BrewBilt Brewing Co - Annual Report: 2012 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 [ ]

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 (§ 229.405 of this chapter) during the preceeding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K. Yes [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an 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]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $372,257

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 222,958,643 shares as of June 18, 2012.

TABLE OF CONTENTS

PART I

Item 1. Business

Our Business

We are focused on the development, exploration and production of oil and gas in North America. Our primary focus is on oil and gas properties with proven undeveloped reserves that are economically attractive but are underserved by major independent oil and gas companies.

Garcia #3 Well

On May 23, 2012, we acquired a ten percent working interest, seven point five percent net revenue interest, from a third party interest holder of the Garcia #3 well (10.0 % WI, 7.5% NRI). For our interest, we paid $300,000 in convertible preferred shares with a conversion rate of .01 per share.

We are subject to the terms and conditions of the operating agreement established by the operator for the Garcia#3 well, Kidd Production Inc, the property developer, Progas Energy Services and the third party vendor we acquired our 10% interest from. We have been repeatedly misinformed by Kidd Production and Progas about the start date for the drilling of the Garcia #3, which is to commence when a drill rig is available and when the operator has determined to move forward with the project. When ready, Garcia #3 will be drilled to approximately 4,200 feet in depth and test the Frio Sands to identify commercial production in the prospect.

Due to our minority interest in the Garcia#3 well, we are reviewing operational alternatives to resolve our inability to control the development of this well and the field in general for any future drilling activities.

Joaquin Basin Resources, Inc.

Effective January 20, 2011, we entered into a Shared Exchange Agreement with Joaquin Basin Resources Inc., a Nevada corporation, and its stockholders (the “Agreement”). Pursuant to the provisions of the Agreement, we agreed to issue to Joaquin Basin shareholders (i) 62,000,000 shares of our common stock and (ii) 2,076,324 shares of our convertible preferred stock, in exchange for the transfer and delivery to us of their 62,000,000 shares of common stock in Joaquin Basin, which represents all of the issued and outstanding shares in Joaquin Basin. As result of the transaction, Joaquin Basin became our wholly owned subsidiary.

On November 21, 2011, Joaquin Basin entered into an amendment (the “Amendment”) to its original Asset Transfer Agreement with Xploration, Inc., a Nevada corporation. Pursuant to the Asset Transfer Agreement, Xploration assigned Joaquin Basin a 50% working interest (37.5% net revenue interest) in mineral leases of approximately 4,000 acres in the Kreyenhagen Trend and Joaquin Basin assumed all of the liabilities associated with the leases.

Pursuant to the Amendment, in consideration for a reduction in working interest from 50% to 20% and in consideration for a reduction in net revenue interest from 37.5% to 14%, Xploration will do the following as increased compensation to Joaquin:

The total expenses that Xploration will pay on behalf of Joaquin associated with the mineral leases will exceed $1,100,000. Joaquin will get a full carry on the first well drilled.

The following is a list of the expenses Xploration shall pay on behalf of Joaquin:

1. Pay all GG&A, estimated to be in excess of $300,000, as determined by Xploration of the leases for the period October 1, 2011 through September 30, 2012.
2. Pay all lease rentals, estimated to be in excess of $284,000, due for the period October 1, 2011 through September 30, 2012.
3. Pay all expenses through completion of the first well planned to be on a lease preselected by the geological team (but at Xploration’s election to be drilled on any of the leases), the cost of which is estimated to be in excess of $500,000 (“First Farmin Well”), such well anticipated to be commenced during the period October 1, 2011 through September 30, 2012.
4. In the event Xploration has not commenced drilling the First Farmin Well within the timeframe as referenced in 3. above, then the time period within which Xploration may drill the First Farmin well may be further extended for an additional twelve month period ending September 30, 2013 at Xploration’s sole discretion, by Xploration giving no less than thirty days notice to Joaquin prior to October 1, 2012 and the same conditions per the First Farmin Well only as set forth in 3. would apply to that additional twelve month period provided that the decision to drill a well pursuant to 3. above and this clause 4. rests in the sole and absolute discretion of Xploration.

As mentioned above, we issued 2,076,000 shares of convertible preferred stock in concluding the Joaquin Basin purchase agreement. The cost of the issue, $4,152,000, was based on the value of preferred stock as if converted to common stock. $4,152,000 was added to the cost of the Joaquin property.

On March 1, 2011, Joaquin Basin entered into an Operating Agreement with Solimar Energy, LLC (“Solimar”) to explore and develop the 4,000 leased acres covering extensions of the Coalinga California oil and gas field in California. The acreage is labeled as the Kreyenhagen Trend acreage is on the nose of a Coalinga anticline.

In recent months, Solimar Energy as operator has been active on the Kreyenhagen Trend Prospect. Six wells have been submitted to the State of California for permitting.

Bawden 1-24 - The well that we have a Carried Interest or Farm-in well where we will not have any expenses and we are carried 100%. Target Zone: Temblor Test

Vintage 1-17 - Temblor Test

Vintage 1-21 - Temblor Test

Den Hartog A-1 - Avenal Test

Den Hartog A-2 - Avenal Test

Den Hartog A-3 - Avenal Test

Each Drilling permit requires a Blunt Nose Lizard "study" to be conducted once in the Spring, which is currently underway by an outside service, and once again in the Fall. After the study is finalized the drilling permits can be issued and the drilling process is expected to start. We are planning to spud three exploratory wells sometime in 2013-2014.

The Geological study was conducted on the Kreyenhagen Trend as well as the Kreyenhagen Ranch. We will be provided with the information specific to the Trend acreage. This information will speak specifically to the well selection of the 6 wells listed above. We will not be charged for any expense of the study as it falls under the Amendment.

Solimar Energy is in the process of providing the finished survey to Grid Petroleum Corp imminently.

SE Jonah Prospect

Our 100% working interest in the four separate oil and gas leases no longer exists; we only have a 100% working interest in two located near the Jonah Field region, which encompasses an area of premium natural gas reserves within the Greater Green River Basin in the Rocky Mountains area of Wyoming. The Green River Basin area contains approximately 26 TCF (Trillion Cubic Feet) of natural gas, with the Jonah Field estimated to contain 7 to 10 TCF according to the Wyoming State Geological Survey. The Jonah Field currently produces from in excess of 500 wells. This well-defined region has a high success rate for drilling and completion.

We referred to our four leases in this region as the SE Jonah Prospect. These four leases were issued by the United States Department of the Interior Bureau of Land Management: #WYW158664 and #WYW158665 dated August 1, 2004, #WYW159734; and #159737 dated February 1, 2004 and we no longer have #WYW159734 and #159737. The leases covered 3,744.57 acres in the Jonah Prospect, South of the Jonah Field in the Greater Green River Basin, Wyoming. The two leases are subject to a 12.5% royalty retained by the lessor and a 5% overriding royalty retained by the seller. We acquired the leases on March 17, 2010 for $300,000 cash from a related party. We have conducted no exploration work on the properties.

The SE Jonah Prospect is located six miles southeast of the Jonah Field. The breakdown of the acreage and royalties that are owed to various parties is set forth in the table below. In June of 2012 we learned that SunCal Energy Inc. did not reinstate two leases and additionally SunCal Energy Inc. had not properly completed and submitted the assignment documentation nor paid the lease payments to the Bureau of Land Management so leases #WYW158664 and 158665 have officially been terminated and we are in the process of submitting the documentation and lease payments for #WYW158664 and 158665 so we can contain these leases.

Schlumberger Data and Consulting Services, a leading oilfield services provider, has prepared a technical report on the SE Jonah Prospect, for analysis and development appraisal of the property. (The SE Jonah Prospect includes a portion of land in the southwestern area of the Prospect that covers roughly 1,300 acres that is not evaluated in the Schlumberger report). The report concludes that further study is needed to proceed with any drilling operations.

The report also concludes that “There is a good possibility of productive hydrocarbons being encountered in the Prospect and the surrounding area. The geological, petrophysical, and engineering conditions are similar to the Jonah Field. The one difference is the lower pressure gradient in the Prospect area, which will result in lower production rates.”

Additionally Schlumberger’s report recommends that additional seismic data should be acquired over the SE Jonah Prospect allowing for more subsurface control and better positioning of drilling locations and additional seismic should be acquired over the Prospect either by purchase or shooting.

Subsequent to this report by Schlumberger, Grid Petroleum’s Chief Geological and Geophysicist Advisor, Robert Murphy, completed an analysis of the report devising a work program to encompass the necessary additional study.

Concluding that the SE Jonah acreage can be considered as exploration rather than development/production acreage, the work program consists of eleven elements divided into two phases. The first phase comprises six elements requiring data accumulation and study. The completion of phase one will provide information as to the prospects of finding producible gas and, if so, the predicted range of gas quantity in place.

The second phase being contingent on positive results from the first phase includes well test interpretation and investigating development drilling scenarios and production forecasting.

No exploration work has been conducted by the Company on the properties. We are, however, in discussion with consulting groups to implement the first phase of the devised work program.

Competition and Marketing

We will be faced with strong competition from many other companies and individuals engaged in the oil and gas business, many are very large, well established energy companies with substantial capabilities and established earnings records. We may be at a competitive disadvantage in acquiring oil and gas prospects since we must compete with these individuals and companies, many of which have greater financial resources and larger technical staffs. It is nearly impossible to estimate the number of competitors; however, it is known that there are a large number of companies and individuals in the oil and gas business.

Exploration for and production of oil and gas are affected by the availability of pipe, casing and other tubular goods and certain other oil field equipment including drilling rigs and tools. We expect we will depend upon independent drilling contractors to furnish rigs, equipment and tools to drill wells. Higher prices for oil and gas may result in competition among operators for drilling equipment, tubular goods and drilling crews which may affect our ability expeditiously to drill, complete, recomplete and work-over wells.

The market for oil and gas is dependent upon a number of factors beyond our control, which at times cannot be accurately predicted. These factors include the proximity of wells to, and the capacity of, natural gas pipelines, the extent of competitive domestic production and imports of oil and gas, the availability of other sources of energy, fluctuations in seasonal supply and demand, and governmental regulation. In addition, there is always the possibility that new legislation may be enacted, which would impose price controls or additional excise taxes upon crude oil or natural gas, or both. Oversupplies of natural gas can be expected to recur from time to time and may result in the gas producing wells being shut-in. Imports of natural gas may adversely affect the market for domestic natural gas.

The market price for crude oil is significantly affected by policies adopted by the member nations of Organization of Petroleum Exporting Countries ("OPEC"). Members of OPEC establish prices and production quotas among themselves for petroleum products from time to time with the intent of controlling the current global supply and consequently price levels. We are unable to predict the effect, if any, that OPEC or other countries will have on the amount of, or the prices received for, crude oil and natural gas.

Gas prices, which were once effectively determined by government regulations, are now largely influenced by competition. Competitors in this market include producers, gas pipelines and their affiliated marketing companies, independent marketers, and providers of alternate energy supplies, such as residual fuel oil. Changes in government regulations relating to the production, transportation and marketing of natural gas have also resulted in significant changes in the historical marketing patterns of the industry. Generally, these changes have resulted in the abandonment by many pipelines of long-term contracts for the purchase of natural gas, the development by gas producers of their own marketing programs to take advantage of new regulations requiring pipelines to transport gas for regulated fees, and an increasing tendency to rely on short-term contracts priced at spot market prices.

Existing and Probable Governmental Regulation

We intend to monitor and comply with current government regulations that affect our activities, although our operations may be adversely affected by changes in government policy, regulations or taxation. There can be no assurance we will be able to obtain all of the necessary licenses and permits that may be required to carry out our exploration and development programs. It is not expected any of these controls or regulations will affect our operations in a manner materially different than they would affect other natural gas and oil companies operating in the areas in which we operate.

Government Regulation

The United States federal government and various state and local governments have adopted laws and regulations regarding the protection of human health and the environment. These laws and regulations may require the acquisition of a permit by operators before drilling commences, prohibit drilling activities on certain lands lying within wilderness areas, wetlands, or where pollution might cause serious harm, and impose substantial liabilities for pollution resulting from drilling operations, particularly with respect to operations in onshore and offshore waters or on submerged lands. These laws and regulations may increase the costs of drilling and operating wells. Because these laws and regulations change frequently, the costs of compliance with existing and future environmental regulations cannot be predicted with certainty.

The transportation and certain sales of natural gas in interstate commerce are heavily regulated by agencies of the federal government. Production of any oil and gas by properties in which we have an interest will be affected to some degree by state regulations. States have statutory provisions regulating the production and sale of oil and gas, including provisions regarding deliverability. Such statutes and the regulations are generally intended to prevent waste of oil and gas and to protect correlative rights to produce oil and gas between owners of a common reservoir.

State regulatory authorities may also regulate the amount of oil and gas produced by assigning allowable rates of production to each well or pro-ration unit.

Any exploration or production on Federal land will have to comply with the Federal Land Management Planning Act which has the effect generally of protecting the environment. Any exploration or production on private property whether owned or leased will have to comply with the Endangered Species Act and the Clean Water Act. The cost of complying with environmental concerns under any of these acts varies on a case by case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.

Environmental Regulation

Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Numerous governmental agencies, such as the U.S. Environmental Protection Agency, or EPA, issue regulations which often require difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties and may result in injunctive obligations for failure to comply. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically sensitive and other protected areas, require action to prevent or remediate pollution from current or former operations, such as plugging abandoned wells or closing pits, and impose substantial liabilities for pollution. The strict liability nature of such laws and regulations could impose liability upon us regardless of fault. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage, transport, disposal or cleanup requirements could materially adversely affect our operations and financial position, as well as the oil and natural gas industry in general.

The Comprehensive Environmental Response, Compensation and Liability Act, also known as CERCLA or the “Superfund” law, generally imposes joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination and those persons that disposed or arranged for the disposal of the hazardous substance. Under CERCLA and comparable state statutes, such persons may be subject to strict joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. Governmental agencies or third parties may seek to hold us responsible under CERCLA and comparable state statutes for all or part of the costs to clean up sites at which such “hazardous substances” have been released.

We did not incur any costs in connection with the compliance with any federal, state, or local environmental laws. However, costs could occur at any time through industrial accident or in connection with a terrorist act or a new project. Costs could extend into the millions of dollars for which we could be totally liable. In the event of liability, we believe we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability is limited to our percentage share, any significant liability would wipe out our assets and resources.

Item 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 1B. Unresolved Staff Comments

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Properties

Our principal executive offices are located at 999 18th Street, Suite 3000, Denver, CO 80202. We are committed to payments of $199 per month for shared office space and office services in Denver, Colorado until February 28, 2011. A description of our oil and gas properties is set forth above in this Annual Report under the heading “Business.”

Item 3. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 4. Mine Safety Disclosure

N/A

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. Our shares are quoted on the OTCBB under the symbol “GRPR.”

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Holders of Our Common Stock

We are authorized to issue 1,500,000,000 shares of common stock with a par value of $0.001 per share. As at June 18, 2012 we had 222,958,643 shares of common stock outstanding. Our shares are held by approximately twelve (12) stockholders of record, not include those that hold their shares in street name. We are authorized to issue twenty million shares of preferred stock, par value $0.001 per share. We have 1,885,000 shares of preferred stock outstanding.

Dividends

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

On August 18, 2011, 500,000 shares of common stock were issued for consulting services.

Between August 29 and September 21, 2011, 9,406,149 common shares were issued in conversion of debt to stock pursuant to an agreement with Asher Enterprises, Inc. Debt of $178,982 was offset.

Between November 28 and December 8, 2011, 11,295,545 common shares were issued in conversion of debt to stock pursuant to the agreement with Asher. Debt of $55,000 was offset.

On December 2, 2011, 12,000,000 shares were issued for consulting services.

On January 1, 2012, 3,198,528 shares were returned to treasury and cancelled in a preliminary transaction further to a consulting agreement.

Between January 1 and February 8, 2012, 12,815,862 common shares were issued at $0.008, $0.009 and $0.010 per share in elimination of $115,000 notes payable. .

On January 31, 2012, 2,076,000 shares of Preferred Series A stock were issued in completion of the agreement signed January 20, 2011, wherein the Company acquired100% of the outstanding common stock of Joaquin Basin Resources, Inc., owner of an oil & gas property. There being no market for the shares, they were valued at the prevailing market price of $0.01 for the number of post-conversion shares of common stock. The value, $4,152,000, was assigned to the cost of the Joaquin Basin oil & gas property.

On February 2, 2012, 1,684,427 shares of common stock were issued at $0.01 per share for consulting.

On January 31, 2012, 22,200,000 shares of common stock were issued at $0.01 per share in converting 111,000 shares of Series A preferred stock to common stock. The value of the common stock equated to that of the preferred stock, resulting in no gain or loss on the transaction.

As at March 31, 2012, 1,500,000,000 common shares of par value $0.001 were authorized, of which 201,944,542 were issued and outstanding, (135,241,087 as at March 31, 2011).

As at March 31, 2012, 10,000,000 Series A preferred shares and 10,000,000 Series B preferred shares of par value $0.001 were authorized, of which 1,965,000 Series A were issued and outstanding, (nil as at March 31, 2011).

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any equity compensation plans.

Item 6. Selected Financial Data

A smaller reporting company is not required to provide the information required by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Results of Operations for the Years Ended March 31, 2012 and 2011

We are in the exploration stage. We have not earned any revenues since our inception. We will not be able to earn revenue unless we are able to locate oil and gas potential on our leases and exploit any reserves we may find. There is no assurance that we will be able to accomplish our business plan to produce oil and gas from our leases.

We incurred operating expenses in the amount of $502,135 for the year ended March 31, 2012 as compared with $834,271 for the year ended March 31, 2011. The decrease was primarily due to decrease in investor relations, professional fees expenses, consulting fees and other general administrative expenses. Investor relations expenses decreased from $77,383 in 2011 to $9,200 in 2012. In 2011 purchases of a commercial advertising report and research analyst coverage to gain investment market exposure began in March 2010 and we issued announcements of all the changes that occurred with Company.  We did not incur these charges in 2012. Other general administrative expense decreased from $245,546 in 2011 to $48,045 in 2012. In 2011, the increased expenses were a result of costs of changing and bringing on new management, setting up new offices and design of a new website for the Company. Professional fees have decreased from $93,698 in 2011 to $66.804 in 2012 primarily due to increased fees in 2011 associated with changes to the Company’s business. Consulting fees decreased from $391,430 in 2012to $373,144.

We incurred a net loss from operations in the amount of $502,135 for year ended March 31, 2012, as compared with $834,271for the year ended March 31, 2011.

Liquidity and Capital Resources

We had total current assets in the amount of $25,416 as of March 31, 2012. We had current liabilities of $530,216 as of March 31, 2012. We had a working capital deficit of $504,800 as of March 31, 2012.

We used net cash of $442,110 in operating activities for the year ended March 31, 2012. Our net loss was the major contributing factor to our negative operating cash flow.

We used net cash of $4,151,776 in investing activities for the year ended March 31, 2012 mainly for the purchase of our oil and gas properties.

Financing activities provided $4,604,292 for the year ended March 31, 2012, mainly as the result of the issuance of preferred stock to finance the purchase of our oil and gas properties.

We anticipate our cash requirements to increase over the course of this year as we will be more active and will incur costs for management and exploration of our oil and gas properties.

We anticipate that we will be dependent, for the immediate future, upon additional investment capital to fund operating expenses. We estimate that we will require additional financing to operate and carry out planned exploration activities over the next twelve months.

Off Balance Sheet Arrangements

As of March 31, 2011, there were no off balance sheet arrangements.

Going Concern

The Company has experienced losses since inception into an exploration stage March 31, 2009:

The Company has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable, including the completion of acquisitions, exploration and development of oil and gas properties and projects, is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There are no assurance the Company will be successful in achieving these goals.

The Company does not have sufficient cash to fund its desired exploration for the next twelve months. The Company has arranged financing as described in the Company’s financial statements and intends to draw upon this financing arrangement to fund administration and exploration. This financing may be insufficient to fund expenditures or other cash requirements required to find, develop and exploit oil and reserves to the point of profitable operations. These can be no assurance the Company will be successful in finding oil and gas reserves. The Company plans to seek additional financing if necessary in private or public equity offering to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data

Audited Financial Statements:

 Report of Independent Registered Public Accounting Firm

Board of Directors

Grid Petroleum Corporation

I have audited the accompanying consolidated balance sheet of Grid Petroleum Corporation (an Exploration Stage Company) and Subsidiaries as of March 31, 2012 and March 31, 2011, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and for the period from inception March 31, 2009 through March 31, 2012. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor was I engaged to perform an audit of its internal control over financial reporting. My 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, I express no such opinion. An audit also includes assessing the accounting principles used and significant estimated made by management, as well as evaluating the overall financial statement presentation. I believe my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grid Petroleum Corporation and Subsidiaries as of March 31, 2012 and March 31, 2011 and the results of its operations, stockholders’ deficit, and cash flows for the years then ended, and for the period since inception March 31, 2009 through March 31, 2012, in conformity with accounting principles generally accepted in United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as going concern. As disclosed in Note 2 to the consolidated financial statements, the Company has experienced losses in the exploration stages and development stage, and has limited business operations which raise substantial doubt about its ability to continue as going concern. Management’s plans in regard to this matter are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainly.

/ s / John Kinross-Kennedy, CPA

John Kinross-Kennedy, CPA

Irvine, California

June 25, 2012

GRID PETROLEUM CORP.

(formerly SUNBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Balance Sheet

as at March 31, 2011 and 2012

GRID PETROLEUM CORP. (formerly SUBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Statement of Operations and Comprehensive Loss

GRID PETROLEUM CORP.

( formerly SUNBERTA RESOURCES INC.)

(An Exploration Stage Company) Consolidated Statement of Stockholders' Equity

For the period from formation, (September 19, 2006), to March 31, 2012

GRID PETROLEUM CORP. ( formerly SUNBERTA RESOURCES INC.)

(An Exploration Stage Company)

Consolidated Statement of Cash Flows