IGPG Ignis Petroleum Group Inc (CE)

Ignis Petroleum Group, Inc. (OTCBB: IGPG) today announced its financial results for the fiscal year ended June 30, 2006. Following are financial highlights from the Company�s Annual Report on Form 10-KSB: Fiscal Year Results For the fiscal year ended June 30, 2006, Ignis reported a net loss of $12.424 million, or $0.26 per average diluted share. The loss includes $519,535 of revenue from oil and gas sales, $4.813 million in exploration expenses, including a dry hole impairment expense, $1.932 million non-cash charge for amortization of the discount of debentures, and a $1.299 non-cash charge from valuation of derivatives related to the $5.0 million convertible debt financing. Sales from production were 5,874 barrels of oil and 20.5 million cubic feet of natural gas or 9,294 barrels of oil equivalent. The average prices the Company received for its oil and natural gas were $58.88 per barrel of oil and $7.89 per thousand cubic feet of gas. The sales were primarily related to new oil and natural gas production volumes from the Company�s Acom A-6 well, which commenced operations in October 2005. As of June 30, 2006, the Company had estimated total proved reserves of 29,495 barrels of oil equivalent of which 100% were proved producing reserves. This compares with no proved reserves for the period ended June 30, 2005. Exploration Expenses Exploration expenses, including a dry hole, were partly comprised of a $2.813 million expense for the Wefel Family Trust 19-1 #1 well, located in Escambia County, Alabama that we decided to plug and abandon. In addition, we recorded a $2.000 million impairment expense related to our North Wright prospect investments. Compared to other opportunities, this prospect does not meet the technical and economic criteria put in place by current management. Accordingly we have decided not to drill the prospect. Financing Expenses To obtain funding for our ongoing operations, we entered into securities purchase agreements during fiscal 2006 with Cornell Capital Partners, LP (�Cornell�), for the sale of $5,000,000 in secured convertible debentures and 12,000,000 warrants from which we received total net proceeds of $4,265,000 after fees associated with the transaction. The convertible feature of the debenture allows Cornell the option to have the note repaid with shares of our common stock. In accordance with accounting rules, the $5.0 million face amount of the note was discounted into both: 1) a derivative liability (to reflect the beneficial conversion feature) in an amount of $1.306 million, and 2) a warrant liability (to reflect the warrant value) in the amount of $3.694 million. The derivative liability is marked to market at the end of each reporting period. As of June 30, 2006, after adjustment, we revalued this derivative liability and recorded a non-cash expense of $1.299 million. Generally, as the common stock price increases, gains are recorded because fewer shares are required to repay the debt. Conversely, as the common stock price decreases losses are recorded because more shares are required to repay the debt. We also recorded a non-cash expense of $1.931 million to reflect the amortization of the discount on the debenture. Management Comments Michael P. Piazza, Ignis� President and Chief Executive Officer, stated, �Fiscal 2006 was our first full year of operation with the current management. We built a team of experienced world-class individuals, generated revenues from production volumes, completed multiple financings, and defined and executed a strategy to source, select and acquire high-potential projects. For example, we recently signed a definitive agreement to acquire 45% of acreage, producing properties and a natural gas gathering and treating system owned by W. B. Osborn Oil & Gas Operations, Ltd. and St. Jo Pipeline Limited within the St. Jo Ridge (Barnett Shale) Field located in North Texas.� Piazza continued, �Our recently announced acquisition and development program is progressing towards closing and we look forward with considerable confidence to participating in this full-scale, multi-well, continuous development program. �Even though we had to make some challenging decisions this year, I believe Ignis has the right people and the right projects, and remains on course to achieve continued increases in production, reserves and revenues. We have a lot of work to do to realize the Company's full value and remain fully committed to that end." Summary financial statements follow. In addition to this press release, please refer to the Company's Annual Report on Form 10-KSB for the year ended June 30, 2006 that was filed with the Securities & Exchange Commission on October 13, 2006. About Ignis Petroleum Ignis Petroleum Group, Inc. is a Dallas-based oil and gas production company focused on exploration, acquisition and development of crude oil and natural gas reserves in the United States. The Company's management has closely aligned itself with strategic industry partnerships and is building a diversified energy portfolio. It focuses on prospects that result from new lease opportunities, new technology and new information. For further information, visit www.ignispetro.com. Safe Harbor for Forward-Looking Statements This release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions and ventures discussed in this release. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the risks inherent in oil and gas exploration, the need to obtain additional financing, the availability of needed personnel and equipment for the future exploration and development, fluctuations in gas prices, and general economic conditions. Ignis Petroleum Group, Inc. and Subsidiary Consolidated Balance Sheet June 30, 2006 � ASSETS Current assets: Cash and cash equivalents $ 872,572� Accounts receivable 55,782� Prepaid expenses and other current assets 188,500� Total current assets 1,116,854� � Property and equipment: Oil and gas properties, successful efforts method 2,521,869� � Other assets 669,760� � Total assets $ 4,308,483� � � LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) � Current liabilities: Accounts payable and accrued expenses $ 1,089,396� Note payable 100,000� Total current liabilities 1,189,396� � Convertible notes 1,931,886� Derivative liability 2,604,813� Warrant liability 3,694,293� 8,230,992� � Commitments and contingencies -� � Stockholders' equity (deficit): Preferred stock, $0.001 par value, 5,000,000 shares authorized none issued and outstanding -� Common stock, $0.001 par value, 300,000,000 shares authorized 50,026,464 issued and outstanding 50,026� Additional paid-in capital 7,554,137� Accumulated deficit (12,716,068) Total stockholders' equity (deficit) (5,111,905) � Total liabilities and stockholders' equity (deficit) $ 4,308,483� Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Operations � For the Period For the December 9, 2004 Year Ended (Inception) to June 30, 2006 June 30, 2005 � Revenues from oil and gas product sales $ 519,535� $ -� � � Operating expenses: Depreciation and depletion 494,493� -� Exploration expenses, including dry holes 4,813,268� -� General and administrative expenses 4,233,971� 253,555� Total operating expenses 9,541,732� 253,555� � Other income (expense) Loss from valuation of derivative liability (1,299,201) -� Interest expense (2,102,681) (22,685) (3,401,882) (22,685) � Net loss $ (12,424,079) $ (276,240) � � Basic and diluted loss per common share $ (0.26) $ (0.01) � Weighted average number of common shares outstanding and proforma 47,674,470� 40,829,557� Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Stockholders' Equity For the Period December 9, 2004 (reverse merger) to June 30, 2005 and the Year Ended June 30, 2006 � � � Additional Common Stock Paid-in Accumulated Shares Par value Capital Deficit Total � � Issuance of common stock 31,200,000� $ 31,200� $ $ 20,800� $ 52,000� � Donated services for rent 3,000� 3,000� � Net loss � � � � (39,549) � (39,549) � Balance December 9, 2004 (reverse merger) 31,200,000� 31,200� -� (15,749) 15,451� � Issuance of common stock 10,000,000� 10,000� 340,000� -� 350,000� � Donated services for rent -� -� 13,500� -� 13,500� � Net loss -� � -� � -� � (276,240) � (276,240) � Balance June 30, 2005 41,200,000� 41,200� 353,500� (291,989) 102,711� � Conversion of convertible notes 3,100,000� 3,100� 1,547,202� 1,550,302� � Issuance of common stock for services 1,856,313� 1,856� 2,569,625� 2,571,481� � Sale of common stock 3,395,151� 3,395� 1,996,605� 2,000,000� � Issuance of common stock for Newton extension fee 400,000� 400� 1,027,600� 1,028,000� � Issuance of common stock for debt fees 75,000� 75� 59,605� 59,680� � Net loss (12,424,079) (12,424,079) � � � � � Balance June 30, 2006 50,026,464� $ 50,026� $ 7,554,137� $ (12,716,068) $ (5,111,905) Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Cash Flows � For the Period ended For the December 9, 2004 Year Ended (Inception) to June 30, 2006 June 30, 2005 � Cash flow from operating activities Net loss $ (12,424,079) $ (276,240) � Adjustments to net loss not affecting cash: Donated capital -� 13,500� Reverse merger adjustments -� 15,451� Depletion and amortization 494,493� -� Amortization of debt cost 133,280� Loss from valuation adjustment of oil and gas properties 2,000,000� Stock issued for compensation and services 2,631,161� -� Amortization of discount of debentures 1,931,790� -� Loss from valuation of derivatives 1,299,201� -� Increase / decrease in current assets and liabilities Increase in accounts receivable (55,781) -� Increase in repaid expenses and other current assets (168,434) (20,066) Increase in other assets (740,000) (3,360) Increase in accounts payable and accrued expenses � 1,044,206� � 45,189� � Cash used in operating activities � (3,854,163) � (225,526) � Cash flow from investing activities Purchase of oil and gas properties � (1,757,739) � (1,500,000) � Cash used for investing activities � (1,757,739) � (1,500,000) � Cash flow from financing activities Issuance of common stock and warrants 2,000,000� 350,000� Proceeds from note payable 100,000� -� Proceeds from convertible notes 4,260,000� 1,500,000� Advance from related party � (20,590) � 20,590� � Cash provided by financing activities � 6,339,410� � 1,870,590� � Net increase in cash 727,508� 145,064� � Cash at beginning of period � 145,064� � -� � Cash at end of period $ 872,572� $ 145,064� � � Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ -� $ -� Income taxes $ -� $ -� � Supplemental non-cash financing transactions: Conversion of notes payable and interest into equity $ -� $ -� Issuance of common stock for oil and gas property $ 1,028,000� $ -� Ignis Petroleum Group, Inc. (OTCBB: IGPG) today announced its financial results for the fiscal year ended June 30, 2006. Following are financial highlights from the Company's Annual Report on Form 10-KSB: Fiscal Year Results For the fiscal year ended June 30, 2006, Ignis reported a net loss of $12.424 million, or $0.26 per average diluted share. The loss includes $519,535 of revenue from oil and gas sales, $4.813 million in exploration expenses, including a dry hole impairment expense, $1.932 million non-cash charge for amortization of the discount of debentures, and a $1.299 non-cash charge from valuation of derivatives related to the $5.0 million convertible debt financing. Sales from production were 5,874 barrels of oil and 20.5 million cubic feet of natural gas or 9,294 barrels of oil equivalent. The average prices the Company received for its oil and natural gas were $58.88 per barrel of oil and $7.89 per thousand cubic feet of gas. The sales were primarily related to new oil and natural gas production volumes from the Company's Acom A-6 well, which commenced operations in October 2005. As of June 30, 2006, the Company had estimated total proved reserves of 29,495 barrels of oil equivalent of which 100% were proved producing reserves. This compares with no proved reserves for the period ended June 30, 2005. Exploration Expenses Exploration expenses, including a dry hole, were partly comprised of a $2.813 million expense for the Wefel Family Trust 19-1 #1 well, located in Escambia County, Alabama that we decided to plug and abandon. In addition, we recorded a $2.000 million impairment expense related to our North Wright prospect investments. Compared to other opportunities, this prospect does not meet the technical and economic criteria put in place by current management. Accordingly we have decided not to drill the prospect. Financing Expenses To obtain funding for our ongoing operations, we entered into securities purchase agreements during fiscal 2006 with Cornell Capital Partners, LP ("Cornell"), for the sale of $5,000,000 in secured convertible debentures and 12,000,000 warrants from which we received total net proceeds of $4,265,000 after fees associated with the transaction. The convertible feature of the debenture allows Cornell the option to have the note repaid with shares of our common stock. In accordance with accounting rules, the $5.0 million face amount of the note was discounted into both: 1) a derivative liability (to reflect the beneficial conversion feature) in an amount of $1.306 million, and 2) a warrant liability (to reflect the warrant value) in the amount of $3.694 million. The derivative liability is marked to market at the end of each reporting period. As of June 30, 2006, after adjustment, we revalued this derivative liability and recorded a non-cash expense of $1.299 million. Generally, as the common stock price increases, gains are recorded because fewer shares are required to repay the debt. Conversely, as the common stock price decreases losses are recorded because more shares are required to repay the debt. We also recorded a non-cash expense of $1.931 million to reflect the amortization of the discount on the debenture. Management Comments Michael P. Piazza, Ignis' President and Chief Executive Officer, stated, "Fiscal 2006 was our first full year of operation with the current management. We built a team of experienced world-class individuals, generated revenues from production volumes, completed multiple financings, and defined and executed a strategy to source, select and acquire high-potential projects. For example, we recently signed a definitive agreement to acquire 45% of acreage, producing properties and a natural gas gathering and treating system owned by W. B. Osborn Oil & Gas Operations, Ltd. and St. Jo Pipeline Limited within the St. Jo Ridge (Barnett Shale) Field located in North Texas." Piazza continued, "Our recently announced acquisition and development program is progressing towards closing and we look forward with considerable confidence to participating in this full-scale, multi-well, continuous development program. "Even though we had to make some challenging decisions this year, I believe Ignis has the right people and the right projects, and remains on course to achieve continued increases in production, reserves and revenues. We have a lot of work to do to realize the Company's full value and remain fully committed to that end." Summary financial statements follow. In addition to this press release, please refer to the Company's Annual Report on Form 10-KSB for the year ended June 30, 2006 that was filed with the Securities & Exchange Commission on October 13, 2006. About Ignis Petroleum Ignis Petroleum Group, Inc. is a Dallas-based oil and gas production company focused on exploration, acquisition and development of crude oil and natural gas reserves in the United States. The Company's management has closely aligned itself with strategic industry partnerships and is building a diversified energy portfolio. It focuses on prospects that result from new lease opportunities, new technology and new information. For further information, visit www.ignispetro.com. Safe Harbor for Forward-Looking Statements This release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions and ventures discussed in this release. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the risks inherent in oil and gas exploration, the need to obtain additional financing, the availability of needed personnel and equipment for the future exploration and development, fluctuations in gas prices, and general economic conditions. -0- *T Ignis Petroleum Group, Inc. and Subsidiary Consolidated Balance Sheet June 30, 2006 ASSETS Current assets: Cash and cash equivalents $ 872,572 Accounts receivable 55,782 Prepaid expenses and other current assets 188,500 ------------ Total current assets 1,116,854 ------------ Property and equipment: Oil and gas properties, successful efforts method 2,521,869 ------------ Other assets 669,760 ------------ Total assets $ 4,308,483 ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 1,089,396 Note payable 100,000 ------------ Total current liabilities 1,189,396 ------------ Convertible notes 1,931,886 Derivative liability 2,604,813 Warrant liability 3,694,293 ------------ 8,230,992 ------------ Commitments and contingencies - Stockholders' equity (deficit): Preferred stock, $0.001 par value, 5,000,000 shares authorized none issued and outstanding - Common stock, $0.001 par value, 300,000,000 shares authorized 50,026,464 issued and outstanding 50,026 Additional paid-in capital 7,554,137 Accumulated deficit (12,716,068) ------------ Total stockholders' equity (deficit) (5,111,905) ------------ Total liabilities and stockholders' equity (deficit) $ 4,308,483 ============ *T -0- *T Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Operations For the Period For the December 9, 2004 Year Ended (Inception) to June 30, 2006 June 30, 2005 ------------- ------------- Revenues from oil and gas product sales $ 519,535 $ - ------------- ------------- Operating expenses: Depreciation and depletion 494,493 - Exploration expenses, including dry holes 4,813,268 - General and administrative expenses 4,233,971 253,555 ------------- ------------- Total operating expenses 9,541,732 253,555 ------------- ------------- Other income (expense) Loss from valuation of derivative liability (1,299,201) - Interest expense (2,102,681) (22,685) ------------- ------------- (3,401,882) (22,685) ------------- ------------- Net loss $ (12,424,079) $ (276,240) ============= ============= Basic and diluted loss per common share $ (0.26) $ (0.01) ============= ============= Weighted average number of common shares outstanding and proforma 47,674,470 40,829,557 ============= ============= *T -0- *T Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Stockholders' Equity For the Period December 9, 2004 (reverse merger) to June 30, 2005 and the Year Ended June 30, 2006 Additional Common Stock Paid-in --------------------- Shares Par Capital value ----------- -------- ----------- Issuance of common stock 31,200,000 $ 31,200 $ Donated services for rent Net loss ----------- -------- ----------- Balance December 9, 2004 (reverse merger) 31,200,000 31,200 - Issuance of common stock 10,000,000 10,000 340,000 Donated services for rent - - 13,500 Net loss - - - ----------- -------- ----------- Balance June 30, 2005 41,200,000 41,200 353,500 Conversion of convertible notes 3,100,000 3,100 1,547,202 Issuance of common stock for services 1,856,313 1,856 2,569,625 Sale of common stock 3,395,151 3,395 1,996,605 Issuance of common stock for Newton extension fee 400,000 400 1,027,600 Issuance of common stock for debt fees 75,000 75 59,605 Net loss ----------- -------- ----------- Balance June 30, 2006 50,026,464 $50,026 $7,554,137 =========== ======== =========== Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Stockholders' Equity For the Period December 9, 2004 (reverse merger) to June 30, 2005 and the Year Ended June 30, 2006 Accumulated Deficit Total ------------- ------------- Issuance of common stock $ 20,800 $ 52,000 Donated services for rent 3,000 3,000 Net loss (39,549) (39,549) ------------- ------------- Balance December 9, 2004 (reverse merger) (15,749) 15,451 Issuance of common stock - 350,000 Donated services for rent - 13,500 Net loss (276,240) (276,240) ------------- ------------- Balance June 30, 2005 (291,989) 102,711 Conversion of convertible notes 1,550,302 Issuance of common stock for services 2,571,481 Sale of common stock 2,000,000 Issuance of common stock for Newton extension fee 1,028,000 Issuance of common stock for debt fees 59,680 Net loss (12,424,079) (12,424,079) ------------- ------------- Balance June 30, 2006 $(12,716,068) $ (5,111,905) ============= ============= *T -0- *T Ignis Petroleum Group, Inc. and Subsidiary Consolidated Statement of Cash Flows For the Period ended For the December 9, 2004 Year Ended (Inception) to June 30, 2006 June 30, 2005 -------------- ------------- Cash flow from operating activities Net loss $(12,424,079) $ (276,240) Adjustments to net loss not affecting cash: Donated capital - 13,500 Reverse merger adjustments - 15,451 Depletion and amortization 494,493 - Amortization of debt cost 133,280 Loss from valuation adjustment of oil and gas properties 2,000,000 Stock issued for compensation and services 2,631,161 - Amortization of discount of debentures 1,931,790 - Loss from valuation of derivatives 1,299,201 - Increase / decrease in current assets and liabilities Increase in accounts receivable (55,781) - Increase in repaid expenses and other current assets (168,434) (20,066) Increase in other assets (740,000) (3,360) Increase in accounts payable and accrued expenses 1,044,206 45,189 -------------- ------------- Cash used in operating activities (3,854,163) (225,526) -------------- ------------- Cash flow from investing activities Purchase of oil and gas properties (1,757,739) (1,500,000) -------------- ------------- Cash used for investing activities (1,757,739) (1,500,000) -------------- ------------- Cash flow from financing activities Issuance of common stock and warrants 2,000,000 350,000 Proceeds from note payable 100,000 - Proceeds from convertible notes 4,260,000 1,500,000 Advance from related party (20,590) 20,590 -------------- ------------- Cash provided by financing activities 6,339,410 1,870,590 -------------- ------------- Net increase in cash 727,508 145,064 Cash at beginning of period 145,064 - -------------- ------------- Cash at end of period $ 872,572 $ 145,064 ============== ============= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - ============== ============= Income taxes $ - $ - ============== ============= Supplemental non-cash financing transactions: Conversion of notes payable and interest into equity $ - $ - ============== ============= Issuance of common stock for oil and gas property $ 1,028,000 $ - ============== ============= *T