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    PTCO   US71649B4005

PETROGAS COMPANY

(PTCO)
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PETROGAS : Management's Discussion and Analysis of Financial Condition or Plan of Operation (form 10-Q)

10/29/2020 | 11:35am EDT

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to shares of our common stock.

As used in this quarterly report, the terms "we", "us", "our" and "our company" means PetroGas Company, unless otherwise indicated.



Corporate Overview


We were incorporated under the name Alazzio Entertainment Corp. on January 24, 2014, under the laws of the State of Nevada. Our original business plan was to operate photo booth rentals.

On April 3, 2015, a change in control occurred by virtue of our company's largest shareholder, Dmitri Kapsumun selling 900,000 shares (split adjusted) of our common stock to Rise Fast Limited, a Hong Kong corporation. Such shares represented 71.77% of our total issued and outstanding shares of common stock. As part of the sale of the shares, Rise Fast Limited arranged with the resigning member of our company's Board of Directors, to appoint Mr. Huang Yu as the sole officer and director of our company.

On April 16, 2015, we filed a Certificate of Amendment with the Nevada Secretary of State (the "Nevada SOS") whereby we amended our Articles of Incorporation by increasing our authorized number of shares of common stock from 75 million to 300 million (not adjusted for the one (1) for one hundred (100) stock split) and increasing all of our issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. Our Board of Directors approved this amendment on April 15, 2015 and shareholders holding 71.77% of our issued and outstanding shares approved this amendment via a written consent executed on April 16, 2015.

Effective April 29, 2015 we changed our name to America Resources Exploration Inc. by way of a merger with our wholly-owned subsidiary, incorporated solely for the purpose of the change of name.

On June 10, 2015, we entered into an Asset Purchase Agreement with Zheng Xiangwu, a resident of Guang Dong Province, China, whereby we issued 40,000 million shares of its common stock in exchange for rights to certain oil and gas leases located in Frio and Atascosa Counties, Texas, consisting of a total of 714 total acres of land, two (2) working wells and a total of seven (7) wells (the "Leases"). The acquisition of the Leases pursuant to the Asset Purchase Agreement was completed on June 1, 2015. As a result of the completion of this acquisition, 40,000 shares of our company's common stock were issued to Mr. Zheng Xiangwu, who owns our company's largest shareholder, Rise Fast Limited. The number of shares issued to Mr. Zheng was determined by valuing the Leases at $160,000 and valuing our company's stock at $0.04 per share. At the completion of the Asset Purchase Agreement, we entered into the oil and gas industry.

On June 11, 2015, we entered into various assignment agreements with Mr. Zheng for the acquisition of multiple oil and gas leases and overriding royalty interests ("ORR's") as set out in the table below. From July 6, 2015 through July 9, 2015, we completed the acquisition of such oil and gas leases and ORR's, whereby we issued a total of 6,500 shares of our common stock to Mr. Zheng.

Assignment Date Name of The Property Type of Property Location

June 11th, 2015 Ellis County         Overriding Royalty Int. Oklahoma
June 11th, 2015 Hemphill County      Overriding Royalty Int. Texas
June 11th, 2015 Madison County       Wellbore Interest       Texas
June 11th, 2015 Shelby County        Wellbore Interest       Texas
June 11th, 2015 Emergy County        Lease Purchase          Utah




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On August 13, 2015 we entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereby our company acquired a 78% net revenue interest in 200 acres located in Callahan County, Texas, and a 78% net revenue interest in 522 acres also located in Callahan County, Texas.

On January 20, 2016, we changed our name to PetroGas Company, by way of a merger with our wholly-owned subsidiary, incorporated solely for the purpose of the change of name. In addition, we amended our Articles of Incorporation for a reverse stock split by decreasing all of our issued and outstanding shares of common stock at a ratio one (1) new for one hundred (100) old shares of common stock. The reverse stock split was approved by our directors and shareholders holding 68.65% of our issued and outstanding shares of common stock on January 13, 2016 and the reverse stock split became effective with FINRA on March 7, 2016. The change of name resulted in a change of trading symbol to "PTCO".

On September 13, 2017, we filed a Certificate of Amendment with the Nevada Secretary of State whereby we amended our Articles of Incorporation by decreasing all of our issued and outstanding shares of common stock at a ratio of one (1) share for every one hundred (100) shares held. Our Board of Directors approved the Amendment on July 21, 2017 and Shareholders holding 75.95% of our company's shares approved the Amendment via written consent executed on July 21, 2017, with an effective date of October 5, 2017.

On February 20, 2019 a majority of our shareholders and our board of directors approved a resolution to effect a reverse stock split of our issued and outstanding shares of common stock on a one (1) new for 100 old basis. The reverse split was approved by FINRA with an effective date of March 19, 2019. As a result of the reverse split, our issued and outstanding shares of common stock decreased from 30,099,230 to 300,993 shares of common stock. Our authorized capital remained unchanged.

Our principal executive offices are located at 2800 Post Oak Boulevard, Suite 4100, Houston, Texas 77056. Our telephone number is (832) 899-8597.

We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.

We hold a 94% interest in Seabourn Oil Company, LLC, a Texas LLC.



CURRENT INVESTMENTS


On June 12, 2015, we acquired three (3) producing leases covering 714 acres situated in Atascosa and Frio Counties, Texas, located in the Eagle Ford Shale formation - the Jane Burns "C" ("Burns"), the Theo Rogers "C", and the Theo Rogers "A" & "D" ("Rogers") Leases. We acquired a 99.5% working interest (74.625% net revenue interest) in each lease.

The Burns and Rogers Leases provide exploration and production opportunities in the Kyote Field pay zone, very near the Eagle Ford Shale play with access to available rig crews and other vendor-servicers, due to their close proximity to San Antonio, Texas.

The Burns and Rogers Leases hold collectively seven (7) oil wells, but none of which are operating wells. Although our company's management and industry professionals believed at the time that they were acquired that our company could double or triple previous production on these wells, depressed oil prices indicate that the cost to bring these wells online an uneconomical venture.

On November 30, 2016, we acquired various royalty interests in Texas for $10,485. On December 14, 2016, we acquired two oil and gas leases in Ohio for $2,705. On January 1, 2017, our company acquired the lease for three oil and gas properties for $4,975.



Future Operations


We are actively seeking to acquire producing and non-producing leases that will allow us to explore and drill in high-profile pay zones.




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We intend to raise capital at a low cost from private placements so that we may acquire numerous additional leases, and to commence drilling, and taking advantage of the inevitable uptick in oil prices to come.

In the current climate, our company believes that there are a very large number of oil & gas leases under distress due to the depressed gas prices and that we can strategically position our company to acquire as many of these leases as possible at a discount to market value, hence creating shareholder value.

We are planning an exploration strategy to drill new wells on the current Leases, as well as acquire deeper rights in order to drill some of the wells at great depths. We expect that reservoirs at those depths could yield a very high daily output of oil.




Results of Operations



We have earned limited royalty revenues since inception.




Three months ended September 30, 2020 compared to three months ended September
30, 2019



                      Three Months       Three Months
                         Ended              Ended
                      September 30       September 30
                          2020               2019          Changes

Operating Expenses   $        4,500     $       11,550     $ (7,050 )
Other Expenses       $       22,841     $       27,110     $ (4,269 )
Net Loss             $      (27,341 )   $      (38,660 )   $ 11,319



Our operating expenses for the three months ended September 30, 2020 decreased to $4,500 from $11,550 for the three months ended September 30, 2019.

Other expenses for the three months ended September 30, 2020 was $22,841 as compared to $27,110 incurred during the three months ended September 30, 2019 related to note interest expense and amortization of note discount.




Six months ended September 30, 2020 compared to six months ended September 30,
2019



                      Six Months         Six Months
                         Ended             Ended
                     September 30       September 30
                         2020               2019           Changes

Royalty Revenue      $           -     $          166     $    (166 )
Operating Expenses   $      12,463     $      103,613     $ (91,150 )
Other Expenses       $      53,231     $       51,124     $   2,107
Net Loss             $     (65,694 )   $     (154,571 )   $  88,877



Revenue for the six months ended September 30, 2020 was $0 compared to $166 for the six months ended September 30, 2019. Revenue was comprised of royalty revenue.

Our operating expenses for the six months ended September 30, 2020 decreased to $65,694 from $154,571 for the six months ended September 30, 2019. During the six months ended September 30, 2019, our company incurred stock based compensation of $90,000 for issuance of common shares to our President for management services.




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Other expenses for the six months ended September 30, 2020 was $53,231 as compared to $51,124 incurred during the six months ended September 30, 2019 related to note interest expense and amortization of note discount.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of September 30, 2020 and March 31, 2020, respectively.



Working Capital



                                   As of            As of
                                September 30      March 31,
                                    2020             2020         Changes

Current Assets                 $            -     $        -     $       -
Current Liabilities            $      365,373     $  314,563     $  50,810
Working Capital (Deficiency)   $     (365,373 )   $ (314,563 )   $ (50,810 )




Cash Flows



                                              Six Months        Six Months
                                                 Ended             Ended
                                             September 30      September 30
                                                 2020              2019           Changes

Net cash used in Operating Activities $ (14,884 ) $ (17,113 ) $ 2,229 Net cash used in Investing Activities $

           -     $           -     $       -

Net cash provided by Financing Activities $ 14,884 $ 16,726 $ (1,842 ) Net (decrease) increase in cash and cash equivalents

                                  $           -     $        (387 )   $     387




As of September 30, 2020, we had bank indebtedness of $322 and a working capital deficiency of 365,373 as compared to bank indebtedness of $322 and a working capital deficiency of $314,563 as of March 31, 2020.

Cash Flow from Operating Activities

For the six months ended September 30, 2020, we used $14,884 of cash for operations primarily as a result of the net loss of $65,694, decreased by non-cash expense of $24,308 for amortization of debt discount and a net change in working capital of $26,502.

For the three months ended September 30, 2019, we used $17,113 of cash for operations primarily as a result of the net loss of $154,571, decreased by non-cash expense of $33,862 for amortization of debt discount and $90,000 for stock based compensation and a net change in working capital of $13,596.

Cash Flow from Investing Activities

We did not use any funds for investing activities during the six months ended September 30, 2020 and September 30, 2019.




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Cash Flow from Financing Activities

For the six months ended September 30, 2020 and September 30, 2019, we had $14,884 and $16,726 in net cash provided by financing activities for cash proceeds from issuance of convertible promissory notes, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 - - -
Net income 2021 -0,12 M - -
Net Debt 2021 0,31 M - -
P/E ratio 2021 -14,7x
Yield 2021 -
Capitalization 0,01 M 0,01 M -
EV / Sales 2020 56 461x
EV / Sales 2021 -
Nbr of Employees -
Free-Float 16,3%
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