GROOVE BOTANICALS INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - GROOVE BOTANICALS INC.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - GROOVE BOTANICALS INC.	aogn20140930form10qex31_1.htm
EX-32.1 - EXHIBIT 32.1 - GROOVE BOTANICALS INC.	aogn20140930form10qex32_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________

FORM 10-Q

____________

☒QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 1-12850

AVALON OIL & GAS, INC.

(Exact Name of Small Business Issuer as specified in its charter)

Nevada		84-1168832
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

310 Fourth Avenue South, Suite 7000

Minneapolis, MN 55415

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:

(952) 746-9652

Indicate by check mark whether the Issuer:

(1) Has 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): Yes ☒ No ☐

(2) Has been subject to such filing requirements for the past 90 days. Yes ☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ☒

11,858,062 shares of our common stock were issued and outstanding as of November 15, 2014.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and March 31, 2014	3
	Consolidated Statements of Operations for the Three months and Six months ended September 30, 2014 and 2013 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2014 and 2013 (Unaudited)	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults upon Senior Securities	23
Item 4.	Submission of Matters to a Vote of Security Holders	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	Signatures	25

ITEM 1. Financial Statements

Avalon Oil & Gas, Inc.
Consolidated Balance Sheets
		As of September 30,			As of March 31,
		2014			2014
		(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	164,720		$	223,914
Accounts receivable, net of allowance for doubtful accounts of $0 and $0		62,033			54,226
Notes Receivable		12,143			15,714
Deposits and prepaid expenses		279,400			302,057
Receivables from joint interests, net of allowance for doubtful accounts of $133,428 and $136,872		20,000			20,000
Total Current Assets		538,296			615,911

Notes receivable		—			2,857
Property and equipment, net		20,390			—
Unproven oil & gas properties		1,867,183			1,867,183
Producing oil & gas properties		251,356			149,477
Intellectual property rights, net		74,522			95,815
TOTAL ASSETS	$	2,751,747		$	2,731,243

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	605,146		$	579,536
Accrued payroll- related parties		209,367			207,817
Dividends payable		106,203			66,730
Accrued liabilities to joint interest		10,785			11,596
Notes payable- related party		26,000			26,000
Notes payable, net of discount		524,300			—
Total Current Liabilities		1,481,801			891,679

Notes payable, net of discount		—			514,300
Accrued asset retirement obligation (ARO) liability		118,574			112,927
TOTAL LIABILITIES	$	1,600,375		$	1,518,906

STOCKHOLDERS' EQUITY
Preferred Stock, Series A, ($0.1 par value) 1,000,000 shares authorized; 100 shares issued and outstanding stated at redemption value, as of September 30, 2014 and March 31, 2014, respectively	$	10		$	10
Preferred Stock, Series B, ($0.1 par value) 2,000 shares authorized; 1,525 and 1,300 shares issued and outstanding stated at redemption value, as of September 30, 2014 and March 31, 2014, respectively		153			130
Common Stock, ($0.001 par value) 200,000,000 shares authorized, 11,858,062 and 11,658,062 issued and outstanding at September 30, 2014 and March 31, 2014 and respectively		11,859			11,659
Additional Paid-in Capital		32,262,903			32,024,126
Accumulated deficit		(31,123,553	)		(30,823,588	)
Total Stockholders' Equity	$	1,151,372		$	1,212,337

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,751,747		$	2,731,243

The Accompanying Notes are an Integral Part to These Financial Statements.

Avalon Oil & Gas, Inc.
Consolidated Statements of Operations


	Three Months Ended September 30,						Six Months Ended September 30,
	2014			2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Oil & Gas Sales	$	38,433		$	39,957		$	62,934		$	59,025

Operating expenses:
Lease operating expense, severance taxes and ARO accretion		19,246			40,123			38,793			59,850
Selling, general and administrative expenses		104,244			97,932			177,680			159,635
Stock based compensation		—			43,001			14,000			103,001
Depreciation, depletion, and amortization		20,600			16,620			40,232			31,046
Total operating expenses		144,090			197,676			270,705			353,532

Operating loss		(105,657	)		(157,719	)		(207,771	)		(294,507	)

Other income (expense):
Other miscellaneous income		—			—			10,100			—
Gain (Loss) on conversion of notes payable		—			(39,250	)		—			(47,150	)
Interest expense, net		(10,717	)		(24,696	)		(21,321	)		(49,745	)

Total other income (expense)		(10,717	)		(63,946	)		(11,221	)		(96,895	)

Loss before income tax	$	(116,374	)	$	(221,665	)	$	(218,992	)	$	(391,402	)
Provision for income taxes		—			—			—			—
Net Loss	$	(116,374	)	$	(221,665	)	$	(218,992	)	$	(391,402	)
Preferred stock dividends	$	(40,596	)	$	(14,000	)	$	(80,973	)	$	(27,780	)
Net loss attributable to common shareholders	$	(156,970	)	$	(235,665	)	$	(299,965	)	$	(419,182	)
Net loss per share- basic and diluted		(0.013	)		(0.022	)		(0.025	)		(0.048	)

Weighted average shares outstanding- basic and diluted		11,858,062			10,690,127			11,831,832			8,700,685

The Accompanying Notes are an Integral Part to These Financial Statements.

Avalon Oil & Gas, Inc.
Consolidated Statement of Cash Flows

	Six Months Ended September 30,
	2014			2013
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$	(218,992	)	$	(391,402	)
Adjustments to reconcile net Income to net cash (used in) provided by operating activities:
Common stock issued for services		14,000			103,001
Loss on conversion on notes payable		—			47,150
Depreciation		2,267			—
Depletion		16,673			10,475
Depreciation and ARO liability		1,448			724
Amortization of intangible assets		21,294			21,294
Net change in operating assets and liabilities:
Accounts receivable		(7,807	)		25,152
Accounts payable and other accrued expenses		26,348			(46,443	)
Due to related party		—			5,000
Asset retirement obligation		5,647			5,133
Net cash used in operating activities		(139,122	)		(219,916	)

CASH FLOWS FROM INVESTING ACTIVITIES
Deposit on the purchase of additional assets		—			(119,400	)
Acquisition of oil producing assets		(120,000	)		—
Principal payments received on notes receivable		6,428			1,147
Net cash used in investing activities		(113,572	)		(118,253	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		60,000			—
Common stock issued for cash		—			300,000
Dividends paid		(41,500	)		(24,300	)
Preferred stock B issued for cash		175,000			50,000
Net cash provided by financing activities		193,500			325,700

Net (Decrease) in cash and cash equivalents		(59,194	)		(12,469	)
Cash and cash equivalents at beginning of period		223,914			129,931

Cash and cash equivalents at end of period	$	164,720		$	117,462

Supplemental Disclosures of cash flow information
Cash paid during the period for:
Interest	$	—		$	—
Taxes	$	—		$	—
Common stock issued in exchange for consulting services	$	14,000		$	35,000
Preferred stock issued for conversion of note payable, accrued interest, and assumption of debt	$	50,000		$	10,000

The Accompanying Notes are an Integral Part to These Financial Statements.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Avalon Oil & Gas, Inc. (the "Company") was originally incorporated in Colorado in April 1991 under the name Snow Runner (USA), Inc. The Company was the general partner of Snow Runner (USA) Ltd.; a Colorado limited partnership to sell proprietary snow skates under the name "Sled Dogs" which was dissolved in August 1992. In late 1993, the Company relocated its operations to Minnesota and in January 1994 changed our name to Snow Runner, Inc. In November 1994 we changed our name to the Sled Dogs Company. On November 5, 1997, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In September 1998, we emerged from protection of Chapter 11 of the U.S. Bankruptcy Code. In May, 1999, we changed our state of domicile to Nevada and our name to XDOGS.COM, Inc. On July 22, 2005, the Board of Directors and a majority of the Company's shareholders approved an amendment to our Articles of Incorporation to change the Company's name to Avalon Oil & Gas, Inc., and to increase the authorized number of shares of our common stock from 200,000,000 shares to 1,000,000,000 shares par value of $0.001, and engage in the acquisition of producing oil and gas properties. On November 16, 2011, a majority of the Company's shareholders approved an amendment to our Articles of Incorporation to increase the authorized number of shares of our common stock from 1,000,000,000 shares to 3,000,000,000 shares par value of $0.001. This amendment was not filed with the Nevada Secretary of State.

On June 4, 2012 the Board of Directors approved an amendment to our Articles of Incorporation to a reverse split of the issued and outstanding shares of Common Stock of the Corporation (“Shares”) such that each holder of Shares as of the record date of June 4, 2012 shall receive one (1) post-split Share on the effective date of June 4, 2012 for each three hundred (300) Shares owned. The reverse split was effective on July 23, 2012. On September 28, 2012, we held a special meeting of Avalon’s shareholders and approved an amendment to the Company’s Articles of Incorporation such that the Company would be authorized to issue up to 200,000,000 shares of common stock. We filed this amendment with the Nevada Secretary of State on April 10, 2013.

The Company is currently in the process of raising funds to acquire oil and gas properties and related oilfield technologies, which the Company plans to develop into commercial applications.

On November 9, 2006, the Company purchased all the outstanding shares of Intelli-Well Technologies, Inc. (IWTI) from Innovaro Corporation for 20,000,000 shares of the Company's common stock valued at $594,000. The shares were valued at the average sales price received in private placements for sales of restricted common stock for cash. ITWI became a wholly owned subsidiary of the Company as of the date of acquisition. IWTI holds a non-exclusive license in the United States for a borehole casing technology developed by the Regents of the University of California (the "Regents") through its researchers at Lawrence Livermore National Laboratory.

On September 22, 2007 the Company entered into an agreement with respect to its purchase of a 75.6% interest in Oiltek, Inc. (Oiltek) for $50,000 and the right of Oiltek to market Avalon's intellectual property. Oiltek is consolidated in these financial statements with a minority interest shown.

On October 10, 2013, the Company entered into a Technology Scouting Agreement with IP Technology Exchange, Inc. ("IP TechEx"), to identify potential technology acquisition and licensing opportunities. Our alliance with IP TechEx will enable us to develop a portfolio of new and innovative technologies.

On March 19, 2014, the Company formed Weyer Partners, LLC, a one hundred percent (100%) wholly owned a Minnesota Corporation. Weyer Partners, LLC, was formed to operate oil and gas properties in Oklahoma and Texas.

On May 9, 2014, the Company formed AFS Holdings, Inc., a one hundred percent (100%) wholly owned Nevada Corporation. AFS Holding, Inc., was formed to leverage the Company’s relationship with IP TechEx, and market technology licensed from IP TechEx.

On September 29, 2014 the Company acquired the assets of Kensington Energy Limited Partnership – 1985, Kensington Energy Limited Partnership – 1986, Kensington Energy Limited Partnership – 1987, Kensington Energy Company, Kensington Group Venture, Kensington Group Venture I, Kensington Group Venture II, and Kensington Group Venture III, for a combination of cash and debt.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Principles of consolidation

The consolidated financial statements include the accounts of the Company and The Company’s subsidiary’s Oiltek, Inc., Weyer Partners, LLC, and AFS Holdings, Inc. All significant inter-company items have been eliminated in consolidation.

Basis of Preparation of Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by Accounting Principles generally accepted accounting principles in United States America (“US GAAP”) for complete financial statements and related notes. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto for the year ended March 31, 2014.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the balance sheets of Avalon Oil and Gas Inc. and subsidiaries as of September 30, 2014 and the results of their operations for the three and six months ended September 30, 2014 and 2013, and cash flows for the six months ended September 30, 2014 and 2013 are not necessarily indicative of the results to be expected for the entire year.

Going Concern

The September 30, 2014, financial statements have been prepared assuming the Company will continue as a going concern. However, the Company has incurred a loss of $31,123,553 from inception through September 30, 2014, and has a working capital deficiency of $943,505 and stockholders’ equity of $1,151,372 as of September 30, 2014. The Company currently has minimal revenue generating operations and expects to incur substantial operating expenses in order to expand its business. As a result, the Company expects to incur operating losses for the foreseeable future. The Company will continue to seek equity and debt financing to meet our operating losses. The accompanying consolidated financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.

Basis of Accounting

The Company's financial statements are prepared using the accrual method of accounting. Revenues are recognized when earned and expenses when incurred.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash on deposit, certificates of deposit, money market accounts, and investment grade commercial paper that are readily convertible into cash and purchased with original maturities of three months or less. The Company maintains its cash balances at several financial institutions. Accounts at the institutions are insured by the Federal Deposit Insurance Corporation up to $250,000.

Fair Value of Financial Instruments

The Company's financial instruments are cash and cash equivalents, accounts receivable, accounts payable, notes payable, notes receivable and long-term debt. The recorded values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values based on their short-term nature. The recorded values of notes payable, notes receivable and long-term debt approximate their fair values, as interest approximates market rates.

Accounts Receivable

Management periodically assesses the collectability of the Company's accounts receivable. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company had an allowance of $133,428 and $136,873 for accounts receivable from the joint working interests, respectively as of September 30, 2014 and March 31, 2014.

Oil and Natural Gas Properties

The Company follows the full cost method of accounting for natural gas and oil properties. Under the full cost concept, all costs incurred in acquiring, exploring, and developing properties cost center are capitalized when incurred and are amortized as mineral reserves in the cost center are produced, subject to a limitation that the capitalized costs not exceed the value of those reserves. The unamortized costs relating to a property that is surrendered, abandoned, or otherwise disposed of are accounted for as an adjustment of accumulated amortization, rather than as a gain or loss that enters into the determination of net income, until all of the properties constituting the amortization base are disposed of, at which point gain or loss is recognized. All acquisition, exploration, and development costs are capitalized. The Company capitalizes all internal costs, including: salaries and related fringe benefits of employees directly engaged in the acquisition, exploration and development of natural gas and oil properties, as well as other identifiable general and administrative costs associated with such activities. During the three month and six month periods ended September 30, 2014 and 2013, no acquisition costs were capitalized. Oil and natural gas properties are reviewed for recoverability at least annually or when events or changes in circumstances indicate that its carrying value may exceed future undiscounted cash inflows. As of September 30, 2014 and March 31, 2014, the Company had not identified any such impairment.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Other Property and Equipment

Other property and equipment is reviewed for recoverability when events or changes in circumstances indicate that its carrying value may exceed future undiscounted cash inflows. As of September 30, 2014 and 2013, the Company had not identified any such impairment. Repairs and maintenance are charged to operations when incurred and improvements and renewals are capitalized.

Other property and equipment are stated at cost. Depreciation is calculated using the straight-line method for financial reporting purposes and accelerated methods for tax purposes.

Their estimated useful lives are as follows:

Office Equipment: 5-7 Years

Vehicles: 5 years

Asset Retirement Obligations

In accordance with the provisions of Financial Accounting Standards Board “FASB” Accounting Standard Codification “ASC” 410-20-15, “Accounting for Asset Retirement Obligations”, the Company records the fair value of its liability for asset retirement obligations in the period in which it is incurred and a corresponding increase in the carrying amount of the related long live assets. Over time, the liability is accreted to its present value at the end of each reporting period, and the capitalized cost is depreciated over the useful life of the related assets. Upon settlement of the liability, the Company will either settle the obligation for its recorded amount or incur a gain or loss upon settlement. The Company's asset retirement obligations relate to the plugging and abandonment of its oil properties.

Intangible Assets

The cost of licensed technologies acquired is capitalized and will be amortized over the shorter of the term of the licensing agreement or the remaining life of the underlying patents.

The Company evaluates recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that intangible assets carrying amount may not be recoverable. Such circumstances include, but are not limited to: (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of cost significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the assets against the estimated undiscounted future cash flows associated with it.

There was not any impairment loss for the six months ended September 30, 2014 and 2013.

Should the sum of the expected cash flows be less than the carrying amount of assets being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying amount of the assets, exceed fair value. Estimated amortization of intangible assets over the next five years is as follows:

September 30,
2014	$	21,294
2015		42,584
2016		10,644
	$	74,522

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Stock Based Compensation

The Company records share-based compensation expense for awards granted to non-employees in exchange for services at fair value in accordance with the provisions of ASC 505-50, "Equity based" payment to non-employees. For the awards granted to non-employees, the Company will record compensation expenses equal to the fair value of the share options at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date.

Warrants

The value of warrants issued is recorded at their fair values as determined by use of a Black Scholes Model at such time or over such periods as the warrants vest.

Loss per Common Share

ASC 260-10-45, “Earnings Per Share”, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. When the company is in loss position, no dilutive effect is considered.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10-25, “Accounting for Uncertainty in Income Taxes”, is intended to clarify the accounting for uncertainty in income taxes recognized in a company's financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Under ASC 740-10-25, evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Revenue Recognition

In accordance with the requirements ASC topic 605 "Revenue Recognition", revenues are recognized at such time as (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the seller's price to the buyer is fixed or determinable and (4) collectability is reasonably assured. Specifically, oil and gas sales are recognized as income at such time as the oil and gas are delivered to a viable third party purchaser at an agreed price. Interest income is recognized as it is earned.

Long-Lived Assets

Equipment is stated at acquired cost less accumulated depreciation. Office equipment is depreciated on the straight-line basis over the estimated useful lives (five to seven years).

Impairment of long-lived assets is recognized when events or changes in circumstances indicate that the carrying amount of the asset or related group of assets may not be recoverable. If the expected future undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized at that time. Measurement of impairment may be based upon appraisal, market value of similar assets or discounted cash flows. There was no impairment for the three and six months ended September 30, 2014 and 2013.

Recently Issued Accounting Pronouncements

As of May 14, 2015, The FASB has issued up to ASU 2015-07, which are not expected to have a material impact on the consolidated financial statements upon adoption.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

NOTE 2: RECEIVABLE FROM JOINT INTERESTS

The Company is the operator of certain wells acquired in the Expanded Bedford Agreement (see note 4). Pursuant to a joint interest operating agreement (the “Joint Interest Agreement”), the Company charges the other owners of the Grace Wells for their pro-rata share of operating and work over expenses. These receivables are carried on the Company’s balance sheet as Receivable from Joint Interests. At September 30, 2014 and March 31, 2014 the Company deemed the collectability of the receivable from joint interests in the amount of $133,428 and 136,872 as unlikely.

NOTE 3: INTELLECTUAL PROPERTY RIGHTS

A summary of the intellectual property rights at September 30, 2014 and March 31, 2014, are as follows:

	September 30, 2014			March 31, 2014
	(Unaudited)
Ultrasonic Mitigation Technology	$	425,850		$	425,850
Less: accumulated amortization		(351,328	)		(330,035	)
Total	$	74,522		$	95,815

Amortization expense for the three and six months ended September 30, 2014 and 2013 was $10,646 and $21,294 respectively.

NOTE 4: OIL AND GAS PROPERTY ACTIVITY

The table below shows the Company’s working interests in the Grace Wells as of September 30, 2014. There were not any additional acquisitions during the three and nine month periods ended September 30, 2014.

Well	Working Interest
Grace #1		65.25	%
Grace #2		55.75	%
Grace #3		64.00	%
Grace #5A		52.00	%
Grace #6		58.00	%

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

NOTE 4: OIL AND GAS PROPERTY ACTIVITY (Continued)

Producing oil and gas properties consist of the following at September 30, 2014 and March 31, 2014:

	September 30, 2014			March 31, 2014
	(Unaudited)
Lincoln County, Oklahoma	$	111,402		$	111,402
Other properties, net		1,125,676			1,005,676
Asset retirement obligation		39,124			40,572
Property impairments		(481,072	)		(481,072	)
Less: Depletion		(543,774	)		(527,101	)
Net	$	251,356		$	149,477

NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following:

	September 30, 2014		March 31, 2014
	(Unaudited)
Accounts payable	$	381,917	$	375,272
Accrued liabilities		223,229		204,264
Total	$	605,146	$	579,536

NOTE 6: NOTES PAYABLE

Notes Payable are summarized as follows:

	September 30, 2014		March 31, 2014
	(Unaudited)
Notes payable - long-term portion	$	0	$	514,300
Notes payable - current portion		524,300		0
Total	$	524,300	$	514,300

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

NOTE 7: RELATED PARTY TRANSACTIONS

Preferred Stock

The 100 shares of Series A Preferred Stock, issued to an officer/director as payment for $500,000 in promissory notes, are convertible into the number of shares of common stock sufficient to represent forty percent (40%) of the fully diluted shares outstanding after their issuance. The Series A Preferred Stock pays an eight percent (8%) dividend. The dividends are cumulative and payable quarterly. The Series A Preferred Stock carries liquidating preference, over all other classes of stock, equal to the amount paid for the stock plus any unpaid dividends. The Series A Preferred Stock provides for voting rights on an "as converted to common stock" basis.

During the three and six months ended September 30, 2014 and 2013, the Company incurred $10,000 and $20,000 in Series A preferred stock dividends, paid $6,500 and $12,300 for the three months ended September 30, 2014 and 2013, and paid $ 25,500 and $24,300 for the six months ended September 30, 2014 and 2013. As of September 30, 2014 and March 31, 2014, the accrued balance due Mr. Rodriguez was $36,450 and 41,950 respectively.

The holders of the Series A Preferred Stock have the right to convert each share of preferred stock into a sufficient number of shares of common stock to equal 40% of the then fully-diluted shares outstanding. Fully diluted shares outstanding is computed as the sum of the number of shares of common stock outstanding plus the number of shares of common stock issuable upon exercise, conversion or exchange of outstanding options, and warrants. In the event that the Company does not have an adequate number of shares of Common Stock authorized, upon a conversion request, only the maximum allowable number of shares of Series A preferred stock shall convert into Common Stock and the remaining shares of Series A preferred Stock shall convert upon lapse of the applicable restrictions.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended September 30, 2014 and 2013

(Unaudited)

Employment Agreements

KENT RODRIGUEZ

In 2009, Mr. Rodriguez, our President, was under an employment agreement dated April 1, 2008 that expires on March 31, 2016, pursuant to which he was compensated at an annual rate of $120,000. On April 1, 2011 Mr. Rodriguez voluntarily reduced his compensation to an annual rate of $48,000, subject to an increase by the Company’s Board of Directors. The Company charged to operations the amount of $12,000 and $24,000 for the three and six month periods ended September 30, 2014 and 2013, of which $10,950 and $22,450 was paid to him during the three month and six month periods ending September 30, 2014, and $10,800 and $19,800 during the three and six month periods ending September 30, 2013 respectively. As of September 30, 2014, and March 31, 2014, the balances of accrued and unpaid salaries were $209,367 and $207,817.

NOTE 8: INCOME TAXES

Deferred income taxes result from the temporary difference arising from the use of accelerated depreciation methods for income tax purposes and the straight-line method for financial statement purposes, and an accumulation of New Operating Loss carry-forwards for income tax purposes with a valuation allowance against the carry-forwards for book purposes.

In assessing the value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in deferred tax assets are Federal and State net operating loss carry forwards of approximately $31,123,553, which will expire beginning in 2028. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon our cumulative losses through September 30, 2014, we have provided a valuation allowance reducing the net realizable benefits of these deductible differences to $0 at September 30, 2014. The amount of the deferred tax asset considered realizable could change in the near term if projected future taxable income is realized. Due to significant changes in the Company's ownership, the Company's future use of its existing net operating losses may be limited.

NOTE 9: STOCKHOLDERS' EQUITY

Series A Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.10 per share. As of September 30, 2014, the Company has 100 shares of Series A preferred stock issued and outstanding.

During the three and six months September 30, 2014 and 2013, the Company incurred $10,000 and $20,000 respectively in Series A preferred stock dividends, and paid $6,500 and $12,300 for the three months ended September 30, 2014 and 2013 respectively, and paid $ 25,500 and $24,300 for the six months ended September 30, 2013 and 2012 respectively. As of September 30, 2014 and March 31, 2014, the accrued balance due Mr. Rodriguez was $36,450 and 41,950 respectively.

The 100 shares of Series A Preferred Stock, issued to an officer/director as payment for $500,000 in promissory notes, are convertible into the number of shares of common stock sufficient to represent 40 percent (40%) of the fully diluted shares outstanding after their issuance. The Series A Preferred Stock pays an eight percent (8%) dividend. The dividends are cumulative and payable quarterly. The Series A Preferred Stock carries liquidating preference, over all other classes of stock, equal to the amount paid for the stock plus any unpaid dividends. The Series A Preferred Stock provides for voting rights on an "as converted to common stock" basis.

The holders of the Series A Preferred Stock have the right to convert the preferred stock into shares of common stock such that if converted simultaneously, they shall represent forty percent (40%) of the fully diluted shares outstanding after their issuance. Fully diluted shares outstanding is computed as the sum of the number of shares of common stock outstanding plus the number of shares of common stock issuable upon exercise, conversion or exchange of outstanding options, warrants, or convertible securities.

Series B Preferred Stock

In March, 2013, our Board of Directors authorized the issuance of 2,000 shares of Series B Preferred Stock (the "Series B Preferred Stock"). The face amount of share of the Series B Preferred Stock is $1,000. As of September 30, 2014, the Company has 1,525 shares of Series B preferred stock issued and outstanding.

The Series B Preferred Stock accrues dividends at the rate of nine percent (9%) per annum on the original purchase price for the shares. These dividends are payable annually on April 1. We are prohibited from paying any dividends on our Common Stock until all accrued dividends are paid on our Series B Preferred Stock. The Series B Preferred Stock ranks junior to the Series A Preferred Stock owned by our President and Chief Executive Officer, as to Dividends and to a distribution of assets in the event of a liquidation of assets.

The Holders of Series B Preferred Stock do not have any voting rights and their consent is not required to take any sort of corporate action.

During the three month period ended September 30, 2014, the Company issued 175 shares of Series B Preferred Stock to one accredited investor for 175,000.

During the six month period ended September 30, 2014, the Company issued 50 shares of Series B Preferred Stock to one accredited investor in exchange for a note payable in the amount of $50,000.

During the three month periods ended September 30, 2014 and 2013, the Company incurred $30,377 and $4,000 in dividends and $44,973 and $7,780 for the six month periods ended September 30, 2013 and 2014, respectively on Series B preferred stock. The Company did not pay any dividends for the three month periods ended September 30, 2014 and 2013 and paid 16,000 and $ 3,780 in dividends for the six month period September 30, 2014 and 2013 respectively.

Total dividends payable from both A and B preferred shares at September 30, 2014 and March 31, 2014 were $106,203 and $66,730 respectively.

Common Stock

On April 25, 2014, the Company issued 200,000 shares of Common Stock to a consultant, the value of these shares in the amount of $14,000, or $0.02 per share was charged to operations, and was valued at closing bid price of the Company's common stock on the date the Consulting Agreement was executed by the Company.

There are no stock options outstanding.

AVALON OIL & GAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Three Month and six Periods Ended September 30, 2014 and 2013

(Unaudited)

Warrants

The following table summarizes the warrants outstanding and the related prices for the shares of the Company’s common stock issued to non-employees of the Company at September 30, 2014:

Warrants Outstanding

Warrants Exercisable

Weighted Average

Exercise

Number

Remaining Contractual

Weighted Average

Number

Remaining Contractual

Prices

Outstanding

Life (years)

Exercise Price

Exercisable

Life (years)

$ 600.00

167

0.25

$ 600.00

167

0.25

167

0.25

167

0.25

Transactions involving warrants are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at March 31, 2014		167	$	600.00
Granted		-		-
Exercised		-		-
Cancelled or expired		-		-
Outstanding at September 30, 2014		167	$	600.00

NOTE 10: EARNINGS PER SHARE

ASC 260-10-45 requires a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations. As the Company is in a loss position during the three and six month periods ended September 30, 2014 there is no dilutive effect included.

NOTE 11: COMMITMENTS AND CONTINGENCIES

Commitments and contingencies through the date of these financial statements were issued have been considered by the Company and none were noted which were required to be disclosed.

NOTE 12: SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the issuance of the consolidated financial statements and no subsequent event is identified.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and the notes related thereto. The discussion of results, causes and trends should not be construed to infer conclusions that such results, causes or trends necessarily will continue in the future.

Business Development

Acquisition Strategy

Our strategy is to acquire oil and gas producing properties that have proven reserves and established in-field drilling locations with a combination of cash, debt, and equity. We believe that acquisition of such properties minimizes our risk, allows us to generate immediate cash flow, and provides in-field drilling locations to expand production within the proven oil and gas fields. We will aggressively develop these low cost/low risk properties in order to enhance shareholder value. In addition, Avalon's technology group acquires oil production enhancing technologies. Through its strategic partnership with IP Technology Exchange, Inc., a transfer technology company, Avalon is building an asset portfolio of innovative.

In furtherance of the foregoing strategy, we have engaged in the following transactions during the last three years:

On July 1, 2013, the Company acquired a fifty percent (50%) working interest in the Moody and West Lease, Duval County, Texas.

On September 29, 2014 the Company acquired the assets of Kensington Energy Limited Partnership – 1985, Kensington Energy Limited Partnership – 1986, Kensington Energy Limited Partnership – 1987, Kensington Energy Company, Kensington Group Venture Kensington Group Venture I, Kensington Group Venture II, and Kensington Group Venture III for a combination of cash and debt.

We plan to raise additional capital during the coming fiscal year, but currently have not identified additional funding sources. Our ability to continue operations is highly dependent upon our ability to obtain additional financing, or generate revenues from our acquired oil and gas leasehold interests, none of which can be guaranteed.

Ultimately, our success is dependent upon our ability to generate revenues from our acquired oil and gas leasehold interests, and to achieve profitability, which is dependent upon a number of factors, including general economic conditions and the sustained profitability resulting from the operation of the acquired oil and gas leaseholds. There is no assurance that even with adequate financing or combined operations, we will generate revenues and be profitable.

PATENTS, TRADEMARKS, AND PROPRIETARY RIGHTS

On November 9, 2006, The Company acquired Intelli-Well Technologies, Inc., ("IWT"). IWT holds a license for borehole casing technology developed by researchers at Lawrence Livermore National Laboratory.

On August 16, 2007, Kent Rodriguez, the Company's President and CEO, presented a proposal to the Board of Directors to spin-off Oiltek Inc. ("Oiltek"), which specializes in oil and gas recovery technology to Avalon's shareholders. The oil and gas technology include, but are not limited, to the Patent; a system to detect hazardous gas leaks including small leaks in natural gas pipelines; and a system for intelligent drilling and completion sensors to provide real-time oil reservoir monitoring of subsurface information.

On September 22, 2007 the Company entered into an agreement with respect to its purchase of a 75.6% interest in Oiltek for $50,000 and the right of Oiltek to promote Avalon's intellectual property.

GOING CONCERN

Financing Activities

We have been funding our obligations through the issuance of our Common Stock for services rendered and for notes payable owed or for cash in private placements. The Company may seek additional funds in the private or public equity or debt markets in order to execute its plan of operation and business strategy. There can be no assurance that we will be able to attract capital or obtain such financing when needed or on acceptable terms in which case the Company's ability to execute its business strategy will be impaired.

Results of Operations

Three and six month periods ended September 30, 2014 compared to the three and six month periods ended September 30, 2013:

Revenues

Revenues for the three months ended September 30, 2014 were $38,433, a decrease of $1,524 or approximately 4% compared to revenue of $39,957 for the three months ended September 30, 2013. Revenues decreased as a result of a lower market price of oil.

Revenues for the six months ended September 30, 2013 were $62,934, an increase of $3,909 or approximately 7 % compared to revenue of $ 59,025 for the six months ended September 30, 2013. Revenues increased as a result of the higher market price for natural gas.

Lease Operating Expenses

During the three months ended September 30, 2014, our lease operating expenses were $19,246, a decrease of $19,547 or approximately 49% compared to $40,123 for the three months ended September 30, 2013. The decrease was due to less workover expenses incurred on the Company's properties in Miller County, Arkansas.

During the six months ended September 30, 2014, our lease operating expenses were $38,793, a decrease of $21,057 or approximately 35% compared to $59,850 for the six months ended September 30, 2013. The decrease was due to less workover expenses incurred on the Company's properties in Miller County, Arkansas.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2014 were $104,244, an increase of $6,312 or approximately 6% compared to selling, general and administrative expenses of $97,932 during the three months ended September 30, 2013. Selling, general and administrative expenses for the three months ended September 30, 2014 consisted primarily of payroll and related costs of $12,000; legal and accounting fees in the amount of $48,349; travel and entertainment expenses of $13,524; office expenses of $25,202; facilities costs in the amount of $3,000; and investor relations costs of $2,169.

Selling, general and administrative expenses for the six months ended September 30, 2014 were $177,680, an increase of $18,045 or approximately 11% compared to selling, general and administrative expenses of $159,635 during the six months ended September 30, 2013. Selling, general and administrative expenses for the six months ended September 30, 2014 consisted primarily of payroll and related costs of $24,000; legal and accounting fees in the amount of $53,769; travel and entertainment expenses of $40,489; office expenses of $50,461; facilities costs in the amount of $6,000; and investor relations costs of $2,961.

Stock Based Compensation

There was not any non-cash compensation for the three months ended September 30, 2014, compared to non-cash compensation of $43,001 for the three months ended September 30, 2013.

Non-cash compensation for the six months ended September 30, 2014 was $14,000, compared to non-cash compensation of $103,001 for the six months ended September 30, 2013, or a decrease of 89,001 or 86%. This decrease was due to less common stock issuances for services rendered during the six month period ended September 30, 2014.

Depreciation, Depletion, and Amortization

Depreciation, Depletion, and Amortization was $20,600 for the three months ended September 30, 2014, an increase of $3,980 or approximately 24% compared to $16,620 for the three months ended September 30, 2013. Depreciation increased as a result of the acquisition of the Kensington Energy Assets.

Depreciation, Depletion, and Amortization was $40,232 for the six months ended September 30, 2014, an increase of $9,186 or approximately 30% compared to $31,046 for the six months ended September 30, 2013. Depreciation increased as a result of the acquisition of the Kensington Energy Assets.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $10,717 for the three months ended September 30, 2014, a decrease of $13,979, or approximately 57% compared to $24,696 for the three months ended September 30, 2013.

Interest expense, net of interest income was $21,321 for the six months ended September 30, 2014, a decrease of $28,424 or approximately 57% compared to $49,745 for the six months ended September 30, 2013.

Net Loss

Our net loss for the three months ended September 30, 2014, was $116,374 a decrease of $105,291 or approximately 48% compared to a net loss of $221,665, during the three months ended September 30, 2013. The decrease was due to a decrease in stock based compensation and workover expenses incurred.

Our net loss for the six months ended September 30, 2014, was $218,992 a decrease of $172,410 or approximately 44% compared to a net loss of $391,402, during the six months ended September 30, 2013. The decrease was due to a decrease in stock based compensation and workover expenses incurred.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents were $164,720 on September 30, 2014, compared to $223,914 on March 31, 2014. We met our liquidity needs through the issuance of our common and preferred stock for cash and the revenue derived from our oil and gas operations.

We need to raise additional capital during the fiscal year, but currently have not acquired sufficient additional funding. Our ability to continue operations as a going concern is highly dependent upon our ability to obtain immediate additional financing, or generate revenues from our acquired oil and gas leasehold interest, and to achieve profitability, none of which can be guaranteed. Unless additional funding is located, it is highly unlikely that we can continue to operate. There is no assurance that even with adequate financing or combined operations, we will generate revenues and be profitable.

Ultimately, our success is dependent upon our ability to generate revenues from our acquired oil and gas leasehold interests.

Investing activities

During the six months ended September 30, 2014, we invested $113,572 and increase of $4,681 compared to the six months ended September 30, 2013.

Financing Activities

During the six months ended September 30, 2014, we received $ 175,000 from the sale of preferred stock, borrowed $60,000 and incurred dividends on preferred stock of $41,500. During the six months ended September 30, 2013 we received $300,000 from the sale of common stock and $50,000 from the sale of Series B Preferred Stock and incurred dividends on preferred stock of $24,300.

Operating activities

Critical Accounting Policies

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based on information available. These estimates and assumptions affect the reporting amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A summary of the significant accounting policies is described in Note 1 to the financial statements.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards or pronouncements, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Material Commitments

We have no material commitments during the next twelve (12) months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information has been omitted, as the Company qualifies as a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal executive and financial officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report (the "Evaluation Date"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure, and (ii) is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

There has been no change in our internal control over financial reporting identified during the period covered by this report which have materially affected or is likely to materially affect

PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ended June 30, 2014, The Company issued 50 shares of Series B Preferred Stock to one accredited investor in exchange for a note payable in the amount of $50,000.

During the three month period ended September 30, 2014, The Company issued 175 shares of Series B Preferred Stock to one accredited investor for $175,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Form 8-K

NONE

(b) Exhibits

Exhibit Number		Description

3.1		Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form SB-2, Registration No. 33-74240C).*
3.2		Restated Bylaws (Incorporated by reference to Exhibit 3.2 to Registration Statement on Form SB-2, Registration No. 33-74240C). *
3.3		Articles of Incorporation for the State of Nevada. (Incorporated by reference to Exhibit 2.2 to Form 10-KSB filed February 2000) *
3.4		Articles of Merger for the Colorado Corporation and the Nevada Corporation (Incorporated by reference to Exhibit 3.4 to Form 10-KSB filed February 2000) *
3.5		Bylaws of the Nevada Corporation (Incorporated by reference to Exhibit 3.5 to Form 10-KSB filed February 2000) *
4.1		Specimen of Common Stock (Incorporated by reference to Exhibit to Registration Statement on Form SB-2, Registration No. 33-74240C). *
10.1		Employment Agreement between the Company and Kent Rodriguez dated April 1, 2011 *
10.2		Promissory Note between the Company and Peter Messerli dated January 6, 2011, in the amount of $200.000 *
10.3		Promissory Note between the Company and Maerki Baumann & Company AG dated January 11, 2011, in the amount of $250,000 *
10.4		Promissory Note between the Company and Maerki Baumann & Company AG dated January 27, 2012, in the amount of $200,000 *
10.5		Certificate of Designation Series B Preferred Stock*
31.1		Certification
32.1		Certification

____________

* Incorporated by reference to a previously filed exhibit or report.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Avalon Oil & Gas, Inc.

Date: May 18, 2015	By:	/s/ Kent Rodriguez
		Kent Rodriguez
		Chief Executive Officer
		Chief Financial and Accounting Officer

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