GALLAGHER, BRIODY & BUTLER
COUNSELLORS AT LAW
PRINCETON FORRESTAL VILLAGE
155 VILLAGE BOULEVARD
2ND FLOOR
THOMAS P. GALLAGHER PRINCETON, NEW JERSEY 08540 NEW YORK OFFICE
KEVIN M. BRIODY+ _________ 300 PARK AVENUE
JOHN K. BUTLERO 17TH FLOOR
BARBARA J. COMLY*+ (609) 452-6000 NEW YORK, NY 10022
MARTIN J. CONROY FAX: (609) 452-0090 212-938-0831
DEBORAH L. CARROLL# FAX: 212-938-0917
JONATHAN M. GRISCHUK*
HERBERT P. MOORE, JR.* * ALSO ADMITTED IN NY
+ ALSO ADMITTED IN PA
o ALSO ADMITTED IN DC
# ADMITTED IN NY, DC
AND CT ONLY
October 20, 2008
VIA FACSIMILE (202) 772-9369
Ms. Joanna Lam
Staff Accountant
United States Securities and Exchange Commission
Division of Corporate Finance
100 F Street, N.E.
Washington, D.C. 20549-7010
RE: GULF COAST OIL & GAS, INC.
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2007
FILE NO. 000-32747
Dear Ms. Lam:
As discussed with you earlier today, on behalf of Gulf Coast Oil & Gas,
Inc. (the "Company") attached please find a blacklined version of selected pages
from the Company's Form 10-KSB/A for the Year Ended December 31, 2007 showing
the Company's proposed revisions to its report in response to our conversations.
Please advise whether these changes would address the Commission's comments. If
so, the Company will go ahead and file via EDGAR an amended Form 10-KSB for the
Year Ended December 31, 2007 with these changes incorporated.
Please do not hesitate to contact me at (609) 452-6000.
Very truly yours,
/s/ Herbert P. Moore, Jr.
-------------------------
Herbert P. Moore, Jr.
CC: Rahim Rayani, President & CEO (via email)
EXPLANATORY NOTE
Gulf Coast Oil & Gas, Inc. ("we" or the "Company") is filing this Amendment No.
2 to its annual report on Form 10-KSB for the year ended December 31, 2007 to
amend our disclosure in Item 8A Controls and Procedures. As required by Rule
13a-15 or 15d-15 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), our Chief Executive Officer/Chief Financial Officer carried out
an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rule 13a-15(e) or 15d-15(e) under the
Exchange Act as of the end of the period covered by this report. Based on the
foregoing evaluation, we initially concluded that our disclosure controls and
procedures were effective. However, after reviewing a comment letter from the
SEC dated July 21, 2008 and subsequent discussions with the SEC Division of
Corporation Finance staff, we realized that we failed to disclose management's
assessment of internal control over financial reporting in our annual report on
Form 10-KSB for the year ended December 31, 2007 filed with the SEC on April 15,
2008. Therefore, we subsequently amended our annual report on Form 10-KSB for
the year ended December 31, 2007 to enhance our disclosure regarding disclosure
controls and procedures and to include disclosure about management's assessment
of internal control over financial reporting. Due to this earlier omission, we
now conclude that our controls and procedures were not effective as of December
31, 2007.
PART I
This report on Form 10-KSB/A-2 contains "forward-looking statements". These
statements involve important known and unknown risks, uncertainties and other
factors and can be identified by phrases using "estimate," "anticipate,"
"believe," "project," "expect," "intend," "predict," "potential," "future,"
"may," "should" and similar expressions or words. Our future results,
performance or achievements may differ materially from the results, performance
or achievements discussed in the forward-looking statements. There are numerous
factors that could cause actual results to differ materially from the results
discussed in forward-looking statements, including changes in existing laws or
the introduction of new laws, regulations or policies (including environmental
regulations) that could increase the cost of oil and gas exploration and
extraction, fluctuations in the market price of oil and gas, advances in
technology that may reduce dependence on oil and gas as a source of energy, and
other risk factors detailed in this report and in our other SEC filings. This
list provides examples of factors that could affect the results described by
forward-looking statements contained in this Form 10-KSB/A-2. However, this list
is not intended to be exhaustive; many other factors could impact our business
and it is impossible to predict with any accuracy which factors could result in
which negative impacts. Although we believe that the forward-looking statements
contained in this Form 10-KSB/A-2 are reasonable, we cannot provide you with any
guarantee that the anticipated results will be achieved. All forward-looking
statements in this Form 10-KSB/A-2 are expressly qualified in their entirety by
the cautionary statements contained in this section and you are cautioned not to
place undue reliance on the forward-looking statements contained in this Form
10-KSB/A-2. In addition to the risks listed above, other risks may arise in the
future, and we disclaim any obligation to update information contained in any
forward-looking statement.
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
We are an exploration stage company engaged in the oil and gas exploration
business in the continental United States. We expect that the majority of our
initial projects will have a comparatively lower risk profile in order to
increase our chances of obtaining positive cash flow in the near term. However,
we may also seek to acquire interests in riskier projects that have the
potential of developing into major oil or gas fields, and will consider
acquiring an interest
OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE
SIGNIFICANTLY.
There has been a limited public market for our common stock and there can be
no assurance that an active trading market for our common stock will
develop. An absence of an active trading market could adversely affect our
shareholders' ability to sell our common stock in short time periods, or
possibly at all. Our common stock has experienced, and is likely to
experience in the future, significant price and volume fluctuations that
could adversely affect the market price of our common stock without regard
to our operating performance. In addition, we believe that factors such as
quarterly fluctuations in our financial results and changes in the overall
economy or the condition of the financial markets could cause the price of
our common stock to fluctuate substantially.
OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK", WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS.
Our common stock is deemed to be "penny stock" as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These
requirements may reduce the potential market for our common stock by
reducing the number of potential investors. This may make it more difficult
for investors in our common stock to sell shares to third parties or to
otherwise dispose of them. This could cause our stock price to decline.
Penny stocks are stock:
o with a price of less than $5.00 per share;
o that are not traded on a "recognized" national exchange;
o whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ-listed stocks must still have a price of not less than $5.00
per share); or
o in issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$5.0 million (if in continuous operation for less than three years),
or with average revenues of less than $6.0 million for the last three
years.
Broker/dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny
stock is a suitable investment for a prospective investor.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our financial statements and supplementary data are attached hereto commencing
with Page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 8A. CONTROLS AND PROCEDURES
DISCUSSION OF CONTROLS AND PROCEDURES
As required by Rule 13a-15 or 15d-15 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), our Chief Executive Officer/Chief Financial
Officer carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15(e)
or 15d-15(e) under the Exchange Act as of the end of the period covered by this
report based upon criteria set forth in the Internal Control- Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on the foregoing evaluation, we initially concluded that our
disclosure controls and procedures are effective. However, after reviewing a
comment letter from the SEC dated July 21, 2008 and subsequent discussions with
the SEC Division of Corporation Finance staff, we realized that we failed to
disclose management's assessment of internal control over financial reporting in
our annual report on Form 10-KSB for the year ended December 31, 2007 filed with
the SEC on April 15, 2008. Therefore, we subsequently amended our annual report
on Form 10-KSB for the year ended December 31, 2007 to enhance our disclosure
regarding disclosure controls and procedures and to include disclosure about
management's assessment of internal control over financial reporting. Due to
this earlier omission, we now conclude that our controls and procedures were not
effective as of December 31, 2007.
Our management does not expect that our disclosure controls and procedures or
our internal control over financial reporting will necessarily prevent all fraud
and material error. Our disclosure controls and procedures are designed to
provide reasonable assurance of achieving our objectives. Further, the design of
a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. Our internal control over financial
reporting is designed to provide reasonable assurance regarding the (i)
effectiveness and efficiency of operations, (ii) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and (iii) compliance
with applicable laws and regulations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting based upon criteria set forth in the
Internal Control- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission is as of December 31, 2007. We now
believe that internal control over financial reporting was not effective as of
December 31, 2007 as a result of our inadequate disclosure but we identified the
material weaknesses and enhanced our disclosure in this 10-KSB/A-2.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permits us to provide only management's report in
this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial reporting
during the quarter ended December 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 8B. OTHER INFORMATION
None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning our directors and
executive officers as of the date hereof:
NAME AGE POSITION
- ----------------------- --- ----------------------------------------
Rahim Rayani 33 Chairman of the Board, Chief Executive
Officer and President
RAHIM RAYANI, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mr. Rayani has been the Chairman of the Board and Chief Executive Officer of the
Company since June of 2005. Since 2003, Mr. Rayani has worked independently,
providing management consulting and investment banking services to companies,
focusing on the oil and gas and resource mining sectors. From 2001 to 2003, Mr.
Rayani was an Investor Relations Executive with Mindshare Communications, Inc.,
where he managed investor relations services for companies in the mining, oil &
gas, and technology sectors.
Our directors hold office until the next annual meeting of our stockholders and
until their successors have been duly elected and qualified.
AUDIT COMMITTEE