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For
Period Ended:
June 30, 2007
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¨
Transition
Report on
Form 10-K
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¨
Transition
Report on
Form 20-F
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¨
Transition
Report on
Form 11-K
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¨
Transition
Report on
Form 10-Q
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¨
Transition
Report on
Form N-SAR
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For
the Transition Period Ended:
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Read
Instruction (on back page) Before Preparing Form. Please Print
or
Type.
Nothing
in this form shall be construed to imply that the Commission has
verified
any information contained
herein.
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If
the
notification relates to a portion of the filing checked above, identify the
Item(s) to which the notification relates:
PART
I - REGISTRANT INFORMATION
Ignis
Petroleum Group, Inc.
Full
Name of Registrant
Not
applicable
Former
Name if Applicable
One
Legacy Town Center
7160
Dallas Parkway, Suite 380
Plano,
Texas 75024
Address
of Principal Executive Office
PART
II - RULES 12b-25(b) AND (c)
If
the
subject report could not be filed without unreasonable effort or expense
and the
registrant seeks relief pursuant to Rule 12b-25(b), the following should
be
completed. (Check box if appropriate)
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(a)
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The
reasons described in reasonable detail in Part III of this form
could not
be eliminated without unreasonable effort or expense;
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x
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(b)
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The
subject annual report, semi-annual report, transition report on
Form 10-K,
Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or portion thereof,
will
be filed on or before the fifteenth calendar day following the
prescribed
due date; or the subject quarterly report or transition report
on Form
10-Q or subject distribution report on Form 10-D, or portion thereof,
will
be filed on or before the fifth calendar day following the prescribed
due
date; and
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(c)
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The
accountant’s statement or other exhibit required by Rule 12b-25(c) has
been attached if applicable.
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PART
III - NARRATIVE
State
below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR,
N-CSR,
or the transition report or portion thereof, could not be filed within the
prescribed time period.
We
are filing this Form 12b-25 because
we have been unable to compile the requisite financial data necessary to
complete our annual report on Form 10-KSB by September 28, 2007
without reasonable effort and expense. We intend to file
our annual report on Form 10-KSB within the time period specified by Rule
12b-25(b)(2)(ii) of the Securities Exchange Act of 1934, as
amended.
(Attach
Extra Sheets if Needed)
PART
IV - OTHER INFORMATION
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(1)
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Name
and telephone number of person to contact in regard to this
notification
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Shawn
L. Clift
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972-526-5251
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(Name)
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(Telephone
Number)
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(2)
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Have
all other periodic reports
required under Section 13 or 15(d) of the Securities Exchange Act
of 1934
or Section 30 of the Investment Company Act of 1940 during the
preceding
12 months or for such shorter period that the registrant was required
to
file such report(s) been filed? If answer is no, identify
report(s).
x
Yes
¨
No
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(3)
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Is
it anticipated that any
significant change in results of operations from the corresponding
period
for the last fiscal year will be reflected by the earnings statements
to
be included in the subject report or portion
thereof?
x
Yes
¨
No
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If
so,
attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
Reclassification
and Restatement of
June 30, 2006
Reclassifications
For
the
twelve-month period ended June 30, 2006, we elected to reclassify the costs
as presented in the Statement of Operations. The original
presentation did not separately disclose lease operating expense and
production taxes for oil and gas operations. We reclassified the
netted oil and natural gas sales from $519,535 to $553,266. Production
tax was
$28,466. We reclassified lease operating expense for the Acom A-6 well
from
proved property to expense in the amount of $1,866.
The
original presentation included amortization of debt in general and
administrative expense. We reclassified amortization expense of $130,122
to
interest expense.
Restatement
of 2006 Consolidated Financial Statements
We
identified an error in recording exploration expenses. We recorded
additional exploration costs in the amount of $274,082. We elected to write
down
the North Wright Field asset balance of $199,082 to zero. We recorded
a $75,000 delay rental for the Sherburne prospect that was inadvertently
recorded as an asset which has been corrected in this restatement.
We
identified an accounting error in recording gross and net revenue and lease
operating expense for the Barnett Shale property in Cooke County,
Texas. We did not accrue revenue for April, May, and June 2006 as we
did not accrue the associated production tax and lease operating
expense. This resulted in an understatement of accounts receivable in
the amount of $17,482, understatement of revenue in the amount of $23,014,
understatement of production tax in the amount of $1,261 and lease operating
expense of $4,304, each of which has been corrected in this
restatement.
We
also
identified an error in recording depletion. We recorded an additional $51,653
in
depletion expense under the units of production method which has been corrected
in this restatement.
In
addition, we identified errors in our accounting for the warrant liability
issued to Cornell Capital Partners, LP and recording the issuance of
shares of our common stock. The warrant liability error relates to
adjusting the warrant liability for changes in fair market value on a quarterly
basis. We historically recorded the fair market value of the warrant
liability at inception with no subsequent adjustments for changes in the
market
value. As a result, we did not record the gain/loss on change in the
warrant liability as of June 30, 2006.
The
warrant liability error resulted in an understatement of warrant liability
of
$1,280,014 for the
twelve
months ended June 30, 2006. The share issuance error resulted
in an understatement of general and administrative expenses by $189,000
for the
issuance of 128,125 shares of our common stock in August 2005 and $644,000
for
the issuance of 350,000 shares of our common stock in October 2005. These
corrections had no effect on our revenue, total assets, cash flow or
liquidity for any period. In addition, we identified an error in the
recording of the original warrants dated April 28, 2006 at $0.93 and warrants
dated April 28, 2006 at $0.81 were recorded $374,000 below fair market
value. The fair market value exceeded the principal value of
$5,000,000 and any fair market value in excess of the principal value should
have been expensed at inception of the recording of the debt which properly
states the true liability. We have deleted the reduction and we will use
the
full fair market value as calculated by the Black-Scholes model to record
gain/loss on the value of the warrants,
We
identified an error in our
accounting for the derivative liability issued to Cornell Capital Partners
LP. Under the Secured Convertible Debenture, Section 3(b)(i) limits
the number of shares issuable to Cornell Capital Partners, LP upon conversion
to
4.99% of the outstanding stock at time of conversion. Under section 39(a)(ii)
of
the same agreement, we are required to pay cash in lieu of shares for the
portion greater than 4.99%. The amount of cash is determined by the
number of shares issuable upon conversion and the current market price of
our
stock. Since the number of shares issuable is calculated using 94% of
the market price, the cash conversion results in approximately a 6% premium
paid
on conversion. As a result, the value of the derivative liability
related to the conversion in excess of 4.99% will be based on the conversion
premium at the end of the reporting period, the Cash Premium Method rather
than
using the Black-Scholes model. We corrected the derivative liability
for the period ended June 30, 2006 resulting in a decrease in the liability
of
$1,455,678.
We
also
identified an error in accounting for the amortization of the debt discount
related to the $5,000,000 Convertible Debenture issued to Cornell Capital
Partners, LP. We calculated the amortization of the debt discount
using the effective interest method that amortized the largest amount in
the
first year decreasing to zero over the life of the debentures. The
proper method is to amortize the smaller amount or near zero amortization
in the
first year and exponentially increasing in the later years because the debt
balance is zero at inception. We corrected the method of amortization in
this
restatement resulting in a decrease to interest expense and increase to the
debt
discount of $28,042. For the period ended June 30, 2006 the balance
of convertible debt less debt discount was $2.
The
effects of these changes on the consolidated balance sheet as of June 30,
2006,
and the statements of operations for the twelve month period ended June
30, 2006
are summarized as follows:
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June
30, 2006
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June
30, 2006
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As
Previously Reported
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Adjustments
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As
Restated
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Accounts
receivable
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55,782
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17,482
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73,264
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Property
and equipment:
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2,521,869
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(438,170
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2,083,699
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Oil
and gas properties, successful efforts method
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Other
assets
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669,760
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28,042
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697,802
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Accounts
payable and accrued expenses
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1,089,396
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3,366
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1,092,762
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Long-term
debt less debt discount
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1,931,886
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(1,831,884
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100,002
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Derivative
liability
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2,604,813
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(1,455,678
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1,149,135
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Warrant
liability
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3,694,293
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1,280,014
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4,974,307
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Accumulated
deficit
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(12,716,068
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2,098,302
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(10,617,766
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Revenues
from oil and gas product sales
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519,535
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33,731
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553,266
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Lease
operating expense
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-
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5,647
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5647.18
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Production
an ad valorem taxes
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-
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28,466
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28466.32
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Depreciation
and depletion
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494,493
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51,653
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546,146
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Exploration
expenses, including dry holes
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4,813,268
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274,082
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5,087,350
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General
and administrative expenses
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4,233,971
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(130,122
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4,103,849
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Loss)
from valuation of derivative liability
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1,299,201
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(175,664
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1,123,537
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Interest
expense
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2,102,681
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(1,826,646
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276,035
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Basic
and diluted loss per common share
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(0.26
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0.04
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(0.22
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Ignis
Petroleum Group, Inc.
(Name
of Registrant as Specified in Charter)
has
caused this notification to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date:
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September
28, 2007
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By:
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/s/
Shawn L. Clift
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Shawn
L. Clift
Chief
Financial Officer
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INSTRUCTION:
The form may be signed by an executive officer of the registrant or by any
other
duly authorized representative. The name and title of the person signing
the
form shall be typed or printed beneath the signature. If the statement is
signed
on behalf of the registrant by an authorized representative (other than an
executive officer), evidence of the representative’s authority to sign on behalf
of the registrant shall be filed with the form.