Kodiak Energy, Inc.
OTC Bulletin Board : KDKN

Kodiak Energy, Inc.

March 17, 2009 18:13 ET

Kodiak Energy, Inc. Restatement of Financials

CALGARY, ALBERTA--(Marketwire - March 17, 2009) - Kodiak Energy, Inc. (TSX VENTURE:KDK) (OTCBB:KDKN) ("Kodiak", "Company" or the "Corporation"). On March 13, 2009, we determined that it was necessary to restate our financial results for the fiscal quarter ended September 30, 2007 and the year ended December 31, 2007. The purpose of the restatements is to correct an error in measurement and an error in the application of US GAAP in the course of recording the September 2007 transactions of the Company as related to the acquisition of the Thunder River assets and the flow-through share financing for that project as set out below. The restatement relating to the flow-through share premium will have no net impact on the Company's consolidated total shareholders' equity as at December 31, 2008, while the restatement relating to the Thunder property acquisition results in an increase in unproved properties and a corresponding increase in Additional Paid in Capital.

All dollar values are in United States currency unless otherwise stated.

Issue of common shares of the Company in consideration for the acquisition of properties

On September 28, 2007, the Company issued to Thunder River Energy, Inc. ("Thunder") 7,000,000 common shares of the Company as partial consideration for the acquisition of properties. The shares issued were recorded at a negotiated price per share of $2.00 or $14,000,000. In the course of a review by the U.S. Securities and Exchange Commission (Commission) of the Company's Form 10-Q for the Fiscal Quarter Ended September 30, 2007 and Form 10-K for the Fiscal Year Ended December 31, 2007, the Commission questioned the measurement date and the $2.00 per share value at which the transaction was recorded. Following an exchange of correspondence and discussions between the Company and the Commission during 2008 and 2009 regarding this issue, the Company has determined that the acquisition should have been recorded at a value per share of $2.50 or $17,500,000, which represents the fair value of exactly comparable common shares issued at the same $2.50 price per share as a private placement financing for 2,756,000 common shares which closed on September 28, 2007, the same date that the Thunder transaction closed. Management of the Company believes the $2.50 price per share to be the fair value at the appropriate measurement date. The result of the restatement adjustment would be an increase of $3,500,000 in the recorded acquisition cost and related issuance of common shares.

Issue of flow-through common shares of the Company at a premium

On September 28, 2007, October 3, 2007 and October 30, 2007, the Company issued on a Canadian flow-through share basis, 2,251,670 common shares of the Company at $3.00 per share or $6,755,010, which amount represented a premium of $.50 per share or $1,125,835 when compared to other non-flow-through shares issued at the same time at $2.50 per share. At the time of the transactions, the issue of the flow-through common shares was recorded as appropriate credits to par value of common shares and additional paid in capital. Following recent discussions with the Company's tax consultant, the Company has determined that the $1,125,835 premium on flow-through common shares issued should have, in accordance with US GAAP, been recorded as a liability at the time the shares were issued rather than as additional paid in capital. The premium liability was discharged during the period October 2007 to August 2008 and recognized as reduction of deferred tax expense when the portion of the flow-through eligible expenditures relating to the flow-through premium was incurred by the Company.

The Company has determined that its financial statements for the Fiscal Quarter ended September 30, 2007, the Fiscal Year ended December 31, 2007, and the Fiscal Quarters ended March 31, June 30 and September 30, 2008 should not be relied upon. The Company will file amended reports on Form 10-Q for the Fiscal Quarter ended September 30, 2007 and on Form 10-K for the Fiscal Year ended December 31, 2007 to restate the financial statements and notes to reflect the changes in accounting treatment described above, and it will reflect those changes in the statements and notes in the Form 10-K for the Fiscal Year ended December 31, 2008, which notes will discuss the quarterly 2008 financial changes based on the restatement of the prior financial statements. These reports will be filed after the filing of this Current Report on Form 8-K.

Company management has discussed the matters disclosed in this filing on Form 8-K with its independent registered public accounting firm.

In view of these restatements, the Company has filed a Notification of Late Filing for its December 31, 2008 Annual Report Form 10-K, which with the extension must be filed no later than March 31, 2009. Management anticipates filing the amended reports and the current Form 10-K by that date.

About Kodiak: Kodiak Energy, Inc. is a Calgary, Alberta, Canada based publicly traded oil and gas exploration and development company focused on developing and exploring onshore oil, gas and CO2 properties within North America. Our main prospects are located in the central Mackenzie River Valley of the Northwest Territories and northeast New Mexico. Through our private subsidiary, Cougar Energy, Inc., we are developing the projects of Lucy in the Horn River Basin in northeast British Columbia and CREEnergy Joint Venture located in north central Alberta.

Forward-looking Statements: This press release contains forward-looking statements. The words or phrases "would be," "will" "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," or similar expressions are intended to identify "forward-looking statements". The Corporation's business is subject to various other risks and uncertainties, which may be described in its corporate filings (www.sec.gov and www.sedar.com). Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Corporation cautions readers not to place reliance on such statements. Kodiak undertakes no obligation to update or publicly revise forward looking statements or information unless so required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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