10KSB/A 1 v116543_10ksb-a.htm Unassociated Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-KSB/A
 
Amendment No. 2
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
 
Commission File Number 000-52272
 
ZULU ENERGY CORP.
(Exact name of registrant as specified in its charter)
 
Colorado
  
20-3281304
State or other jurisdiction of
  
(I.R.S. Employer
incorporation or organization
 
Identification No.)

122 N. Main Street, Sheridan, Wyoming 82801
(Address of principal executive offices) (Zip Code)
 
307-673-0800
(Issuer’s telephone number)
 
N/A
(Former Address)
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share
 
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o
 
Check if no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB/A or any amendment to this Form 10-KSB/A o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No  x
 
Issuer’s revenues for the year ended December 31, 2007 was $0.00.
 
State the aggregate market value of the voting and non-voting common equity stock held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: $73,840,000 on March 7, 2008. Without asserting that any director or executive officer of the issuer, or the beneficial owner of more than five percent of the issuer’s common stock, is an affiliate, the shares of which they are the beneficial owners have been deemed to be owned by affiliates solely for this calculation.
 
The number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 88,000,000 as of April 28, 2008.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Not applicable.
 
Transitional Small Business disclosure format (check one): Yes o    No x
 
 
 
EXPLANATORY NOTE

This Amendment No. 2 to Form 10-KSB/A (this “Amendment”) amends the items identified below with respect to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007, originally filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2008 (the “Original Filing”) and to our Amendment No. 1 to Form 10-KSB/A for the fiscal year ended December 31, 2007, originally filed with the SEC on April 29, 2008 (the “Amendment No. 1”).

As previously disclosed in the Current Report on Form 8-K filed with the SEC on May 14, 2008, our Board of Directors on May 12, 2008, concluded that the Company’s previously filed audited financial statements for the fiscal years ended June 30, 2007 and December 31, 2007 and the quarterly period ended September 30, 2007 should no longer be relied upon and need to be restated as a result of our determination that we previously misstated (i) our authorized shares of common stock as 500 million, when, in fact, our authorized shares of common stock is 100 million and (ii) the par value of our common stock as $0.0001, when, in fact, the par value of our common stock is $0.001.

Authorized officers of the Company discussed this matter with our current and former independent public accounting firms who agreed that the Company's previously issued financial statements described above could not be relied upon and needed to be restated. See “Note 11 - Restatement” in the Notes to Financial Statements for further details.

This Amendment only amends certain information in (i) Item 7 (Financial Statements) of the Original Filing and such amendment with respect to Item 7 reflects the restatement of the financial statements as described above and (ii) Item 12 (Certain Relationships and Related Transactions) to include certain information that was inadvertently omitted from Amendment No. 1.

Except as described above, no other changes have been made to the Original Filing or Amendment No. 1. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. The Amendment No. 1 continues to speak as of the date of the filing of the Amendment No. 1, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Amendment No. 1. Except for the foregoing amended information, this Amendment continues to describe conditions as of the date of the Original Filing and Amendment No. 1, as the case may be, and the disclosures contained herein have not been updated to reflect events, results or developments that have occurred after the Original Filing or Amendment No. 1, as the case may be, or to modify or update those disclosures affected by subsequent events.

In addition, in connection with the filing of this Amendment, and pursuant to Rule 12b-15 and 13a-14 under the Exchange Act, we are including with this Amendment currently dated certifications. The Original Filing also included a cautionary statement concerning forward-looking statements, which is also applicable to this Amendment.
 
 

FORM 10-KSB/A ANNUAL REPORT
 
ZULU ENERGY CORP.
 
 
As used in this document, references to “Zulu Energy”, “our company”, “the Company”, “we”, “us”, and “our” refer to Zulu Energy Corp. and its directly and indirectly wholly-owned subsidiaries.
 


 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and
Stockholders of ZULU ENERGY CORP. AND SUBSIDIARIES
 
We have audited the accompanying consolidated balance sheets of ZULU Energy Corp. and Subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the two-year period ended December 31, 2007, and for the period from August 11, 2005 (inception) to December 31, 2007. ZULU Energy Corp.’s management is responsible for these financial statements. 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 audit 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 audit 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of ZULU Energy Corp. and Subsidiaries as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2007, and for the period from August 11, 2005 (inception) to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, net capital deficiencies, and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
De Leon & Company, P.A.
 
Pembroke Pines, Florida
 
April 12, 2008, except as to notes 3, 5, 6, 11, and 12 which date is June 1, 2008.
 
 
ZULU ENERGY CORP. & SUBSIDIARIES
(Formerly Global Sunrise, Inc.)
(An Exploration Stage Company)
AUDITED CONSOLIDATED BALANCE SHEETS AS AT

   
December 31,
 
December 31,
  
   
2007
  
2006
  
ASSETS
  
Current Assets
          
Cash and cash equivalents
  
$
17,598
  
$
—
  
Prepaid Expenses
    
5,468
    
3,723
  
Total Current Assets
    
23,066
    
3,723
  
               
Fixed Assets, net
    
216
    
—
  
Oil and Gas Properties
    
29,575
    
—
  
Prospecting Licenses
    
3,000,000
   
—
  
Total Assets
  
$
3,052,857
  
$
3,723
  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
              
Accounts Payables
  
$
266,380
  
$
—
  
Accrued Expenses
    
63,333
    
—
  
Loan payable to shareholder
    
252,083
    
34,826
  
Liability - acquisition of prospecting licenses rights
   
3,000,000
    
—
  
Liabilities to Government of Botswana
   
4,561,393
    
—
  
Total Current Liabilities
  
$
8,143,189
  
$
34,826
  
Stockholders’ Deficit:
              
Preferred Stock, $.001 par value; authorized 10,000,000 shares, none issued
    
—
    
—
  
Common stock 100,000,000 shares authorized at $0.001 par value, 82,000,000 shares and 600,000 shares issued and outstanding at 12/31/2007 and 12/31/2006 respectively.
    
82,000
    
600
  
Additional paid-in capital
    
(411,724
)
  
(598
)
Deficit accumulated during the exploration stage
    
(4,840,906
)
  
(31,105
)
Subscription receivable
    
(98
)
      
Accumulated other comprehensive income
   
80,396
    
—
  
Total Stockholders’ Deficit
    
(5,090,332
)
  
(31,103
)
Total Liabilities and Stockholders’ Deficit
  
$
3,052,857
  
$
3,723
  
             
             
The accompanying notes are an integral part of these financial statements
 
 
ZULU ENERGY CORP. & SUBSIDIARIES
(Formerly Global Sunrise, Inc.)
(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2007
 
   
YEAR ENDED
DECEMBER 31, 2007
  
YEAR ENDED
DECEMBER 31, 2006
  
FOR THE PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2007
  
Revenue
  
$
—
  
$
—
  
$
—
  
Operating expenses
    
4,748,830
    
24,018
    
4,779,935
  
Loss from operations before Minority Interest
    
(4,748,830
)
  
(24,018
)
  
(4,779,935
)
Minority Interest
    
2,303,022
    
—
    
2,303,022
 
Taxes
    
—
    
—
    
—
  
Loss for the period
  
$
(2,445,808
)
$
(24,018
)
$
(2,476,913
)
                     
Other Comprehensive Income:                    
Foreign currency translation
   
80,396
    
—
    
80,396
  
Total Comprehensive Loss
  
$
(2,365,412
)
$
(24,018
)
$
(2,396,517
)
                   
Comprehensive Loss per Share:
                    
Primary
  
$
(0.14
)
$
(0.04
)
      
Weighted Average Shares Outstanding
    
16,969,315
    
600,000
        
                   
                   
The accompanying notes are an integral part of these financial statements
 
 
ZULU ENERGY CORP. & SUBSIDIARIES
(Formerly Global Sunrise, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
For the period from August 11, 2005 (Date of Inception) to December 31, 2007
 
                   
Deficit
          
                   
Accumulated
          
   
Common Stock
  
Additional
  
Other
  
During the
      
Total
  
   
Number
      
Paid In
  
Comprehensive
  
Exploration
  
Subscription
  
Stockholders
  
   
Shares
  
Amount
  
Capital
  
Income
  
Stage
  
Receivable
  
(Deficiency)
  
                               
Balance on Date of Inception
    
—
  
$
—
  
$
—
  
$
—
  
$
—
        
$
—
  
Issuance of common stock-Aug. 11, 2005
    
600,000
    
600
    
(598
)
  
—
    
—
          
2
  
                                             
Net loss for the year 2005
    
—
    
—
    
—
    
—
    
(7,087
)
  
—
    
(7,087
)
Balance, December 31, 2005
    
600,000
   
600
   
(598
)
  
—
    
(7,087
)
        
(7,085
)
                                             
Net loss for the year 2006
    
—
    
—
    
—
    
—
    
(24,018
)
  
—
    
(24,018
)
Balance, December 31, 2006
    
600,000
    
600
    
(598
)
  
—
    
(31,105
)
        
(31,103
)
                                             
Net Loss for the year ended Dec 31, 2007
    
—
    
—
    
—
    
80,396
   
(2,445,808
)
        
(2,365,412
)
Shares Issued - Subscription receivable
    
29,400,000
    
29,400
    
(29,302
)
  
—
    
—
    
(98
)
  
—
  
Issuance of common stock Dec 20, 2007 for Net Assets of Zulu Energy Corp.
    
52,000,000
    
52,000
    
(381,824
)
  
               
(329,824
)
Minority Interest Acquired
    
—
    
—
    
—
    
—
    
(2,363,993
)
  
—
    
(2,363,993
)
Balance, December 31, 2007
    
82,000,000
    
82,000
    
(411,724
)
  
80,396
    
(4,840,906
)
  
(98
)
  
(5,090,332
)
                                             
The accompanying notes are an integral part of these financial statements
 
 
ZULU ENERGY CORP. & SUBSIDIARIES
(Formerly Global Sunrise, Inc.)
(An Exploration Stage Company)
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006 AND FOR THE PERIOD FROM
AUGUST 11, 2005 (DATE OF INCEPTION) TO DECEMBER 31, 2007
 
           
For the Period
  
           
From August 11, 2005
  
   
Year Ended
  
Year Ended
  
(Inception) to
  
   
December 31,
  
December 31,
  
December 31,
  
   
2007
  
2006
  
2007
  
               
Cash Flows from Operating Activities :
              
Net loss for the period
  
$
(2,445,808
)
$
(24,018
)
$
(2,476,913
)
Adjustments to reconcile net income to net cash used by operating activities:
                    
Depreciation
    
82
    
—
    
82
  
Changes in working capital balances:
                    
Prepaid expenses
    
(1,745
)
  
—
    
(5,468
)
Other liabilities, net of minority interest
    
2,197,400
    
—
    
2,197,400
  
Accounts payable and accrued expenses
    
35,448
   
—
    
35,448
  
Net cash used by operating activities
    
(214,623
)
  
(24,018
)
  
(249,451
)
                     
Cash Flows used in Investing Activities:
                    
Cash acquired upon investment in subsidiary
   
17,452
    
—
    
17,452
  
Fixed Assets
    
(298
)
        
(298
)
Oil and gas properties
    
(29,575
)
  
—
    
(29,575
)
Net cash used by investing activities
    
(12,421
)
  
—
    
(12,421
)
                     
Cash Flows from Financing Activities:
                    
Issuance of common stock
    
—
    
—
    
2
  
Increase in shareholder loan
   
164,246
    
24,018
    
199,072
 
Net cash provided by financing activities
    
164,246
    
24,018
    
199,074
  
                   
Effects on exchange rates on cash
    
80,396
    
—
    
80,396
 
                     
Increase in cash and cash equivalents
    
17,598
    
—
    
17,598
 
Cash and cash equivalents, beginning of period
    
—
   
—
    
—
 
Cash and cash equivalents, end of the period
  
$
17,598
  
$
—
  
$
17,598
  

Supplemental Disclosures:
The Company did not pay any interest or taxes during the above periods.

Non-cash financing and investing activities:
The Company issued 52,000,000 shares of common stock for net monetary liabilities of $329,824.
 
 
 
 

Note 1
Significant Accounting Policies
 
Basis of Presentation 
 
These consolidated financial statements include the accounts of Zulu Energy Corp. (“Zulu Energy”) and its wholly owned subsidiaries, Nyati Mauritius Limited (“Nyati Mauritius”), Nyati Resources Limited (“Nyati Resources”), and Nyati Botswana (Proprietary) Limited (“Nyati Botswana”). Collectively, the consolidated entities are referred to herein as the (“Company”). All significant inter-company transactions have been eliminated.
 
Going Concern
 
The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s net loss for the year ended December 31, 2007 totaled $2,365,412 and accumulated losses through December 31, 2007 totaled $4,760,510. As of December 31, 2007 the Company’s working capital deficiency totaled $8,120,123 and its shareholder deficit totaled $5,090,332. These factors raise substantial doubt the Company’s ability to continue as a going concern.
 
The Company’s ability to continue as a going concern will be dependent upon its ability to obtain sufficient financing to pay its existing creditors, cover its operating overhead, and fund oil and gas exploration and production projects. Other market factors such as the price of oil, gas and other natural resources upon extraction at prices sufficient to generate profitable operations may impact the Company’s ability to continue as a going concern.
 
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
Exploration Stage Company
 
The Company is in the exploration stage. In December 2007, Zulu Energy acquired oil and gas licenses and drilling rights located in Botswana, Africa. The recoverability of the cost of capitalized oil and gas properties are dependent upon the discovery of recoverable reserves, the Company’s ability to obtain the necessary funding to extract the reserves and the sale of production at profitable market prices.
 
The Company complies with Financial Accounting Standards Board Statement No. 7 and SEC Guide 7 for its characterization of the Company as exploration stage.
 
Cash and Cash Equivalents
 
The Company considers all investments purchased with a maturity of three months or less to be cash equivalents.
 
Concentration of Credit Risk
 
Financial instruments which potentially subject the Company to credit risk consist principally of cash. The Company maintains its cash with a quality financial institution. The Company did not maintain a balance in excess of the FDIC insured amount of $100,000 at any time during the year ended December 31, 2007.
 
 
Oil and Gas Activities - Successful Efforts Method of Accounting
 
On April 4, 2005, the FASB adopted FASB Staff Position FSP FAS 19-1 that amends Statement of Financial Accounting Standards No. 19 (FAS 19), Financial Accounting and Reporting by Oil and Gas Producing Companies, to permit the continued capitalization of exploratory well costs beyond one year if (a) the well found a sufficient quantity of reserves to justify its completion as a producing well and (b) the entity is making sufficient progress assessing the reserves and the economic and operating viability of the project.
 
The Company accounts for its crude oil development and natural gas development activities utilizing the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and daily rentals for oil and gas leases, are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties.
 
The application of the successful efforts method of accounting requires managerial judgment to determine that proper classification of wells designated as developmental or exploratory which will ultimately determine the proper accounting treatment of the costs incurred. The results from a drilling operation can take considerable time to analyze and the determination that commercial reserves have been discovered requires both judgment and industry experience. Wells may be completed that are assumed to be productive and actually deliver oil and gas in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. Wells are drilled that have targeted geologic structures that are both developmental and exploratory in nature and an allocation of costs is required to properly account for the results. Delineation seismic incurred to select development locations within an oil and gas field is typically considered a development cost and capitalized, but often these seismic programs extend beyond the reserve area considered proved and management must estimate the portion of the seismic costs to expense. The evaluation of oil and gas leasehold acquisition costs requires managerial judgment to estimate the fair value of these costs with reference to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.
 
Revenue Recognition
 
The Company has not earned any revenues since its inception. Oil and gas revenues will be recorded at such time as the Company has delivered and transferred title to a purchaser of its product and the price has been reasonably determined.
 
Asset Retirement Obligations
 
The Corporation recognizes the value of a liability for an asset retirement obligation in the year in which a reasonable estimate of value can be made.
 
 
Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. As at December 31, 2007 the value of the oil and gas property’s site restoration costs is insignificant.
 
Environmental Costs
 
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.
 
Goodwill and Intangible Assets
 
The Company has adopted the provisions of the FAS No. 142, “Goodwill and Intangible Assets.” Under FAS No. 142, goodwill and intangible assets with indefinite lives are not amortized but are annually tested for impairment. The determination of any impairment includes a comparison of the estimated future operating cash flows anticipated during the remaining life for the net carrying value of the asset as well as a comparison of the fair value to the book value of the Company or the reporting unit to which the goodwill can be attributed.
 
Stock-Based Compensation
 
In December 2004, the Financial Accounting Standards Board issued FAS 123R “Share-Based Payment,” a revision to FAS 123. FAS 123R replaces existing requirements under FAS 123 and APB 25, and requires public companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions. FAS 123R also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions. The Company adopted FAS 123R on November 1, 2006.
 
Income Taxes
 
The Company accounts for income taxes by the asset and liability method as mandated by Statement of Financial Standards Number 109. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized. The Company is subject to income taxes in the Country of Mauritius.
 
 
Financial Instruments
 
The carrying values of cash, accounts payable and accrued liabilities and due to related parties approximate their fair value because of the short maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
 
Basic and Diluted Loss Per Share
 
The Company reports basic loss per share in accordance with the FAS No. 128, “Earnings per Share.” Basic loss per share is computed using the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock options, using the treasury stock method. The diluted EPS computation uses the average stock price for the year to determine the number of shares assumed to be purchased from the exercise of stock options or warrants. As at December 31, 2007 the Company has sustained operating losses and, accordingly, any dilutive potential common shares would have an anti-dilutive effect and are therefore not considered in computing diluted EPS.
 
Foreign Currency Translation
 
The accounts of the Company are translated in accordance with Statement of Financial Accounting Standard No. 52, which requires that foreign currency assets and liabilities be translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average rates prevailing throughout the period. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as the accumulated other comprehensive adjustment in shareholders’ equity.
 
Accounting for Derivative Instruments and Hedging Activities
 
We have adopted SFAS No. 133 “Accounting for Derivative and Hedging Activities,” which requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain and loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. We have not entered into derivative contracts either to hedge existing risks or for speculative purposes, but we plan to use derivative contracts in the future solely for hedging prices on production.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make assumptions and estimates that effect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates.
 
 
Recent Accounting Pronouncements
 
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”). This interpretation clarifies the application of SFAS 109 by defining the criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements and also provides guidance on measurement, de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 is effective for our fiscal year commencing November 1, 2007. The adoption of FIN 48 is not expected to have an impact on our results of operations or financial condition.
 
In November 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combination (FAS 141(R)) and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (FAS 160). FAS 141(R) will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. FAS 160 will change the accounting and reporting for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. FAS 141(R) and FAS 160 are effective for both public and private companies for fiscal years beginning on or after December 15, 2008 (fiscal 2010 for the Company). FAS 141(R) will be applied prospectively. FAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of FAS 160 will be applied prospectively. Early adoption is prohibited for both standards. Management is currently evaluating the requirements of FAS 141(R) and FAS 160 and has not yet determined the impact on its financial statements.
 
In December 2007, the FASB issued FSAS No.157, Fair Value Measurements. This Statement does not require any new fair value measurements, but rather, it provides enhanced guidance to other pronouncements that require or permit assets or liabilities to be measured at fair value. However, the application of this Statement may change how fair value is determined. The Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. As of December 1, 2007, the FASB has proposed a one-year deferral for the implementation of the Statement for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Management is currently evaluating the requirements of FAS 157 and has not yet determined the impact on its financial statements.
 
In December 2007, the FASB issued FSAS No.159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115. This Statement provides all entities with an option to report selected financial assets and liabilities at fair value. The Statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007, with early adoption available in certain circumstances. Management is currently evaluating the requirements of FAS 159 and has not yet determined the impact on its financial statements.
 
Note 2
Nature and Continuance of Operations
 
Zulu Energy Corp.
Zulu Energy Corp. (“Zulu Energy”) was incorporated under the laws of the State of Colorado on May 6, 2005 under the name of Global Sunrise, Inc. On January 16, 2007 Zulu Energy changed its name to Zulu Energy Corp. Prior to the share exchange agreement dated December 20, 2007, as more fully explained below, Zulu Energy utilized a June 30 fiscal year-end. Zulu Energy changed its year-end to December 31 as a result of the merger with Nyati Mauritius Limited (Mauritius) (“Nyati Mauritius”). The focus of Zulu Energy’s business plan is the acquisition of oil and gas properties and leasing rights and their exploration, development and production.
 
 
Effective December 20, 2007, Zulu Energy acquired 100% of the outstanding common stock of Nyati Mauritius (including Nyati Resources Limited (“Nyati Resources”), the wholly-owned subsidiary of Nyati Mauritius) in exchange for 30,000,000 common shares of Zulu Energy. Zulu Energy’s acquisition of Nyati Mauritius (an operating company) and its subsidiary has been recorded as a recapitalization of Zulu Energy because Zulu Energy was a “shell” company, accordingly, Nyati Mauritius is deemed to be the accounting acquirer. The 30,000,000 common shares issued have been recorded as if issued by Nyati Mauritius for the net monetary assets of Zulu Energy. The statement of stockholder’s deficit reflects the accumulated deficit of Nyati Mauritius from its inception and that of Zulu Energy from December 21, 2007 through March 31, 2008 and has been restated to reflect the 10 to 1 forward stock split of January 8, 2007 (see below) as if it had occurred at inception. The prior year comparative financial statements presented are those of Nyati Mauritius and its subsidiary.
 
Nyati Mauritius Limited
The Company was incorporated under the laws of the country of Mauritius on August 11, 2005 as Nyati Mauritius Limited.
 
Nyati Mauritius’ share capital is comprised of authorized common stock of 50,000 shares at $1 par value. The common shareholders have a right to one vote per share held.
 
At inception, Nyati Mauritius issued 2 shares at $1 par value to the subscribers of the company.
 
Nyati Resources, the wholly-owned subsidiary of Nyati Mauritius, acquired a controlling stake (90%) in Nyati Resources Botswana (Proprietary) Limited (“Nyati Botswana”), when 90 shares of Nyati Botswana were issued to Nyati Resources on February 14, 2007 at par value i.e. Pula 1 per share. Nyati Botswana is an oil and gas (exploration stage) company. As of February 14, 2007, the other 10% shares of Nyati Botswana were held by Swansi Holdings Corp. (“Swansi”).
 
On March 2, 2007 Swansi entered into a call options agreement to buy 40 shares of Nyati Botswana from Nyati Resources Limited at $1 per share. On June 6, 2007 Nyati Resources sold 40 shares of Nyati Botswana to Swansi pursuant to their exercising the call options agreement mentioned above, thus reducing the ownership of Nyati Resources in Nyati Botswana from 90% to 50%. As of December 31, 2007, Nyati Resources’ shareholding in Nyati Botswana was 50% with the remainder held directly by Zulu Energy. Prior to the December 20, 2007 share exchange agreement referred to below, the remaining 50% stock ownership interest in Nyati Botswana was held by Swansi.
 
Nyati Mauritius issued 98 shares to its holding company LMA Hughes, LLLP (“LMA Hughes”) on July 2, 2007 at par value, thus bringing the total shares issued and outstanding of the company to 100. All shares of the company were acquired by Zulu Energy on December 20, 2007.
 
 
Entry into a Material Definitive Agreement
 
On December 20, 2007, Zulu Energy entered into a Share Exchange Agreement and Plan of Reorganization (the “Exchange Agreement”), dated as of December 19, 2007,  with Nyati Mauritius and LMA Hughes.  Nyati Mauritius is the parent entity of Nyati Resources, which holds 50% of the issued and outstanding capital stock of Nyati Botswana, which holds certain exploration licenses issued by the government of the Republic of Botswana.  On December 20, 2007, Zulu Energy also entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”), dated as of December 19, 2007, with Swansi to acquire the remaining 50% of the issued and outstanding common stock of Nyati Botswana. The transactions contemplated by the Exchange Agreement and the Stock Purchase agreement were consummated and all closing conditions were met on December 20, 2007.  As a result of the transactions contemplated by the Exchange Agreement and Stock Purchase Agreement, Nyati Mauritius and Nyati Botswana became the wholly-owned subsidiaries of Zulu Energy.
 
Pursuant to the terms of the Exchange Agreement, Zulu Energy issued 30,000,000 shares of its common stock to LMA Hughes, which was the sole shareholder of Nyati Mauritius prior to the closing, in exchange for all of the issued and outstanding shares of common stock of Nyati Mauritius. As a result of the foregoing issuance, LMA Hughes became the largest shareholder of Zulu Energy. Zulu Energy also granted LMA Hughes a 10% over-riding royalty interest in any properties that the Companies acquire from LMA Hughes in the future and Zulu Energy agreed to reimburse LMA Hughes for certain expenses it incurred as part of this transaction.
 
Pursuant to the terms of the Stock Purchase Agreement, the Company is obligated to pay Swansi $3 million in the aggregate in two tranches of $1.5 million each. The first tranche is payable within thirty business days of the December 20, 2007 closing date and the second tranche is payable nine months following the closing date. The initial tranche period expired without the payment of the $1.5 million term amount. On March 26, 2008, Swansi transferred their 50% interest in Nyati Botswana to the Company. Upon the completion of a private placement and payment to Swansi of the initial $1.5 million tranche in May 2008, Zulu Energy issued to Swansi 15,000,000 common stock warrants expiring five years from issuance at an exercise price of $1.50 per share.
 
The issuances of the common stock to LMA Hughes and the warrant to Swansi were made pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, as, among other things, each transaction did not involve a public offering, the investor was an accredited investor, the investor had access to information about the company and their investment, the investor took the securities for investment and not resale, and Zulu Energy took appropriate measures to restrict the transfer of the common stock.
 
Note 3
Preferred Stock And Common Stock
 
Preferred Stock
 
The Company is authorized to issue up to 10,000,000 shares of preferred stock having a par value of $.001 per share. The Company has not issued any shares of preferred stock.
 
 
Common Stock
 
The Company is authorized to issue 100,000,000 shares of common stock at $.001 per share (see Note 11).
 
The Company issued 600,000 shares of its common stock on August 11, 2005 to its founders for $2.
 
The Company issued 29,400,000 shares of its common stock on July 2, 2007 for a subscription receivable of $98.
 
The Company issued 52,000,000 shares of its common stock on December 20, 2007 for the net monetary assets of Zulu Energy.
 
On January 8, 2007, the Board of Directors of Zulu Energy authorized a ten to one (10 - 1) forward split of the Company’s issued and outstanding shares of common stock. The effect of this stock split has been reflected retroactively in the financial statements as if the stock split had occurred at the inception of Zulu Energy.
 
Note 4
Fixed Assets
 
All fixed assets are recorded at cost. Depreciation is provided for using the straight-line method as follows:
 
   
December 31,
  
December 31,
  
   
2007
  
2006
  
       
Accumulated
          
Asset Class
  
Cost
  
Depreciation
  
Net
  
Net
  
Property, Plant & Equipment
  
$
298
  
$
82
  
$
216
  
$
—
  
                           
Total
  
$
298
  
$
82
  
$
216
  
$
—
  

Estimate for the life of property, plant and equipment is 10 years and a 10% rate of depreciation is assumed fair.
 
Note 5
Oil and Gas Properties
 
The Company has acquired nine leases in unproved oil and gas properties located in Botswana. Under the terms of the lease agreements, the Company is required to pay its share of royalties and other obligations. The Company paid $7,579 and $7,996 for the lease years ended September 30, 2007 and 2006, respectively to the Government of Botswana under such lease agreements. Such leases expire in September 30, 2008. There is no assurance that the leases will be extended by the government.
 
Pursuant to such contracts, as at December 31, 2007, the Company was obligated to pay $5,684 to maintain the leases. This amount does not contemplate funds required for exploration.
 
 
Pursuant to the lease agreements the Company was required to expend the following amounts during the lease period:
 

Lease
Period Ended
  
 
Description
  
Amount
in Pulas
9/30/06
  
Study of Data, Bore hole to 300m, Desorption study for 6 months
  
1,150,000
9/30/07
  
Data interpretation, Permeability study, Drill production Bore hole, Test CBM produced
  
2,000,000
9/30/08
  
Full feasibility Study, Production and marketing Study
  
3,000,000

As of December 31, 2007 the Company has not expended the amounts required during the lease periods. Amounts that were to be spent on exploration are due to the government by Botswana law. As of December 31, 2007 and based on Botswana law, management is of the opinion that the Company will not be able to renew 50% of the lease acreage and, accordingly, the financial statements reflect a liability of $4,561,393 (P 27,675,000 converted at $.16482) to the government of Botswana representing the aggregate minimum required prospecting expenditures over the three year lease term. The Company plans to accelerate the exploration activity on the properties and is of the opinion that such activity will be sufficient to enable the renewal of the remaining 50%. There is no assurance that the government will renew any of the leases.
 
The Company has capitalized $29,575 spent during the year ended December 31, 2007 towards exploration activities as oil and gas properties.
 
In addition to the over-riding royalty interests granted by Nyati Botswana disclosed in Note 6 below, in February 2007 Nyati Botswana granted a 2.5% over-riding royalty interest to Paul Tromp in the oil and gas properties it has leased from the government of Botswana.
 
Note 6
Related Party Transactions
 
Amounts due to related parties consist of loan in the amount of $252,083 from LMA Hughes, LLLP (“LMA Hughes”). As at December 31, 2007 these loans remain payable to LMA Hughes and are unsecured, non-interest bearing and without specific terms for repayment.
 
Pursuant to the Exchange Agreement described in Note 2 above, the Zulu Energy is obligated to reimburse LMA Hughes for its expenses incurred as part of the transactions contemplated by the Exchange Agreement up to $250,000. Pursuant to the Exchange Agreement, Zulu Energy granted LMA Hughes a 10% over-riding royalty interest in any properties that the Companies acquire from LMA Hughes in the future.  
 
In July 2007, Nyati Botswana granted a 6.5% over-riding royalty interest to LMA Hughes in the oil & gas properties it has leased from the government of Botswana further described in Note 5 above. In February 2007, Nyati Botswana granted a 1% over-riding royalty interest to Tafilani Machacha, who is a member of the board of directors of Nyati Botswana, in the oil & gas properties it has leased from the government of Botswana further described in Note 5 above.
 
 
Note 7
Stock-based Compensation
 
We have adopted SFAS No. 123 “Accounting for Stock Based Compensation” as amended by SFAS No. 148 “Accounting for Stock-based Compensation - Transition and Disclosure.” We recognize stock-based compensation expense using a fair value based method. We do not have a qualified stock option plan in place as of the reporting date.
 
On September 24, 2007, the Company granted 3,000,000 stock options exercisable at $1.81 until September 24, 2012. All these options vest on the date of the grant.
 
The fair value of these share purchase options was determined using the Company’s historical stock prices and the Black-Scholes option-pricing model with the following assumptions:
 
Risk free rate
    
3.875
%
Dividend yield
    
0
%
Weighted average expected volatility
    
90
%
Weighted average expected option life
    
5 yrs
  
Weighted average fair value of options
  
$
1.292
  
Total options outstanding
    
3,000,000
  
Total fair value of options outstanding
  
$
3,876,000
  

These options were granted by the legal parent who is the accounting acquiree for financial reporting purposes. Accordingly, due to the vesting of the stock options prior to the December 20, 2007 stock exchange agreement the statement of operations does not reflect the effect of this transaction.
 
Note 8
Accrued Expenses
 
Accrued salary payable to the CEO of the Company for $63,333 has been recorded as accrued expenses as on December 31, 2007.
 
Note 9
Income Taxes
 
As of December 31, 2007, the Company had net operating loss (NOLs) carry-forwards of approximately $387,869 expiring in years 2026 through 2027. Total deferred net tax assets and the related valuation allowance as of December 31, 2007 and 2006 is as follows:
 
   
2007
  
2006
  
Deferred tax assets, net of liabilities
  
$
131,875
  
$
5,630
  
Valuation allowance
    
(131,875
)
  
(5,630
)
     
-0-
    
-0-
  

The deferred net tax assets are computed using a corporate tax rate of 34%. The value of the net deferred tax assets was offset by a valuation allowance due to the uncertainty of the future realization of the net deferred tax assets.
 
Note 10
Commitments and Contingencies
 
The Company is obligated to spend Pula (“P”) 6,150,000 or approximately $1,000,000 US per lease over the term of the lease (three years). If such expenditures do not occur then such amounts are payable to the government of Botswana. The total expenditure committed is $9,000,000 US for nine leases. The Company believes that it will be able to perform sufficient work on the leaseholds so that the maximum amount it will owe the government is $4.5 million.
 
 
Note 11
Correction of Errors
 
Zulu Energy determined that it previously misstated that its authorized shares of common stock was 500 million when, in fact, it was 100 million and misstated the par value of its shares in common stock; specifically, Zulu Energy incorrectly reported the par value of its shares to be $0.0001 when, in fact, the par value of its shares is $0.001.

Additionally, Zulu Energy determined that it misstated its operations for the year ended December 31, 2006 by not including $22,600 of expenses in operations. The results of such errors on reported financial statements are as follows:
 
Financial Statement
  
As reported
  
As Corrected
  
Balance Sheet
          
Common stock authorized
    
500,000,000
    
100,000,000
  
Par Value
  
$
.0001
  
$
.001
  
Statement of Operations 2006
              
Operating expense
  
$
1,418
  
$
24,018
  
Loss for the period
              
Loss per Share
    
($1,418
)
  
($24,018
)
Statement of Cash Flows
    
($0
)
  
($.04
)
Cash flows from operating activities
    
($1,418
)
  
($24,018
)
Increase in shareholder loans
  
$
1,418
  
$
24,018
  
 
The statement of stockholders’ equity was affected by increasing the value of shares issued tenfold and reducing the additional paid in capital by the same amount.

Note 12
Subsequent Events 
 
Zulu Energy has received a non compliance letter from the government of Botswana regarding the committed work and required expenditures on its leased acreage. The Company expects to accelerate its drilling process prior to the renewal application deadline at the end of June for its leases. As of April 10, 2008, the Company has not commenced drilling, however, subject to the completion of a financing, the Company expects to have at least 3 holes drilled by the end of June 2008.
 
On May 7, 2008, Zulu Energy sold 8,000,000 shares of its common stock, together with warrants to purchase up to 8,000,000 shares of common stock, to certain investors in a private placement, also referred to as the Offering. Zulu Energy received $8,000,000 in aggregate gross proceeds in the Offering. The warrants have an exercise price of $1.50 per share and are exercisable for 3 years. The warrants are not exercisable until such time as Zulu Energy's shareholders approve an amendment to Zulu Energy's articles of incorporation to increase Zulu Energy's authorized shares of common stock.
 
 
Pursuant to the Subscription Agreements entered into as part of the Offering, in the event Zulu Energy, in a subsequent financing, sells any of its equity securities and receives gross proceeds of $5,000,000 or more within 120 days following the closing of the Offering, the investors in the Offering have the right for 30 days following notice by Zulu Energy to them of the subsequent financing to participate in and receive the same terms as the investors in the subsequent financing. If an investor in the Offering elects to participate in the subsequent financing, (i) the subscription funds provided to Zulu Energy as part of the Offering will be allocated to the purchase price or purchase consideration, as applicable, for the securities offered in the subsequent financing, (ii) the investor will surrender to Zulu Energy for cancellation the stock certificates representing the shares of common stock and the warrant received in the Offering, and (iii) the investor will enter into the operative documents prepared in conjunction with the subsequent financing.
 
Pursuant to the Swansi Stock Purchase Agreement, on May 7, 2008 we issued to Swansi Holdings Corp. a warrant to acquire 15,000,000 shares of our common stock at an exercise price of $1.50 per share, which is exercisable for a period of 5 years. The warrant is not exercisable until such time as Zulu Energy's shareholders approve an amendment in Zulu Energy's articles of incorporation to increase Zulu Energy's authorized shares of common stock. The issuance of the warrant described in this paragraph is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) and Rule 506 of Regulation D promulgated thereunder. An accredited investor received the warrant and Zulu Energy did not engage in any general solicitation or advertising to market the warrant

In conjunction with the Offering, the Company issued a 3 year warrant to exercise 800,000 shares of common stock at $1.50 as a placement fee for the Offering.
 
Employment Agreement with Mr. Paul Stroud
 
On April 15, 2008, Zulu Energy’s Board of Directors approved an employment agreement with Paul Stroud, Zulu Energy's Chief Executive Officer, to be effective March 1, 2008 that supersedes and replaces the employment agreement entered into between Zulu Energy and Mr. Stroud on September 24, 2007.
 
Under Mr. Stroud's new employment agreement, Mr. Stroud will receive an annual salary based on certain financings achieved by Zulu Energy. If Zulu Energy consummates a financing less than $5 million, he will receive an annual salary of $180,000. If Zulu Energy consummates a financing between $5 million and $10 million, Mr. Stroud's annual salary will be $240,000. If Zulu Energy consummates a financing in excess of $10 million, Mr. Stroud's annual salary will be $300,000. Mr. Stroud will receive a signing bonus of $100,000 following the consummation by Zulu Energy of a $5 million financing. Mr. Stroud is also eligible to receive an annual bonus at the discretion of the Board. Mr. Stroud was also granted stock options to purchase 1,500,000 shares of common stock with an exercise price of $1.00 per share. Mr. Stroud may exchange these stock options for incentive stock options following the implementation of a stock option plan by Zulu Energy. Pursuant to his employment agreement, the Board also approved the grant to Mr. Stroud of 2,000,000 shares of common stock and subsequently approved a grant of 50,000 shares of restricted stock that are be subject to restrictions outlined in a restricted stock agreement and will vest as follows: 820,000 shares (40%) on January 1, 2009 so long as Mr. Stroud still is in service with the Company and the Company has successfully drilled three stratigraphic test wells before that date; 615,000 shares (30%) on January 1, 2010 so long as Mr. Stroud still is in service with the Company and the Company shall have successfully located and tested a potentially viable hydrocarbon reservoir prior to that date and the remaining 615,000 shares (30%) on January 1, 2011 so long as Mr. Stroud still is in service with the Company.  In addition, Mr. Stroud is entitled to the coverage or benefits under any and all employee benefits plans maintained by Zulu Energy.
 

Employment Agreement with Mr. James Hostetler

On April 15, 2008, the Board appointed James Hostetler as Executive Vice President of Zulu Energy and approved an employment agreement with Mr. Hostetler, to be effective March 1, 2008. Under Mr. Hostetler's employment agreement, he will receive an annual salary equal to $180,000. Mr. Hostetler is also eligible to receive an annual bonus at the discretion of the Board. Mr. Hostetler was also granted stock options to purchase 1,500,000 shares of common stock with an exercise price of $1.00 per share. Mr. Hostetler may exchange these stock options for incentive stock options following the implementation of a stock option plan by Zulu Energy. Pursuant to his employment agreement, the Board also approved the grant to Mr. Hostetler of 1,900,000 shares of common stock that are be subject to restrictions outlined in a restricted stock agreement and will vest as follows: 760,000 shares (40%) on January 1, 2009 so long as Mr. Hostetler still is in service with the Company and the Company has successfully drilled three stratigraphic test wells before that date; 570,000 shares (30%) on January 1, 2010 so long as Mr. Hostetler still is in service with the Company and the Company shall have successfully located and tested a potentially viable hydrocarbon reservoir prior to that date and the remaining 570,000 shares (30%) on January 1, 2011 so long as Mr. Hostetler still is in service with the Company. In addition, Mr. Hostetler is entitled to the coverage or benefits under any and all employee benefits plans maintained by Zulu Energy.

Employment Agreement with Mr. Keith Reeves

On April 15, 2008, the Board appointed Keith Reeves as Vice President, Exploration of Zulu Energy and approved an employment agreement with Mr. Reeves, to be effective March 1, 2008. Under Mr. Reeves's employment agreement, he will receive an annual salary based on certain financings achieved by Zulu Energy. If Zulu Energy consummates a financing less than $5 million, Mr. Reeves will receive an annual salary of $180,000. If Zulu Energy consummates a financing between $5 million and $10 million, Mr. Reeves' annual salary will be $240,000. If Zulu Energy consummates a financing in excess of $10 million, Mr. Reeves' annual salary will be $300,000. Mr. Reeves will receive a signing bonus of $100,000 following the consummation by Zulu Energy of a $5 million financing. Mr. Reeves is also eligible to receive an annual bonus at the discretion of the Board. Mr. Reeves was also granted stock options to purchase 1,500,000 shares of common stock with an exercise price of $1.00 per share. Mr. Reeves may exchange these stock options for incentive stock options following the implementation of a stock option plan by Zulu Energy. Pursuant to his employment agreement, the Board also approved the grant to Mr. Reeves of 2,050,000 shares of common stock that are subject to restrictions outlined in a restricted stock agreement and will vest as follows: 820,000 shares (40%) on January 1, 2009 so long as Mr. Reeves still is in service with the Company and the Company has successfully drilled three stratigraphic test wells before that date; 615,000 shares (30%) on January 1, 2010 so long as Mr. Reeves still is in service with the Company and the Company shall have successfully located and tested a potentially viable hydrocarbon reservoir prior to that date and the remaining 615,000 shares (30%) on January 1, 2011 so long as Mr. Reeves still is in service with the Company. In addition, Mr. Reeves is entitled to the coverage or benefits under any and all employee benefits plans maintained by Zulu Energy.
 

Termination

Under each of the foregoing employment agreements, each of Messrs. Stroud, Hostetler and Reeves may terminate their employment agreements with the Company upon thirty days’ notice. Upon such termination, any unvested common stock or options to purchase common stock become immediately vested. The foregoing employees are also eligible to receive twelve months severance, full vesting of any unvested options or stock and registration of any shares of common stock (if such shares have not been previously registered) granted under their respective employment agreement in the event the employee is terminated without cause. Additionally, any stock options held by the employee will be exercisable for three additional years following termination without cause. Each employment agreement also contains a restrictive covenant.

 
Employment Agreement with Mr. Satyen Deshpande
 
On May 14, 2008, Zulu Energy entered into an employment agreement with Satyendra Deshpande, Zulu Energy’s then Chief Financial Officer and then member of the Board of Directors. Mr. Desphande subsequently resigned as Zulu Energy’s Chief Financial Officer, Secretary, Treasurer and member of the Board on Friday, May 16, 2008.
 
Under Mr. Deshpande’s employment agreement, Mr. Desphande was to receive an annual salary of $150,000 per annum. Pursuant to the terms of the employment agreement, Mr. Deshpande was granted a stock option to purchase 1,000,000 shares of common stock with an exercise price of $1.00 per share pursuant to Zulu Energy’s 2008 Equity Incentive Plan. The options vest as follows: 500,000 shares on the date of grant; and 500,000 shares on January 1, 2009; provided, however, that no options may be exercised until Zulu Energy’s stockholders approve an increase in Zulu Energy’s authorized shares of common stock to at least 150,000,000 shares. As a result of Mr. Deshpande’s resignation from Zulu Energy, the unvested options terminated.
 
During his period of employment, Mr. Desphande was entitled to the coverage or benefits under any and all employee benefits plans maintained by Zulu Energy

Employment Agreement with Mr. David Weisgerber
 
On May 21, 2008, Zulu Energy entered into an employment agreement with David Weisgerber dated effective as of May 15, 2008. Pursuant to his employment agreement, Mr. Weisgerber was appointed Zulu Energy’s Vice President of Operations. Under Mr. Weisgerber's employment agreement, he will receive an annual salary based on certain financings achieved by Zulu Energy. If Zulu Energy consummates a financing less than $5 million, Mr. Weisgerber will receive an annual salary of $180,000. If Zulu Energy consummates a financing between $5 million and $10 million, Mr. Weisgerber's annual salary will be $240,000. If Zulu Energy consummates a financing in excess of $10 million, Mr. Weisgerber's annual salary will be $300,000. Mr. Weisgerber is also eligible to receive an annual bonus at the discretion of the Board.

Mr. Weisgerber was also granted stock options to purchase 1,500,000 shares of common stock with an exercise price of $1.00 per share pursuant to the Zulu Energy 2008 Equity Incentive Plan. Pursuant to his employment agreement, the Board also approved the grant to Mr. Weisgerber of 1,950,000 shares of common stock that will be subject to restrictions outlined in a restricted stock agreement and will vest as follows: 780,000 shares (40%) on January 1, 2009 so long as Mr. Weisgerber is still in service with Zulu Energy and Zulu Energy has successfully drilled three stratigraphic test wells before that date; 585,000 shares (30%) on January 1, 2010 so long as Mr. Weisgerber is still in service with Zulu Energy and Zulu Energy shall have successfully located and tested a potentially viable hydrocarbon reservoir prior to that date and the remaining 585,000 shares (30%) on January 1, 2011 so long as Mr. Weisgerber is still in service with Zulu Energy. In addition, Mr. Weisgerber is entitled to the coverage or benefits under any and all employee benefits plans maintained by Zulu Energy.
 

Under Mr. Weisgerber’s employment agreement, he may terminate his employment with Zulu Energy upon thirty days’ notice. Upon such termination any unvested restricted shares of common stock or options to purchase common stock become immediately vested. Mr. Weisgerber is also eligible to receive twelve months severance, full vesting of any unvested options or stock and registration of any shares of common stock (if such shares have not been previously registered) granted under his employment agreement in the event Mr. Weisgerber is terminated without cause. Additionally, any stock options held by Mr. Weisgerber will be exercisable for three additional years following termination without cause. Mr. Weisgerber’s employment agreement also contains a restrictive covenant.

Pursuant to the terms of a letter agreement between Zulu Energy and Mr. Weisgerber, dated May 21, 2008, Mr. Weisgerber waived his right to exercise the options granted to him under his employment agreement and agreed to defer the grant of restricted stock until such time as Zulu Energy has increased its authorized shares of common stock to at least 150 million shares. The letter agreement is being filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
 
 
 
 
In July 2007, Nyati Resources Botswana (Proprietary) Limited (“Nyati Botswana”), our wholly owned subsidiary, granted a 6.5% over-riding royalty interest to LMA Hughes LLLP (“LMA Hughes”) in the oil & gas properties it has leased from the government of Botswana. LMA Hughes is controlled by Brian Hughes, who recently joined our Board of Directors, and his children. In February 2007, Nyati Botswana granted a 1% over-riding royalty interest to Tafilani Machacha, who is a member of the board of directors of Nyati Botswana, in the oil & gas properties it has leased from the government of Botswana.
 
On December 20, 2007, we entered into a Share Exchange Agreement and Plan of Reorganization (the “Exchange Agreement”), dated as of December 19, 2007, with Nyati Mauritius Limited (“Nyati Mauritius”) and LMA Hughes. A copy of the Exchange Agreement was included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2007. The transaction contemplated by the Exchange Agreement was consummated and all closing conditions were met on December 20, 2007.  As a result of the transaction contemplated by the Exchange Agreement, Nyati Mauritius became our wholly-owned subsidiary.  
 
Pursuant to the terms of the Exchange Agreement, we issued 30,000,000 shares of our common stock to LMA Hughes, which was the sole shareholder of Nyati Mauritius prior to the closing, in exchange for all of the issued and outstanding shares of capital stock of Nyati Mauritius.  As a result of the foregoing issuance, LMA Hughes became our largest shareholder.  We also granted LMA Hughes a 10% over-riding royalty interest in any properties that we acquire from LMA Hughes in the future and we agreed to reimburse LMA Hughes for certain expenses up to $250,000 it incurred as part of this transaction.  
 
The issuances of the common stock to LMA Hughes was made pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, as, among other things, each transaction did not involve a public offering, the investor was an accredited investor, the investor had access to information about the company and their investment, the investor took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the common stock.
 
During the year ended December 31, 2007, we borrowed $252,083 from LMA Hughes, which was an unsecured, non-interest bearing loan without specific terms for payment. We repaid the loan to LMA Hughes in May 2008.
 
 
Pursuant to Rule 601 of Regulation SB, the exhibits filed as part of this Amendment No. 2 on Form 10-KSB/A are reflected on the Exhibit Index following the signature page.
 
 
 
In accordance with the Exchange Act, this report has been signed below by the following person and in the capacities and on the date indicated.
 
 
ZULU ENERGY CORP.
   
   
 
By:  /s/ James Hostetler
 
James Hostetler, Executive Vice President, Secretary, Treasurer,
Chief Financial Officer, Principal Accounting Officer
 
Date: June 4, 2008
   
 
 
 
Exhibit List
 
Exhibit
 
Number 
Description 
 
2.1
Stock Exchange Agreement and Plan of Reorganization among Zulu Energy Corp, Nyati Mauritius Limited and LMA Hughes LLLP dated December 19, 20071
   
3.1
Articles of Incorporation2 
   
3.2
Articles of Amendment7
   
3.3
Statement of Correction7
   
3.4
Form of Amended and Restated Articles of Incorporation4†
   
3.5
Amended and Restated Bylaws5
   
10.2 Stock Purchase Agreement between Zulu Energy Corp. and Swansi Holdings Corp. dated as of December 19, 20071
   
10.3 Tax Indemnification Letter Agreement between Zulu Energy Corp. and LMA Hughes LLLP dated December 19, 20071
 
10.4
Employment Agreement, dated effective March 1, 2008, by and between Zulu Energy Corp. and Paul Stroud4
   
10.5
Employment Agreement, dated effective March 1, 2008, by and between Zulu Energy Corp. and James Hostetler3
   
10.6
Employment Agreement, dated effective March 1, 2008, by and between Zulu Energy Corp. and Kevin Reeves3
   
10.7
Form of Option Holder Letter Agreement3
   
10.8
Letter Agreement dated April 25, 2008 between Zulu Energy Corp. and Swansi Holdings Corp.3
   
10.9
Zulu Energy Corp. 2008 Equity Incentive Plan3†
   
10.10
Form of Restricted Stock Agreement5
   
10.11
Form of Stock Option Agreement5
   
10.12
Form of Common Stock Purchase Warrant6
   
10.13
Form of Subscription Agreement6
   
10.14
Form of Registration Rights Agreement6
   
10.15
Employment Agreement, dated effective May 15, 2008, by and between Zulu Energy Corp. and David Weisgerber8 
   
10.16
Employment Agreement, dated effective May 21, 2008, by and between Zulu Energy Corp. and David Weisgerber8
 
 
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
1.
Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on December 27, 2007, File No. 000-52272.
 
2.
Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the Commission on September 1, 2006, File No. 333-137076.
 
3.
Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 21, 2008, File No. 000-52272.
 
4.
Incorporated by reference to the Company’s Annual Report on Form 10-KSB/A filed with the Commission on April 29, 2008, File No. 000-52272.
 
5.
Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 2, 2008, File No. 000-52272.
 
6.
Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 9, 2008, File No. 000-52272.
 
7.
Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 20, 2008, File No. 000-52272.
 
8.
Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 28, 2008, File No. 000-52272.
 
*
Filed herewith.
 
†
The form of Amended and Restated Articles of Incorporation and 2008 Equity Incentive Plan were approved by the Board of Directors of Zulu Energy Corp. on April 28, 2008 and will be presented to shareholders for approval as part of the 2008 Annual Meeting of Shareholders.