siberian10q063009.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
   
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

[   ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ____________ to ______________

Commission file number: 333-118902

SIBERIAN ENERGY GROUP INC.
(Exact name of registrant as specified in its charter)

NEVADA
52-2207080 
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

275 Madison Ave, 6th Floor, New York, NY 10016
(Address of principal executive offices)

(212) 828-3011
(Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  [  ] No  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer  [  ]
Accelerated filer   [  ]
 
Non-accelerated filer  [  ]
Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes   [ ] No  x 

The number of shares outstanding of each of the issuer’s classes of equity as of August 3, 2009, was 18,705,585 shares of common stock, par value $0.001, and no shares of preferred stock, par value $0.001. 
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
The Board of Directors and Stockholders
Siberian Energy Group Inc.

 
We have reviewed the accompanying condensed consolidated balance sheet of Siberian Energy Group Inc. (a development stage company) as of June 30, 2009, and the related condensed consolidated statements of operations for the three and six months ended June 30, 2009 and 2008, and the cumulative period of development stage activity (January 1, 2003 through June 30, 2009), and the condensed consolidated statements of stockholders’ equity and cash flows for the six months ended June 30, 2009 and 2008, and the cumulative period  of development stage activity (January 1, 2003 through June 30, 2009).   These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the auditing standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board, the consolidated balance sheet as of December 31, 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 31, 2009, we included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern.  In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2008 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

 
 
Lumsden & McCormick, LLP
Buffalo, New York
August 5, 2009
F-1
SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
            
             
Condensed Consolidated Balance Sheets
  
(Unaudited)
        
   
June 30,
    
December 31,
  
   
2009
    
2008
  
             
Assets
            
Current assets:
            
Cash
   $ 759     $ 739  
Prepaid expenses and other
     536       521  
      1,295       1,260  
                 
Investment in joint venture, at equity
     -       -  
Investment in KNG, at equity
     -       -  
Loan receivable - affiliate
     29,500       29,500  
Property and equipment, net
     1,520       1,783  
    $ 32,315     $ 32,543  
                 
Liabilities and Stockholders' Equity
                
Current liabilities:
                
Accounts payable:
                
Related party - stockholders
   $ 483,514     $ 447,663  
Related party - Baltic Petroleum, interest at 14%
     65,784       62,771  
Others
     516,863       410,039  
Accrued payroll
     984,462       824,744  
      2,050,623       1,745,217  
                 
Stockholders' equity:
                
Common stock - authorized 100,000,000 shares, $.001 par value,
                
  18,705,550 and 18,645,550 issued and outstanding
     18,706       18,646  
Additional paid-in capital
     13,138,765       13,112,299  
Accumulated deficit
                
Pre-development stage
     (449,785 )     (449,785 )
Development stage
     (14,732,481 )     (14,406,604 )
Accumulated other comprehensive income
     6,487       12,770  
      (2,018,308 )     (1,712,674 )
                 
    $ 32,315     $ 32,543  
                 
See accompanying notes.
                
 
F-2
 
SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
  
                               
Condensed Consolidated Statements of Operations
  
                           
For the
period of
  
                           
Development
  
                           
Stage Activity-
  
   
For the three
    
For the six
    
January 1, 2003
  
   
months ended
    
months ended
    
through
  
   
June 30,
    
June 30,
    
June 30,
    
June 30,
    
June 30,
  
   
2009
    
2008
    
2009
    
2008
    
2009
  
                               
Revenues and other income:
                              
Management fees from joint venture 
   $  -     $  -     $  -     $  -     $   1,135,000  
Gain from entrance into joint venture
     -       -       -       -        364,479  
Other
     -       -       -       -       6,382  
Total revenues and other income 
    -       -       -       -       1,505,861  
                                         
Expenses:
                                        
Salaries
     102,926       96,266       183,526       176,676       3,621,131  
Professional and consulting fees
     61,009       65,433       114,360       140,858       4,977,169  
Rent and occupancy
     -       749       -       10,465       237,226  
Depreciation and amortization
     152       230       299       461       104,536  
Finance charges and interest
     1,701       3,334       3,699       5,372       115,762  
Marketing and other
     16,438       18,096       23,993       36,431       2,059,001  
Total expenses
     182,226       184,108       325,877       370,263       11,114,825  
                                         
Loss from sale of investment
     -       -       -       -       669,570  
                                         
Loss on deemed disposition of oil and
                                        
gas properties, unproved
     -       -       -       -       3,928,000  
                                         
Impairment charge on investment
     -       -       -       -       525,947  
                                         
Loss before income taxes
     182,226       184,108       325,877       370,263       14,732,481  
                                         
Provision for income taxes (benefit)
     -       -       -       -       -  
                                         
Net loss (development stage)
   $   182,226     $   184,108     $   325,877     $   370,263     $   14,732,481  
                                         
                                         
Basic and diluted loss per common share      (0.01 )       (0.01 )       (0.02 )       (0.02 )       (1.22 ) 
                                         
Weighted average number of basic and
                                        
diluted common shares outstanding
      18,652,803        18,408,634        18,649,176        18,395,832        12,067,273  
                                         
See accompanying notes.
                                        
                                         
F-3
 
SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
                                
                                           
Condensed Consolidated Statements of Stockholders' Equity
                                
                                           
For the cumulative period of Development Stage Activity - January 1, 2003 through June 30, 2009
                    
                                           
                                     
   
Common Stock
                    
    Number of    
Additional
Paid-In
    
Accumulated
    
Accumulated
Other
Comprehensive
          
Comprehensive
  
   
Shares
    
Par Value
    
Capital
    
Deficit
    
Income (Loss)
    
Total
    
Loss
  
                                           
Balance, January 1, 2003 (pre-development stage)
     4,902,886     $ 4,903     $ 430,195     $ (449,785 )   $ -     $ (14,687 )      
                                                       
Loss for the year - 2003
     -       -       -       (422,516 )     -       (422,516 )   $ (422,516 )
                                                         
Shares issued in acquisition (ZNG)
     1,000,000       1,000       (1,000 )     -       -       -          
                                                         
Balance, December 31, 2003
     5,902,886     $ 5,903     $ 429,195     $ (872,301 )   $  -     $ (437,203 )        
                                                         
Loss for the year - 2004
     -       -       -       (833,567 )     -       (833,567 )        
                                                         
Foreign currency translation adjustment
     -       -       -       -       (53,120 )     (53,120 )   $ (886,687 )
                                                         
Shares issued in acquisition (ZNG)
     3,450,000       3,450       746,550       -       -       750,000          
                                                         
Shares issued for professional services
     50,000       50       9,950       -       -       10,000          
                                                         
Other
     -       -       34,426       -       -       34,426          
                                                         
Balance, December 31, 2004
     9,402,886     $ 9,403     $ 1,220,121     $ (1,705,868 )   $ (53,120 )   $ (529,464 )        
                                                         
Loss for the year - 2005
     -       -       -       (1,153,686 )     -       (1,153,686 )        
                                                         
Foreign currency translation adjustment
     -       -       -       -       50,614       50,614     $ (1,103,072 )
                                                         
Shares issued for professional services
     385,000       385       197,829       -       -       198,214          
                                                         
Shares issued for accrued salaries
     1,700,000       1,700       301,871       -       -       303,571          
                                                         
Warrants granted for professional services
     -       -       310,000       -       -       310,000          
                                                         
Balance, December 31, 2005 (Restated)
     11,487,886     $ 11,488     $ 2,029,821     $ (2,859,554 )   $ (2,506 )   $ (820,751 )        
                                                         
Loss for the year - 2006
     -       -       -       (4,072,788 )     -       (4,072,788 )        
                                                         
Foreign currency translation adjustment
     -       -       -       -       (1,939 )     (1,939 )   $ (4,074,727 )
                                                         
Shares issued for employee stock option plan and warrants
     195,000       195       45,305       -       -       45,500          
                                                         
Shares issued for geological data
     1,900,000       1,900       3,323,100       -       -       3,325,000          
                                                         
Shares issued for professional services
     1,139,499       1,140       2,120,320       -       -       2,121,460          
                                                         
Warrants granted for professional services
     -       -       1,201,960       -       -       1,201,960          
                                                         
Shares cancelled
     (609,424 )     (610 )     610       -       -       -          
                                                         
Balance, December 31, 2006 (Restated)
     14,112,961     $ 14,113     $ 8,721,116     $ (6,932,342 )   $ (4,445 )   $ 1,798,442          
                                                         
See accompanying notes.
                                                        
F-4
 
SIBERIAN ENERGY GROUP INC. (A Development Stage Company)
                                
                                           
Condensed Consolidated Statements of Stockholders' Equity
                                
                                           
For the cumulative period of Development Stage Activity - January 1, 2003 through June 30, 2009
                
                                           
                           
 
        
   
Common Stock
    
 
    
 
        
   
Number of
          
 
              
   
Shares
    
Par Value
    
Additional
Paid-In
Capital
    
Deficit
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Total
    
Comprehensive
Loss
  
                                           
                                           
Balance, December 31, 2006 (Restated)
     14,112,961     $ 14,113     $ 8,721,116     $ (6,932,342 )   $ (4,445 )   $ 1,798,442        
                                                       
Loss for the year - 2007
     -       -       -       (2,060,487 )     -       (2,060,487 )      
                                                       
Foreign currency translation adjustment
     -       -       -       -       (9,804 )     (9,804 )   $ (2,070,291 )
                                                         
Shares issued for employee stock option plan and warrants
     566,935       567       (567 )     -       -       -          
                                                         
Shares issued for geological data
     200,000       200       349,800       -       -       350,000          
                                                         
Shares issued for accrued salaries
     788,000       788       1,444,618       -       -       1,445,406          
                                                         
Shares issued for licenses
     2,000,000       2,000       1,318,000       -       -       1,320,000          
                                                         
Shares issued for professional services
     715,134       715       1,070,395       -       -       1,071,110          
                                                         
Warrants granted for professional services
     -       -       150,394       -       -       150,394          
                                                         
Balance, December 31, 2007
     18,383,030     $ 18,383     $ 13,053,756     $ (8,992,829 )   $ (14,249 )   $ 4,065,061          
                                                         
Loss for the year - 2008
     -       -       -       (5,863,560 )     -       (5,863,560 )        
                                                         
Foreign currency translation adjustment
     -       -       -       -       27,019       27,019     $ (5,836,541 )
                                                         
Shares issued for professional services and accrued salaries
     155,000       155       41,595       -       -       41,750          
                                                         
Warrants granted for professional services
     -       -       6,303       -       -       6,303          
                                                         
Shares issued for loan repayment and related interest
     107,520       108       10,645       -       -       10,753          
                                                         
Balance, December 31, 2008
     18,645,550     $ 18,646     $ 13,112,299     $ (14,856,389 )   $ 12,770     $ (1,712,674 )        
                                                         
Loss for six months - 2009
     -       -       -       (325,877 )     -       (325,877 )        
                                                         
Foreign currency translation adjustment
     -       -       -       -       (6,283 )     (6,283 )   $ (332,160 )
                                                         
Shares issued for professional services and accrued salaries
     60,000       60       3,540       -       -       3,600          
                                                         
Options vested to employees and directors
     -       -       22,926       -       -       22,926          
                                                         
Balance, June 30, 2009
     18,705,550     $ 18,706     $ 13,138,765     $ (15,182,266 )   $ 6,487     $ (2,018,308 )        
                                                         
See accompanying notes.