FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-Q which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof); finding
suitable merger or acquisition candidates; expansion and growth of the Company's
business and operations; and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments, as well as other factors it
believes are appropriate under the circumstances. However, whether actual
results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, including general
economic, market and business conditions; the business opportunities (or lack
thereof) that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company.
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These forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "will," or similar terms. These
statements appear in a number of places in this Filing and include statements
regarding the intent, belief or current expectations of the Company, and its
directors or its officers with respect to, among other things: (i) trends
affecting the Company's financial condition or results of operations for its
limited history; (ii) the Company's business and growth strategies; and, (iii)
the Company's financing plans. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
significant risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements as a result of
various factors. Such factors that could adversely affect actual results and
performance include, but are not limited to, the Company's limited operating
history, potential fluctuations in quarterly operating results and expenses,
government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-Q are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
General Business Development
The Company was formed on September 26, 2013 in the State of Colorado.
Business Strategy
The Company was incorporated in September 2013. Our business model is to
purchase or trade stock for oil and gas properties to be held as long-term
assets. Oil and gas commodity pricing has stabilized under the current economic
market conditions bringing the U.S. to become one of the top the number one
producers in the world. The momentum to drill using enhanced drilling technology
in previously undeveloped areas assures the continued value of these properties.
Our lean operating structure positions us well to compete in this very
competitive market. Our strategy is to acquire producing properties that the
Company can operate which have proven un-drilled locations available for further
development. At this time the Company is reviewing several properties but have
no contractual commitments to date. Our management's years of experience and
knowledge of the oil and gas industry leads us to believe that there are an
abundance of good drilling prospects available that have either been overlooked
or are not big enough for the larger companies. In the process of identifying
these drilling prospects, the Company will utilize the expertise of existing
management and employ the highest caliber contract engineering firms available
to further evaluate the properties. To qualify for acquisition, the calculated
cash flow after taxes and operating expenses, including ten percent (10%)
interest per year, will recover the acquisition cost in 22 to 30 months. The
cash flow calculation will be based conservatively on $51 per barrel of oil and
$2.89 per MCF of gas. In addition, the selection criteria will require the life
of current producing wells to be 7 years or longer and the field must have a
minimum total life of 15 years.
The company is actively pursuing acquisition of additional properties in
Oklahoma, Texas and New Mexico.
Liquidity and Capital Resources
As of June 30, 2021, we had total current assets of $5,124 and total current
liabilities of $2,458,115.
The Company used $189,476 of cash in operating activities during the six months
ended June 30, 2021, compared to $62,607 used in operations during the same
period in 2020. Net cash used in operating activities during the six months
ended June 30, 2021 was mainly comprised of our $496,819 net loss during the
period, adjusted by a non-cash charges of $120,250 gain on settlement of
accounts payable, $5,099 for loss on change in fair value of derivative
liabilities, stock-based compensation of $111,000, amortization of debt
discounts of $2,754, write off of option contract associated with oil and gas
properties of $85,500, default interest added to note payable of $50,000, asset
retirement obligations expense of $38 and changes in operating assets and
liabilities of $173,202. Net cash used in operating activities during the six
months ended June 30, 2020 was mainly comprised of our $237,385 net loss during
the period, adjusted by a non-cash charges of $49,874 for gain on change in fair
value of derivative liabilities, $96,000 of stock compensation, amortization of
debt discounts of $10,179, asset retirement obligations expense of $38, gain on
extinguishment of debt of $10,750 and changes in operating assets and
liabilities of $129,185.
The Company used cash of $40,000 for investing activities during the six months
ended June 30, 2021 which consisted of a $40,000 deposit for oil and gas
properties.
The Company generated cash of $229,600 from financing activities during the six
months ended June 30, 2021 which consisted of $224,600 in proceeds from advances
from related parties and $5,000 in proceeds from the sale of common stock. The
Company generated cash of $67,894 from financing activities during the six
months ended June 30, 2020, which consisted of $70,000 in proceeds from the sale
of common stock, $3,000 in proceeds from convertible credit line related party
which was offset by $4,250 repayment on convertible credit line payable -
related party and $856 in repayments of short term advances related parties.
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Going Concern
The future of our company is dependent upon its ability to obtain financing and
upon future profitable operations. Management has plans to seek additional
capital through a private placement and public offering of its common stock, if
necessary. See Note 2 to the unaudited consolidated financial statements for
additional information.
Results of Operations
We generated revenues of $0 and $1,217 during the six months ended June 30, 2021
and 2020, respectively. Total operating expenses were $382,133 during the six
months ended June 30, 2021 compared to $273,629 during the same period in 2020.
The increase in operating expenses were due to an increase in general and
administrative expenses of $196,825, increase in professional fees of $31,929
which were offset by a gain on settlement of accounts payable of $120,250.
We generated revenues of $0 and $871 during the three months ended June 30, 2021
and 2020, respectively. Total operating expenses were $212,961 during the three
months ended June 30, 2020 compared to $142,328 during the same period in 2020.
The increase in operating expenses were due to an increase in general and
administrative expenses of $50,623 and an increase in professional fees of
$20,010.
Off-Balance sheet arrangements
As of June 30, 2021, we did not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.
Critical Accounting Policies
The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenue and expenses during the reported periods. Our
accounting policies are described in Note 1 to our audited consolidated
financial statements for 2020 appearing in our Annual Report on Form 10-K for
the year ended December 31, 2020.
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