contracts or arrangements with our officers or directors other than those disclosed in this report. There are no compensation plans or arrangements, including payments to be made by Northumberland, with respect to the officers, directors, employees or consultants of Northumberland that would result from the resignation, retirement or any other termination of such directors, officers, employees or consultants. There are no arrangements for directors, officers or employees that would result from a change-in-control.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, named executive officers and current executive officers, individually and our directors and current executive officers as a group, and the present owners of 5% or more of our total outstanding shares. The shareholder listed below has direct ownership of his shares and possesses sole voting and dispositive power with respect to the shares.
Notes:
(1)Beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this report as of which there were 162,159,100 shares of our common stock issued and outstanding.
(2)Based on 162,159,100 number of shares of common stock issued and outstanding as of the date of this report.
(3)These shares are held of record by I-Quest, Inc., a private company of which Dr. Villamagna is also President and CEO.
(4)These shares have not been issued at the date of this report.
Changes in Control
We do not anticipate at this time any changes in control of Northumberland. There are no arrangements either in place or contemplated which may result in a change of control of Northumberland. There are no provisions within our Articles or Bylaws that would delay or prevent a change of control.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Transactions with Related Persons
Except as disclosed herein, there has been no transaction, since June 22, 2009, or currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest.
(i)any director or executive officer of our company;
(ii)any beneficial owner of shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock; and
(iii)any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.
Director Independence
Our board of directors consists of Dr. FortunatoVillamagna, Chris Knowles and Peter Hewitt. Our securities are quoted on the OTC Bulletin Board which does not have any director independence requirements. According to the definition of “independent director” used in NASDAQ rule 5605(a)(2), Dr. Villamagnaand Peter Hewitt are not independent directors as Dr. Villamagnais our President and Chief Executive Officer and Mr. Hewitt is our Chief Financial Officer and Secretary.
Item 14.
Item 14. Principal Accounting Fees and Services.
The aggregate fees billed for the most recently completed fiscal year ended December 31, 2011, and for fiscal year ended December 31, 2010, for professional services rendered by the principal accountants for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountants in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Sadler, Gibb &Associates LLC
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Registered Public Accounting Firm
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent registered public accounting firms. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accounting firms and believes that the provision of services for activities unrelated to the audit is compatible with maintaining their independence.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
Exhibit
Number
Description
(3)
Articles of Incorporation and By-laws
3.1
Articles of Incorporation (incorporated by reference to an exhibit to our registration statement on Form S1/a filed on June 29, 2010)
3.2
Bylaws (incorporated by reference to an exhibit to our registration statement on Form S1/a filed on June 29, 2010)
(10)
Material Contracts
10.1
Business Consulting Agreement dated December 21, 2009 with Wannigan Consulting Corp.
10.2
Callable Convertible Note (incorporated by reference to an exhibit to the Form 10Q filed on 11/25/11).
(31)
Section 302 Certifications
31.1*
Section 302 Certification of FortunatoVillamagna
31.2*
Section 302 Certification of Peter Hewitt
(32)
Section 906 Certifications
32.1*
Section 906 Certification of FortunatoVillamagna
32.2*
Section 906 Certification of Peter Hewitt
(101)
XBRL Related Documents
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Presentation Linkbase
* Filed herewith
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.
NORTHUMBERLAND RESOURCES INC.
/s/ FortunatoVillamagna
By: FortunatoVillamagna
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 16, 2012
Pursuant to the requirements of the Securities Exchange 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.
/s/ FortunatoVillamagna
By: FortunatoVillamagna
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 16, 2012
/s/Peter Hewitt
By: Peter Hewitt
Chief Financial Officer, Secretary and Director
(Principal Financial Officer and Principal Accounting Officer)
Date: April 16, 2012