ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
For
The Year
Ended
December
31,
2007
(Consolidated)
|
|
For
The Year
Ended
December
31,
2006
|
|
For The Period
From
May 28, 2003
(Inception) To December 31,
2007
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(4,635,418
|
)
|
$
|
(140,836
|
)
|
$
|
(8,762,251
|
)
|
Net
loss from discontinued operations
|
|
|
-
|
|
|
(70,500
|
)
|
|
(4,026,761
|
)
|
Loss
from continuing operations
|
|
|
(4,635,418
|
)
|
|
(70,336
|
)
|
|
(4,735,490
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
In
kind contribution
|
|
|
12,000
|
|
|
9,000
|
|
|
21,000
|
|
Amortization
|
|
|
18,668
|
|
|
14,732
|
|
|
33,400
|
|
Impairment
of investment in oil and gas leases
|
|
|
247,931
|
|
|
-
|
|
|
247,931
|
|
Acquisition
costs
|
|
|
4,250,000
|
|
|
-
|
|
|
4,250,000
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in accounts receivable
|
|
|
7,843
|
|
|
(7,843
|
)
|
|
-
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
(8,661
|
)
|
|
155,802
|
|
|
101,980
|
|
Cash
flows from operating activities in continuing operations
|
|
|
(107,637
|
)
|
|
161,355
|
|
|
(81,179
|
)
|
Cash
flows from operating activities in discontinued operations
|
|
|
-
|
|
|
(7,568
|
)
|
|
(1,034,023
|
)
|
Net
Cash Provided By (Used In) Operating Activities
|
|
|
(107,637
|
)
|
|
93,787
|
|
|
(1,115,202
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
-
|
|
|
(116,331
|
)
|
|
(116,331
|
)
|
Cash
flows from investing activities in continuing operations
|
|
|
-
|
|
|
(116,331
|
)
|
|
(116,331
|
)
|
Cash
flows from investing activities in discontinued operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net
Cash Used In Investing Activities
|
|
|
-
|
|
|
(116,331
|
)
|
|
(116,331
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Repayment
of stockholder loans
|
|
|
-
|
|
|
(609
|
)
|
|
(609
|
)
|
Loans
payable – related parties
|
|
|
108,087
|
|
|
81,387
|
|
|
189,474
|
|
Cash
flows from investing activities in continuing operations
|
|
|
108,087
|
|
|
80,778
|
|
|
188,865
|
|
Cash
flows from investing activities in discontinued operations
|
|
|
-
|
|
|
(59,932
|
)
|
|
1,043,118
|
|
Net
Cash Provided By Financing Activities
|
|
|
108,087
|
|
|
20,846
|
|
|
1,231,983
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
450
|
|
|
(1,698
|
)
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
-
|
|
|
1,698
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
450
|
|
$
|
-
|
|
$
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$
|
-
|
|
$
|
456
|
|
$
|
1,824
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
See
accompanying notes to financial
statements.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
On
November 20, 2007, the Company issued 5 million common shares to acquire 100%
of
the outstanding common shares of Uranium Acquisition Corp., Inc.
On
April
21, 2006, the Company issued 20 million shares of common stock to purchase
a 10%
working interest in oil and gas leases in Texas for $165,000 from a related
public company.
On
April
21, 2006, the Company exchanged all of its ownership in CardioBioMedical
Corporation to the original stockholders for 22,077,509 common shares of Odyssey
and the warrant issued to purchase 6,500,000 shares of the Company’s common
stock was cancelled.
During
2003, the Company issued 16,500,000 shares of common stock with a fair value
of
$1,650,000 for the license rights to the bio-cybernetic technology and frequency
analysis technology.
During
2005, the Company cancelled 16,500,000 shares of common stock with a fair value
of $495,000 for the termination of the exclusive rights to the bio-cybernetic
technology and frequency analysis technology.
During
2005, the Company issued warrants to purchase 6,500,000 of its common shares
at
$0.01 for the non-exclusive rights to the bio-cybernetic technology and
frequency analysis technology valued at $143,238.
See
accompanying notes to financial
statements.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
NOTE 1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
|
(A)
Organization and Basis of Presentation
Odyssey
Oil & Gas, Inc. (F/K/A Advanced Sports Technologies, Inc.) is a Florida
corporation incorporated on August 9, 2001. The Company owns and derives revenue
from its 10% working interest in oil and gas leases located in Texas. Subsequent
to December 31, 2007, at the recommendation of the operator, the gas well was
plugged and abandoned. The investment in the oil and gas leases was expensed
(Note 3). Through its acquisition of Uranium Acquisition Corp. Inc., the Company
owns a 49% interest in a South African company which owns a nonoperating uranium
mine in the Bela Bela district in South Africa (Note 2).
(B)
Principles of Consolidation
The
financial statements for 2007 include the accounts of Odyssey Oil & Gas,
Inc. (F/K/A Advanced Sports Technologies, Inc.) and Uranium Acquisition Corp.,
Inc. (a development stage company) through the date of acquisition of November
20, 2007. The financial statements for 2006 include the accounts of Odyssey
Oil
& Gas, Inc. (F/K/A Advanced Sports Technologies, Inc.) and CardioBioMedical
Corporation (a development stage company) through the date of exchange on April
21, 2006. All intercompany accounts during periods of consolidation have been
eliminated.
On
April
21, 2006, the ownership of CardioBioMedical Corporation was exchanged for
22,077,509 shares of Odyssey common stock to the original stockholders.
Accordingly, all current and prior period amounts relating to the operations
of
CardioBioMedical Corporation have been reflected as discontinued operations.
CardioBioMedical Corporation originally merged with Odyssey Oil & Gas, Inc.
(F/K/A Advanced Sports Technologies, Inc.) on September 23, 2005.
Odyssey
Oil & Gas, Inc. (F/K/A Advanced Sports Technologies, Inc.) is hereafter
referred to as the “Company.”
As
a
result of the transactions referred to in Note 5(D), Centurion Gold Holdings,
Inc., a related public company, owns approximately 32% of the Company (64%
as of
December 31, 2006).
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
(
C)
Investment in Oil and Gas Leases
The
Company follows the successful efforts method of accounting for its oil and
gas
operations. Under this method, all property acquisition costs and costs of
exploratory and development wells are capitalized when incurred, pending
determination of whether an individual well has found proved reserves. If it
is
determined that a well has not found proved reserves, the costs of drilling
the
well are expensed. The costs of development wells are capitalized whether
productive or nonproductive. Geological and geophysical costs on exploratory
prospects and the costs of carrying and retaining unproved properties are
expensed as incurred. An impairment allowance is provided to the extent that
capitalized costs of unproved properties, on a property-by property basis,
are
not considered to be realizable. Depletion, depreciation and amortization
(“DD&A”) of capitalized costs of proved oil and gas properties is provided
on a property- by property basis using the units of production method. The
computation of DD&A takes into consideration dismantlement, restoration and
abandonment costs
and
the
anticipated proceeds from equipment salvage. The estimated dismantlement,
restoration and abandonment costs are expected to be substantially offset by
the
estimated residual value of the lease and well equipment. An impairment loss
is
recorded if the net capitalized costs of proved oil and gas properties exceed
the aggregate undiscounted future net revenues determined on a
property-by-property basis. The impairment loss recognized equals the excess
of
net capitalized costs over the related fair value determined on a
property-by-property basis.
(D)
Fair Value of Financial Instruments
The
carrying amounts of the Company’s financial instruments including accounts
payable and loans payable - related parties approximate fair value due to the
relatively short period to maturity for these instruments.
(E)
Revenue Recognition
Revenue
from its interest in the oil and gas leases is recognized when production is
sold to a purchaser at a fixed or determinable price, when delivery has occurred
and title has transferred and if collectibility of the revenue is
probable.
(F)
Income Taxes
The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
(G)
Loss Per Share
Basic
and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting Standards No.
128,
“Earnings Per Share.”
(H)
Statement of Cash Flows
The
Company considers all highly liquid temporary cash investments with an original
maturity of three months or less to be cash equivalents. The Company did not
have any cash equivalents as of the balance sheet dates presented in the
financial statements.
(I)
Use of Estimates
In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues
and
expenses during the reported period. Actual results could differ from those
estimates.
(
J)
Recent Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “
Fair
Value Measurements
”.
The
objective of SFAS 157 is to increase consistency and comparability in fair
value
measurements and to expand disclosures about fair value measurements. SFAS
157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements
that
require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS No. 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. The
adoption of this statement is not expected to have a material effect on the
Company's future reported financial position or results of
operations.
In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No.
159, “
The
Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement No. 115
”.
This
statement permits entities to choose to measure many financial instruments
and
certain other items at fair value. Most of the provisions of SFAS No. 159 apply
only to entities that elect the fair value option. However, the amendment to
SFAS No. 115 “
Accounting
for Certain Investments in Debt and Equity Securities
”
applies
to all entities with available-for-sale and trading securities. SFAS No. 159
is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provision of SFAS No. 157, “
Fair
Value Measurements”.
The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No.
160, “
Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51
”.
This
statement improves the relevance, comparability, and transparency of the
financial information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting standards that
require; the ownership interests in subsidiaries held by parties other than
the
parent and the amount of consolidated net income attributable to the parent
and
to the noncontrolling interest be clearly identified and presented on the face
of the consolidated statement of income, changes in a parent’s ownership
interest while the parent retains its controlling financial interest in its
subsidiary be accounted for consistently, when a subsidiary is deconsolidated,
any retained noncontrolling equity investment in the former subsidiary be
initially measured at fair value, entities provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the noncontrolling owners. SFAS No. 160 affects those entities
that
have an outstanding noncontrolling interest in one or more subsidiaries or
that
deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Early adoption is prohibited. The adoption of this statement is not
expected to have a material effect on the Company's financial
statements.
NOTE 2
|
ACQUISITION
OF MINING COMPANY
|
On
November 20, 2007, the Company acquired 100% of the outstanding common shares
of
Uranium Acquisition Corp., Inc., a Florida development stage company through
a
share purchase agreement. Uranium Acquisition Corp., Inc. owns a 49% interest
in
MCA Uranium One (Pty) Limited, a South African company which owns a nonoperating
uranium mine in the Bela Bela district in South Africa. The share purchase
agreement also requires each shareholder to provide funding based on the
shareholders’ percentage of the pro rata amount of shares held based on the
future funding requirements of Uranium. If a shareholder does not provide the
required loans, the agreement gives the remaining shareholders the right to
force the sale of shares held by the non-compliant shareholder. Should the
Company provide the majority of the financial support of MCA Uranium One (Pty)
Limited, the Company may be required to consolidate under FIN46R, “
Consolidation
of Variable Interest Entities.”
The
Company issued 5 million restricted common shares with a fair value of
$4,250,000 ($.85 per share based upon latest traded closing price). Under SFAS
No. 144,
“Accounting
for the Impairment or Disposal of Long-Lived Assets”
and SEC
Industry Guide 7,
“Description
of Property by Issuers Engaged or to be Engaged in Significant Mining
Operations,”
the
purchase price has been expensed as acquisition costs.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
Uranium
Acquisition Corp., Inc. had no operations since the date of acquisition.The
Company accounts for its 49% interest in MCA Uranium One (Pty) Limited
on the
equity method. Under the equity method, the Company recognizes its share
of the
net income or loss which increases or reduces its investment.
NOTE 3
|
INVESTMENT
IN OIL AND GAS LEASES
|
On
April
21, 2006, the Company issued 20 million shares of common stock to purchase
a 10%
working interest in oil and gas leases in Texas for $165,000 ($.008 per share)
from Centurion Gold Holdings, Inc., a related public company. The investment
was
recorded at historical cost equal to the amount recorded by Centurion Gold
Holdings, Inc. The investment is being accounted for under the cost method
of
accounting. During the years ended December 31, 2007 and 2006, an additional
$0
and $116,331 was incurred for the Company’s share of oil well development costs
of which $97,141 was paid by related parties (See Note 4).
The
Company accounts for any impairment in accordance with Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“Statement
142”). Under Statement 142, intangible assets are reviewed for evidence or
changes in circumstances that indicate that their carrying value may not
be
recoverable.
The
Company
periodically reviews the carrying value to determine whether or not an
impairment to such value has occurred. Subsequent to December 31, 2007, at
the
recommendation of the operator, the gas well was plugged and abandoned. The
unamortized cost of the investment in oil and gas leases of $247,931 as of
December 31, 2007 was expensed. As of December 31, 2006, no impairment was
recognized.
NOTE 4
|
LOANS
PAYABLE - RELATED
PARTIES
|
During
the year ended December 31, 2007, a third party advanced an additional $108,087
in payment of operating and oil well development expenses. The advances are
unsecured, bear interest at 10% per annum and are due on demand. Loans payable
-
related parties include accrued interest of $20,033.
NOTE 5
|
STOCKHOLDERS’
EQUITY
|
(A)
Common Stock Issued for Cash
During
2003, the Company issued 2,500 shares of common stock to its founder for cash
of
$250 ($0.10 per share).
During
2003, the Company issued 800,000 shares of common stock for cash of $80,000
($0.10 per share).
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
During
2003, the Company issued 277,778 shares of common stock for cash of $125,000
($0.45 per share).
During
2004, the Company issued 672,231 shares of common stock for cash of $302,503
($0.45 per share).
During
2005, the Company issued 11,097,500 shares of common stock to the stockholders
of Advanced Sports upon completion of the merger.
(B)
Common Stock Issued for Services
During
2003, the Company issued 7,125,000 shares of common stock for officer
compensation valued for financial accounting purposes at $712,500 ($0.10 per
share) based upon recent cash offering prices. The initial 2,500 shares issued
upon formation of the corporation were
valued
at
a recent cash offering price of
$.10 per share.
During
2003, the Company issued 16,500,000 shares of common stock for licensing rights
valued for financial accounting purposes at $1,650,000 ($0.10 per share, the
price paid for the initial 2,500 shares issued upon formation of the
corporation) based upon recent cash offering prices. During 2005, these
16,500,000 shares of common stock were cancelled pursuant to a settlement
agreement dated September 16, 2005. Under the terms of this agreement, a
nontransferable warrant for 6,500,000 common shares at $ .01 per share was
issued for the nonexclusive right to the technology. This warrant is exercisable
between January 1, 2007 and December 31, 2014. The fair value of the warrants
was estimated on the grant date using the Black-Scholes option pricing model
as
required by SFAS 123 with the following assumptions: expected dividend yield
0%,
volatility 1%, risk-free interest rate of return of 3.28% and expected life
of
7 years. The value of $143,238 was recorded as intangible license rights
and will be amortized over the patent life of approximately 14
years.
During
2003, the Company issued 8,200,000 shares of common stock for consulting
services valued for financial accounting purposes at $820,000 ($0.10 per share)
based upon recent cash offering prices.
During
2005, the Company issued 5,000,000 shares of common stock to its Chief Executive
Officer and President in recognition and consideration of his service as an
officer and director of the Company since June 2003 and his contributions to
the
progress and development of the Company. For financial accounting purposes,
these shares were valued at $150,000 ($0.03 per share) based upon recent market
prices of the Company.
(C)
In-Kind Contribution
During
2007 and 2006, the Company recorded additional paid-in capital of $12,000 for
the fair value of rent contributed to the Company by its president.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
(D)
Common Stock Issued in Exchange of Assets
On
April
21, 2006, the Company exchanged all of its ownership in CardioBioMedical
Corporation to the original stockholders for 22,077,509 common shares of Odyssey
and the warrant issued to purchase 6,500,000 shares of the Company’s common
stock was cancelled based on the book value of assets and liabilities on the
date of exchange (See Note 8).
On
April
21, 2006, the Company issued 20 million shares of common stock to purchase
a 10%
working interest in certain gas and oil leases in Texas for $165,000 ($.008
per
share) from Centurion Gold Holdings, Inc., a related public company (See Note
3).
On
November 20, 2007, the Company issued 5 million restricted common shares with
a
fair value of $4,250,000 ($.85 per share based upon latest traded closing price)
to acquire 100% of the outstanding common shares of Uranium Acquisition Corp.,
Inc. (See Note 2).
NOTE 6
|
RELATED
PARTY TRANSACTIONS
|
See
Notes
3 and 4.
Income
tax expense (benefit) for the periods ended December 31, 2007 and 2006 is
summarized as follows:
|
|
2007
|
|
2006
|
|
Current:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
-
|
|
Deferred
- Federal and State
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Income
tax expense (benefit)
|
|
$
|
-
|
|
$
|
-
|
|
The
Company's tax expense differs from the "expected" tax expense for the periods
ended December 31, 2007 and 2006 as follows:
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
U.S.
Federal income tax expense (benefit)
|
|
$
|
(1,576,042
|
)
|
$
|
(47,884
|
)
|
State
income tax expense (benefit)
|
|
|
(168,266
|
)
|
|
(5,112
|
)
|
Permanent
difference
|
|
|
1,603,791
|
|
|
31,045
|
|
Impairment
|
|
|
93,296
|
|
|
-
|
|
Effect
on net operating loss carryforward
|
|
|
47,221
|
|
|
21,952
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
The
tax
effects of temporary differences that give rise to significant portions of
deferred tax assets and liabilities at December 31, 2007 and 2006 are as
follows:
|
|
2007
|
|
2006
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
Net
operating loss carryforward
|
|
$
|
69,173
|
|
$
|
21,952
|
|
Total
gross deferred tax assets
|
|
|
69,173
|
|
|
21,952
|
|
Less
valuation allowance
|
|
|
(69,173
|
)
|
|
(21,952
|
)
|
|
|
|
|
|
|
|
|
Net
deferred tax assets
|
|
$
|
-
|
|
$
|
-
|
|
At
December 31, 2007, the Company had a net operating loss carryforward of
approximately $183,800 for U.S. Federal income tax purposes available to offset
future taxable income expiring through 2027. All other losses incurred by the
Company prior to the change in control are not available due to Internal Revenue
Code Section 382 which restricts the deductibility of prior net operating losses
where there has been a change in control. The net change in the valuation
allowance during the year ended December 31, 2007 was an increase of
$47,221.
NOTE 8
|
DISCONTINUED
OPERATIONS
|
On
April
21, 2006, the ownership of CardioBioMedical Corporation was exchanged for
22,077,509 shares of Odyssey common stock to the original stockholders.
Accordingly, all current and prior period amounts relating to the operations
of
CardioBioMedical Corporation have been reclassified to conform to this
presentation. The net book value of assets and liabilities of CardioBioMedical
Corporation was recorded as a distribution on the date of exchange. The loss
from discontinued operations was equal to operating expenses of CardioBioMedical
Corporation for the period January 1, 2006 to April 21, 2006, the date of
exchange.
NOTE 9
|
COMMITMENTS
AND CONTINGENCIES
|
(A)
Purchase Agreement
During
November 2007, the Company signed an agreement under which it acquired 49%
of
the outstanding shares of Uranium Acquisition Corp., Inc. (“Uranium”), a Florida
corporation. The agreement called for the Company to issue 5 million shares
of
Company stock upon signing of the agreement. The agreement also calls for the
Company to issue 10 million shares upon approval of a mining license. In
addition, the agreement calls for the Company to deliver 25 million shares
of
common stock ,within18 months of the signature of the agreement, upon the
proving
up
of
uranium reserves being substantially the same as per the “Summary of Geological
Area and Write up” presented by Mineral Capital Assets.
ODYSSEY
OIL & GAS, INC. & SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007
The
agreement requires each shareholder to provide funding based on the
shareholders’ percentage of the pro rata amount of shares held based on the
future funding requirements of Uranium. If a shareholder does not provide
the
required loans, the agreement gives the remaining shareholders the right
to
force the sale of shares held by the non-compliant shareholder. The agreement
gives the controlling interest shareholders the right of first refusal on
any
shares held by the Company at a price to be determined by the shareholders.
As
reflected in the accompanying financial statements, the Company is in the
development stage with an accumulated deficit of $5,016,659, a working capital
deficiency of $295,533 and a negative cash flow from operations of $1,115,202
from inception. These factors raise substantial doubt about its ability to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company’s ability to raise additional capital and
implement its business plan. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as
a
going concern.
Through
its acquisition of Uranium Acquisition Corp., Inc. on November 20, 2007 (see
Note 2), management anticipates that its interest in the uranium mine will
produce sufficient revenue and cash flow by the end of the next fiscal year
to
ensure the Company will continue as a going concern. To date, operating expenses
have been mostly funded by related parties (see Note 4).
Subsequent
to December 31, 2007, the third party referred to in Note 4 advanced an
additional $7,500 in payment of operating expenses.