UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2014
Commission file number 333-180164
American Oil & Gas Inc.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 99-0372611
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Suite 400 - 601 West Broadway
Vancouver, BC V5Z 4C2
(888) 609-1173
(Address of Principal Executive Offices, Zip Code & Telephone Number)
Resident Agents of Nevada
711 S. Carson Street #4
Carson City, NV 89701
Telephone (775)882-4641 Facsimile (775) 882-6818
(Name, Address and Telephone Number of Agent for Service)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of May 2, 2014, the registrant had 20,000,000 shares of common stock issued
and outstanding. No market value has been computed based upon the fact that no
active trading market had been established.
AMERICAN OIL & GAS INC.
TABLE OF CONTENTS
Page No.
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Part I
Item 1. Business 3
Item 1A. Risk Factors 10
Item 2. Properties 15
Item 3. Legal Proceedings 16
Item 4. Mine Safety Disclosures 16
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 17
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 19
Item 8. Financial Statements and Supplementary Data 21
Item 9A. Controls and Procedures 31
Part III
Item 10. Directors and Executive Officers 33
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 35
Item 13. Certain Relationships and Related Transactions 36
Item 14. Principal Accounting Fees and Services 37
Part IV
Item 15. Exhibits 38
Signatures 39
2
PART I
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this report and actual results may differ materially from historical
results or our predictions of future results.
ITEM 1. BUSINESS
GENERAL INFORMATION
We are an exploration stage company with no limited revenues and a short
operating history. Our independent auditor has issued an audit opinion which
includes a statement expressing substantial doubt as to our ability to continue
as a going concern.
We locate and lease existing wells for reactivation for the production of oil
and gas that we will then sell, through an operator, to oil and gas brokers and
gatherers. The gas sometimes may be sold directly to the public utility
companies.
We currently own a one hundred percent interest in a lease of forty acres
located in Caddo Parrish, Louisiana, there is currently one drilled well bore,
the Cecil Barlow #1, on the property.
Our focus for the current fiscal year will be on developing our existing
property, while continuing to pursue acquisition of additional leases and/or
existing oil and gas wells which have potential for production, if revenues
warrant.
EMERGING GROWTH COMPANY STATUS UNDER THE JOBS ACT
AO&G qualifies as an "emerging growth company" as defined in the Jumpstart our
Business Startups Act (the "JOBS Act").
The JOBS Act creates a new category of issuers known as "emerging growth
companies." Emerging growth companies are those with annual gross revenues of
less than $1 billion (as indexed for inflation) during their most recently
completed fiscal year. The JOBS Act is intended to facilitate public offerings
by emerging growth companies by exempting them from several provisions of the
Securities Act of 1933 and its regulations. An emerging growth company will
retain that status until the earliest of: o The first fiscal year after its
annual revenues exceed $1 billion;
* The first fiscal year after its annual revenues exceed $1 billion;
* The first fiscal year after the fifth anniversary of its IPO;
* The date on which the company has issued more than $1 billion in
non-convertible debt during the previous three-year period; and
* The first fiscal year in which the company has a public float of at
least $700 million.
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FINANCIAL AND AUDIT REQUIREMENTS
Under the JOBS Act, emerging growth companies are subject to scaled financial
disclosure requirements. Pursuant to these scaled requirements, emerging growth
companies may: o Provide only two rather than three years of audited financial
statements in their IPO Registration Statement;
* Provide only two rather than three years of audited financial
statements in their IPO Registration Statement;
* Provide selected financial data only for periods no earlier than those
included in the IPO Registration Statement in all SEC filings, rather
than the five years of selected financial data normally required;
* Delay compliance with new or revised accounting standards until they
are made applicable to private companies; and
* Be exempted from compliance with Section 404(b) of the Sarbanes-Oxley
Act, which requires companies to receive an outside auditor's
attestation regarding the issuer's internal controls.
OFFERING REQUIREMENTS
In addition, during the IPO offering process, emerging growth companies are
exempt from:
* Restrictions on analyst research prior to and immediately after the
IPO, even from an investment bank that is underwriting the IPO;
* Certain restrictions on communications to institutional investors
before filing the IPO registration statement; and
* The requirement initially to publicly file IPO Registration
Statements. Emerging growth companies can confidentially file draft
Registration Statements and any amendments with the SEC. Public
filings of the draft documents must be made at least 21 days prior to
commencement of the IPO "road show."
OTHER PUBLIC COMPANY REQUIREMENTS
Emerging growth companies are also exempt from other ongoing obligations of most
public companies, such as:
* The requirements under Section 14(i) of the Exchange Act and Section
953(b)(1) of the Dodd-Frank Act to disclose executive compensation
information on pay-for-performance and the ratio of CEO to median
employee compensation;
* Certain other executive compensation disclosure requirements, such as
the compensation discussion and analysis, under Item 402 of Regulation
S-K; and
* The requirements under Sections 14A(a) and (b) of the Exchange Act to
hold advisory votes on executive compensation and golden parachute
payments.
We received our initial funding of $10,000 through the sale of common stock to
Robert Gelfand who purchased 10,000,000 shares of our common stock at $0.001 per
share in January, 2012. On July 12, 2012, the Company completed its registered
offering raising $50,000 from the sale of 10,000,000 shares of common stock.
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We have a total of 75,000,000 authorized common shares with a par value of
$0.001 per share with 20,000,000 common shares issued and outstanding as of
January 31, 2014.
GENERAL INFORMATION ABOUT OUR CURRENT LEASE
ACQUISITION OF THE LEASE
On February 2, 2012 the Company signed an assignment agreement with Four Star
Oil Company of Oil City, Louisiana which transferred all the right title and
interest in an oil, gas and mineral lease between The Cecil and Annie Lou Barlow
Trust in favor of Four Star Oil Company recorded under Instrument No. 2026712,
covering and affecting the property described as: SE 1/4 of the NE 1/4 of
Section 6, Township 21 North, Range 15 West, Caddo Parish Louisiana. The
consideration for the assignment was $10.00. Concurrent with the assignment
agreement being signed the Company purchased for $10,000 the bore hole on the
Cecil Barlow #1 well that is located in the lease executed between Four Star Oil
Company and The Cecil and Annie Lou Barlow Trust. There are currently three
additional orphaned wells on the property that if we are successful with the
Cecil Barlow #1 well we could make application to secure the other wells for
production.
REQUIREMENTS OR CONDITIONS FOR RETENTION OF TITLE
The Cecil Barlow #1 lease will remain in force as long as the well is in
production. We are required to pay a 25% royalty on all revenue from the sale of
the oil. The gatherer of the oil from the site will make the payments directly
to The Cecil and Annie Lou Barlow Trust and the operator prior to forwarding the
remaining proceeds to the Company.
LOCATION, ACCESS, CLIMATE, LOCAL RESOURCES & INFRASTRUCTURE
Location: The property is located in the Caddo Pine Island Field which lies in
the northern part of Caddo Parish, Louisiana. The Caddo Pine Island Field is
flanked to the west by Caddo Lake and to the east by the Red River. Latitude:
32.89778, Longitude: -93.96389. The Cecil Barlow #1 well is located in the 40
acres of property described as: SE1/4of the NE1/4of Section 6, Township 21
North, Range 15 West, Caddo Parish Louisiana.
Access: Easy access to the property is available via existing roadways in the
area. The highway system in Caddo Parrish is vast and modern. The highway system
in nearby Shreveport, the largest city in the area, consists of The Outer Loop
Freeway Interstate 220 on the north and The Inner Loop Freeway, Louisiana
Highway 3132 on the south, forming approximately an 8-mile diameter semi-loop
around downtown. Another loop is formed by the Bert Kouns Industrial Loop, (LA
Hwy 526) and circles further south bisecting Interstate 49. Interstate 49 is
currently under constuction to extend to Hwy 549 in Arkansas.
Shreveport lies along the route of the proposed Interstate 69 North American
Free Trade Agreement (NAFTA) superhighway that will link Canada, the U.S.
industrial Midwest, Texas, and Mexico.
Climate: The area has a humid subtropical climate. Rainfall is abundant, with
the normal annual precipitation averaging nearly 47 inches, with monthly
averages ranging from less than 3 inches in August to more than 5 inches in May.
Severe thunderstorms with heavy rain, hail, damaging winds and tornadoes occur
in the area during the spring and summer months. The winter months are normally
mild, with an average of 35 days of freezing or below-freezing temperatures per
year, with ice and sleet storms possible. Summer months are hot and humid, with
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maximum temperatures exceeding 90 degrees an average of 91 days per year, with
high to very high relative average humidity, sometimes exceeding the 90 percent
level.
Local Resources & Infrastructure: The Town of Oil City, LA, located 3 miles from
the property, offers some of the necessary infrastructure required to base and
carry-out our proposed oil & gas program, (limited accommodations,
communications, some equipment and supplies). The independent operator, Four
Star Oil Company, who will carry out the rework and monthly maintenance on the
well, is located in Oil City. Larger or specialized equipment can be acquired in
the City of Shreveport, lying 25 miles to the south.
HISTORY
In 1906, the Caddo-Pine Island Field in northern Caddo Parish, Louisiana was
discovered, and a rush of leasing and drilling activity ensued. In 1908, the
first natural gas pipeline was constructed to transport gas from Caddo-Pine
Island to Shreveport, Louisiana. This was one of the earliest commercial uses of
natural gas, which was commonly viewed as an undesirable by-product of oil
production and often "flared" or burnt off at the well site.
Other innovations in the Caddo-Pine Island Field included the first over-water
oil platform, which was constructed in the field on Caddo Lake in 1910. In that
same year, a major oil pipeline was constructed from Caddo-Pine Island Field to
a refinery built and operated by Standard Oil Company of Louisiana in Baton
Rouge, Louisiana. The refinery continues to operate today.
The Caddo-Pine Island field is located approximately 15 miles north of the City
of Shreveport in Caddo Parish, La., and Marion County, Tex., which covers a
portion of the Ark-La-Tex Area. The discovery well in the Caddo-Pine Island
field was the Savage Bros. & Morrical No.1 Offenhauser, which was completed
March 28, 1905, in the Annona Chalk at a depth of 1,556 ft. The well was located
near Oil City, La. By the close of 1907 23 wells had been drilled -eight of
which produced oil, 11 produced gas, and four were abandoned. Development of the
field continued at a rapid pace during the following years, and by 1918 the
production reached a peak of 11 million bbl/year.
GEOLOGICAL SETTING
The Caddo Pine Island Field sits on top of the Subine uplift, which is the
stratigraphic uplift in Northern Louisiana. Due to the uplift many of the
formations on the top of it became excellent reservoir rock for hydrocarbons.
Impervious formations lying just above these called caprock cause traps that the
oil and gas accumulate up against under pressure. When these caprock formations
are drilled through and into the reservoir rock the pressure is then released
and will flow to the surface carrying oil and gas with it. Production has been
obtained from several horizons, ranging in depth from the Nacatoch sand at 800
ft to the Hosston or Travis Peak which is found at 2,500 ft near the crest of
the dome of the Lower Cretaceous beds.
DISTRIBUTION METHODS
We plan to distribute oil and gas that we produce through oil and gas gathering
companies with the gas sometimes being sold directly to public utility
companies. The operator, Four Star Oil Company, will make the arrangements with
the gathering companies.
If we do find a gas well for lease the distribution agreements for gas generally
provide for the company to tap into the distribution line of a gas distribution
company, and we would be paid for our gas at the market price at the time of
delivery less any transportation charge from the gas transmission company. These
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charges can range from 5% upward of the market value of the gas, depending on
the competition among transmission companies in the area of the wells.
COMPETITION
We operate in a highly competitive environment for acquiring properties,
modernizing existing wells and marketing oil and natural gas we may produce. The
majority of our competitors possess and employ financial, technical and
personnel resources substantially greater than ours, which can be particularly
important in the areas in which we plan to operate. Those companies may be able
to pay more for productive oil and natural gas properties and exploratory
prospects and to evaluate, bid for and purchase a greater number of properties
and prospects than our financial resources permit. Our ability to acquire
additional prospects and to find and develop reserves in the future will depend
on our ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. Also, there is substantial
competition for capital available for investment in the oil and natural gas
industry.
Current competitive factors in the domestic oil and gas industry are unique. The
actual price range of crude oil is largely established by major international
producers. Pricing for natural gas is more regional; however, more favorable
prices can usually be negotiated for larger quantities of oil and/or gas
product. In this respect, while we believe we have a price disadvantage when
compared to larger producers, we view our primary pricing risk to be related to
a potential decline in international prices to a level which could render our
production uneconomical.
We will be committed to use the services of the existing gathering companies in
our present area of production. This potentially gives such gathering companies
certain short-term relative monopolistic powers to set gathering and
transportation costs, because obtaining the services of an alternative gathering
company may require substantial additional costs.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATIONS, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
COMPLIANCE WITH GOVERNMENT REGULATION
REGULATION OF TRANSPORTATION OF OIL
Sales of crude oil, condensate and natural gas liquids are not currently
regulated and are made at negotiated prices. Nevertheless, Congress could
reenact price controls in the future.
Our sales of crude oil will be affected by the availability, terms and cost of
transportation. The transportation of oil in common carrier pipelines is also
subject to rate regulation. The Federal Energy Regulatory Commission, or the
FERC, regulates interstate oil pipeline transportation rates under the
Interstate Commerce Act. Intrastate oil pipeline transportation rates are
subject to regulation by state regulatory commissions. The basis for intrastate
oil pipeline regulation, and the degree of regulatory oversight and scrutiny
given to intrastate oil pipeline rates, varies from state to state.
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Insofar as effective interstate and intrastate rates are equally applicable to
all comparable shippers, we believe that the regulation of oil transportation
rates will not affect our operations in any way that is of material difference
from those of our competitors. Further, interstate and intrastate common carrier
oil pipelines must provide service on a non-discriminatory basis. Under this
open access standard, common carriers must offer service to all shippers
requesting service on the same terms and under the same rates. When oil
pipelines operate at full capacity, access is governed by pro-rationing
provisions set forth in the pipelines' published tariffs. Accordingly, we
believe that access to oil pipeline transportation services generally will be
available to us to the same extent as to our competitors.
REGULATION OF TRANSPORTATION AND SALE OF NATURAL GAS
Historically, the transportation and sale for resale of natural gas in
interstate commerce have been regulated pursuant to the Natural Gas Act of 1938,
the Natural Gas Policy Act of 1978 and regulations issued under those Acts by
the FERC. In the past, the federal government has regulated the prices at which
natural gas could be sold. While sales by producers of natural gas can currently
be made at uncontrolled market prices, Congress could reenact price controls in
the future.
Since 1985, the FERC has endeavored to make natural gas transportation more
accessible to natural gas buyers and sellers on an open and non-discriminatory
basis. The FERC has stated that open access policies are necessary to improve
the competitive structure of the interstate natural gas pipeline industry and to
create a regulatory framework that will put natural gas sellers into more direct
contractual relations with natural gas buyers by, among other things, unbundling
the sale of natural gas from the sale of transportation and storage services.
Although the FERC's orders do not directly regulate natural gas producers, they
are intended to foster increased competition within all phases of the natural
gas industry.
Intrastate natural gas transportation is subject to regulation by state
regulatory agencies. The basis for intrastate regulation of natural gas
transportation and the degree of regulatory oversight and scrutiny given to
intrastate natural gas pipeline rates and services varies from state to state.
Insofar as such regulation within a particular state will generally affect all
intrastate natural gas shippers within the state on a comparable basis, we
believe that the regulation of similarly situated intrastate natural gas
transportation in any states in which we may eventually operate and ship natural
gas on an intrastate basis will not affect our operations in any way that is of
material difference from those of our competitors.
REGULATION OF PRODUCTION
The production of oil and natural gas is subject to regulation under a wide
range of local, state and federal statutes, rules, orders and regulations.
Federal, state and local statutes and regulations require permits for drilling
operations, drilling bonds and reports concerning operations. All states, in
which we may operate in the future, have regulations governing conservation
matters, including provisions for the unitization or pooling of oil and natural
gas properties, the establishment of maximum allowable rates of production from
oil and natural gas wells, the regulation of well spacing, and plugging and
abandonment of wells. The effect of these regulations is to limit the amount of
oil and natural gas that can be produced from wells and to limit the number of
wells or the locations, although companies can apply for exceptions to such
regulations or to have reductions in well spacing. Moreover, each state
generally imposes a production or severance tax with respect to the production
and sale of oil, natural gas and natural gas liquids within its jurisdiction.
The failure to comply with these rules and regulations can result in substantial
penalties. Our competitors in the oil and natural gas industry are subject to
the same regulatory requirements and restrictions that affect our operations.
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SOURCE AND AVAILABILITY OF RAW MATERIALS
We have no significant raw materials. However, if we are successful in our plan
of operations we may make use of numerous oil field service companies. We
currently only have one well lease in Louisiana, where there are numerous oil
field service companies.
MAJOR CUSTOMERS
If we are successful in our plan of operation, we will principally sell our oil
and natural gas production through our operator to marketers and other
purchasers that have access to nearby pipeline facilities. Generally, in areas
where there is no practical access to pipelines, oil is trucked to storage
facilities. We believe that the loss of any of these oil and gas purchasers
would not materially impact our business, because we could readily find other
purchasers for our oil and gas as produced.
PATENTS, TRADEMARKS, FRANCHISES, ROYALTY AGREEMENTS OR LABOR CONTRACTS
We have no patents, trademarks, licenses, concessions, or labor contracts. We
will pay royalties to mineral owners and owners of overriding royalties on the
oil and gas leases. These royalties usually are 25%, as is the case with the
Cecil Barlow #1. The leases are good and royalties are owed as long as there is
production on the property.
ENVIRONMENTAL COMPLIANCE AND RISKS
Oil and natural gas exploration, development and production operations are
subject to stringent federal, state and local laws and regulations governing the
discharge of materials into the environment or otherwise relating to
environmental protection. Historically, most of the environmental regulation of
oil and gas production has been left to state regulatory boards or agencies in
those jurisdictions where there is significant gas and oil production, with
limited direct regulation by such federal agencies as the Environmental
Protection Agency. However, while we believe this generally to be the case for
our production activities in Louisiana, there are various regulations issued by
the Environmental Protection Agency ("EPA") and other governmental agencies that
would govern significant spills, blow-outs, or uncontrolled emissions.
In Louisiana, specific oil and gas regulations apply to the drilling, completion
and operations of wells, and the disposal of waste oil and salt water. There are
also procedures incident to the plugging and abandonment of dry holes or other
non-operational wells, all as governed by the applicable governing state agency.
At the federal level, among the more significant laws and regulations that may
affect our business and the oil and gas industry are: The Comprehensive
Environmental Response, Compensation and Liability Act of 1980, also known as
"CERCLA" or Superfund; the Oil Pollution Act of 1990; the Resource Conservation
and Recovery Act, also known as "RCRA"; the Clean Air Act; Federal Water
Pollution Control Act of 1972, or the Clean Water Act; and the Safe Drinking
Water Act of 1974.
Compliance with these regulations may constitute a significant cost and effort
for us. No specific accounting for environmental compliance has been projected
by us at this time. We are not presently aware of any environmental demands,
claims, or adverse actions, litigation or administrative proceedings in which
our acquired property is involved or subject to, or arising out of any
predecessor operations.
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In the event of a breach of environmental regulations, these environmental
regulatory agencies have a broad range of alternative or cumulative remedies
which include: ordering a clean-up of any spills or waste material and
restoration of the soil or water to conditions existing prior to the
environmental violation; fines; or enjoining further drilling, completion or
production activities. In certain egregious situations the agencies may also
pursue criminal remedies against us or our principal officers.
RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
We paid $10,000 for the lease on our current property.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
Our only employee is our sole officer, Robert Gelfand. Mr. Gelfand currently
devotes 2-4 hours per week to company matters and after receiving funding he
plans to devote as much time as the board of directors determines is necessary
to manage the affairs of the company. There are no formal employment agreements
between the company and our current employee.
REPORTS TO SECURITY HOLDERS
We voluntarily make available an annual report including audited financials on
Form 10-K to security holders. We file the necessary reports with the SEC
pursuant to the Exchange Act, including but not limited to, reports on Form 8-K
as necessary, annual reports on Form 10-K, and quarterly reports on Form 10-Q.
The public may read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other electronic information regarding the
Company and filed with the SEC at http://www.sec.gov.
ITEM 1A. RISK FACTORS
RISKS ASSOCIATED WITH OUR COMPANY
OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THEREFORE THERE IS SUBSTANTIAL
UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR
INVESTMENT.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an ongoing business for the next
twelve months. As such we may have to cease activities and you could lose your
investment.
WE LACK AN OPERATING HISTORY AND HAVE LOSSES WHICH WE EXPECT TO CONTINUE INTO
THE FUTURE. AS A RESULT, WE MAY HAVE TO SUSPEND OR CEASE ACTIVITIES.
We were incorporated in January 2012 and we have not started our proposed
business activities or realized any revenues. We have no operating history upon
which an evaluation of our future success or failure can be made. Our net loss
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was $61,580 from inception to January 31, 2014. Our ability to achieve and
maintain profitability and positive cash flow is dependent upon:
* our ability to locate a profitable oil & gas property
* our ability to generate revenues
* our ability to reduce operating costs
Based upon current plans, we expect to incur operating losses in future periods.
This will happen because there are expenses associated with the research and
reactivation of oil & gas properties. As a result, we may not generate revenues
in the future. Failure to generate revenues may cause us to suspend or cease
activities.
BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, WE MAY HAVE TO LIMIT OUR
ACQUISITION ACTIVITY WHICH MAY RESULT IN A LOSS OF YOUR INVESTMENT.
Because we are small and do not have much capital, we must limit our acquisition
activity. As such we may not be able to lease as many properties as we would
like. In that event, a profitable oil or gas reserve may go undiscovered.
Without producing wells we cannot generate revenues and you will lose your
investment.
WE WILL BE RELIANT UPON AN OUTSIDE OPERATOR TO REWORK THE WELLS AND MONITOR THE
DAY TO DAY OPERATION. IF THE OPERATOR FAILS TO CARRY OUT THE TERMS OF OUR
AGREEMENT OR WE LOSE THE SERVICES OF THE OPERATOR OUR BUSINESS MAY FAIL.
The re-working of our current well and monthly maintenance of the well once
production commences will be carried out by an independent operator, Four Star
Oil Company. We have an operating agreement in place with Four Star Oil Company,
however their failure to live up to the terms of the agreement or an outright
cancellation of the agreement could have an adverse effect on production and
future revenues, consequently our operations, earnings and ultimate financial
success may suffer irreparable harm as a result.
BECAUSE OUR SOLE OFFICER AND/OR DIRECTOR DOES NOT HAVE ANY FORMAL TRAINING
SPECIFIC TO THE TECHNICALITIES OF OIL AND GAS EXPLORATION, THERE IS A HIGHER
RISK OUR BUSINESS WILL FAIL.
Our sole officer and director is Robert Gelfand. Mr. Gelfand has no formal
training as a geologist or in the technical aspects of management of an oil and
gas company. His prior business experience has primarily been in venture capital
for development and start-up stage companies. With no direct training or
experience in these oil and gas industry, he may not be fully aware of the
specific requirements related to working within this industry. His decisions and
choices may not take into account standard engineering or managerial approaches
oil and gas companies commonly use. Consequently, our operations, earnings, and
ultimate financial success could suffer irreparable harm due to his lack of
experience in this industry.
BECAUSE OUR OFFICER AND DIRECTOR HAS OTHER OUTSIDE BUSINESS ACTIVITIES AND WILL
ONLY BE DEVOTING 5 TO 10% OF HIS TIME OR APPROXIMATELY TWO TO FOUR HOURS PER
WEEK TO OUR OPERATIONS, OUR OPERATIONS MAY BE SPORADIC WHICH MAY RESULT IN
PERIODIC INTERRUPTIONS OR SUSPENSIONS OF EXPLORATION.
Because our officer and director has other outside business activities and will
only be devoting 5 to 10% of his time or two to four hours per week to our
operations, our operations may be sporadic and occur at times which are
convenient to our officer and director. As a result our business plan may be
periodically interrupted or suspended.
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OUR DIRECTOR WILL CONTINUE TO EXERCISE SIGNIFICANT CONTROL OVER OUR OPERATIONS,
WHICH MEANS AS A MINORITY STOCKHOLDER, YOU WOULD HAVE NO CONTROL OVER CERTAIN
MATTERS REQUIRING STOCKHOLDER APPROVAL THAT COULD AFFECT YOUR ABILITY TO EVER
RESELL ANY SHARES YOU PURCHASE.
Our executive officer and director owns 50% of our common stock. He has
significant influence in determining the outcome of all corporate transactions,
including the election of directors, approval of significant corporate
transactions, changes in control of the company or other matters that could
affect your ability to ever resell your shares. His interests may differ from
the interests of the other stockholders and thus result in corporate decisions
that are disadvantageous to other stockholders.
OUR SOLE OFFICER AND DIRECTOR LIVES OUTSIDE THE UNITED STATES, MAKING IT
DIFFICULT FOR AN INVESTOR TO ENFORCE LIABILITIES IN FOREIGN JURISDICTIONS.
We are a Nevada corporation and, as such, are subject to the jurisdiction of the
State of Nevada and the United States courts for purposes of any lawsuit, action
or proceeding by investors herein. An investor would have the ability to effect
service of process in any action on the company within the United States.
However, since our officer and director resides outside the United States,
substantially all or a portion of his assets are located outside the United
States. As a result, it may not be possible for investors to effect service of
process within the United States upon him or to enforce any judgments obtained
in United States courts predicated upon the civil liability provisions of the
federal securities laws of the United States or any state thereof.
BECAUSE OUR SOLE OFFICER AND DIRECTOR LIVES IN VANCOUVER, CANADA, AND OUR
CURRENT WELL IS IN CADDO PARRISH, LOUISIANA, THERE MAY BE A HIGHER RISK THAT OUR
BUSINESS MAY FAIL.
The distance from where our sole officer and director lives, and where the well
operations are located, may create a detrimental situation due to lack of
oversight. Though we have an operating agreement with Four Star Oil to monitor
the well production, there is no assurance that it will be carried out properly
without direct oversight by our officer and director. This could have an adverse
effect on production and future revenues, consequently our operations, earnings
and ultimate financial success may suffer irreparable harm as a result.
RISKS RELATING TO THE OIL AND NATURAL GAS INDUSTRY AND OUR BUSINESS
A SUBSTANTIAL OR EXTENDED DECLINE IN OIL AND NATURAL GAS PRICES MAY ADVERSELY
AFFECT OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS AND OUR
ABILITY TO MEET OUR CAPITAL EXPENDITURE OBLIGATIONS AND FINANCIAL COMMITMENTS.
The prices we may receive in the future for our oil and natural gas production
will heavily influence our revenue, profitability, access to capital and future
rate of growth. Oil and natural gas are commodities and, therefore, their prices
are subject to wide fluctuations in response to relatively minor changes in
supply and demand. Historically, the markets for oil and natural gas have been
volatile. These markets will likely continue to be volatile in the future. The
prices we may receive for any future production, and the levels of the
production, depend on numerous factors beyond our control. These factors
include, but are not limited to, the following:
* changes in global supply and demand for oil and natural gas;
* the actions of the Organization of Petroleum Exporting Countries, or
OPEC;
* the price and quantity of imports of foreign oil and natural gas;
12
* political conditions, including embargoes, in or affecting other
oil-producing activity;
* the level of global oil and natural gas exploration and production
activity;
* the level of global oil and natural gas inventories;
* weather conditions;
* technological advances affecting energy consumption; and
* the price and availability of alternative fuels.
Lower oil and natural gas prices may not only decrease any prospective revenues
on a per share basis but also may reduce the amount of oil and natural gas that
we may be able to produce economically. Lower prices will also negatively impact
the value of a proven reserve when and if we are able to find them. A
substantial or extended decline in oil or natural gas prices may materially and
adversely affect our future business, financial condition, results of
operations, liquidity or ability to finance planned capital expenditures.
PRODUCTION OF OIL AND NATURAL GAS ARE HIGH RISK ACTIVITIES WITH MANY
UNCERTAINTIES THAT COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
Our future success will depend on the success of exploitation, development and
production activities. Oil and natural gas production activities are subject to
numerous risks beyond our control, including the risk that an existing well will
not result in commercially viable oil or natural gas production. Our decisions
to lease, develop or otherwise exploit prospects or properties will depend in
part on the evaluation of data obtained through geophysical and geological
analyses, production data and engineering studies, the results of which are
often inconclusive or subject to varying interpretations.
IF OUR ASSESSMENT OF OUR LEASED PROPERTY, OR ANY FUTURE LEASED PROPERTIES, IS
MATERIALLY INACCURATE, IT COULD HAVE SIGNIFICANT IMPACT ON FUTURE OPERATIONS AND
EARNINGS.
The successful acquisition of producing properties requires assessments of many
factors, which are inherently inexact and may be inaccurate, including the
following:
* the amount of recoverable reserves;
* future oil and natural gas prices;
* estimates of operating costs;
* estimates of future development costs;
* estimates of the costs and timing of plugging and abandonment; and
* potential environmental and other liabilities.
Our assessment will not reveal all existing or potential problems, nor will it
permit us to become familiar enough with the properties to assess fully their
capabilities and deficiencies.
IF OIL AND NATURAL GAS PRICES DECREASE, WE MAY BE REQUIRED TO TAKE WRITE-DOWNS
OF THE CARRYING VALUE OF OUR OIL AND NATURAL GAS PROPERTY, POTENTIALLY
NEGATIVELY IMPACTING THE TRADING VALUE OF OUR SECURITIES.
Accounting rules require that we review periodically the carrying value of our
oil and natural gas property for possible impairment. Based on specific market
factors and circumstances at the time of prospective impairment reviews, and the
continuing evaluation of development plans, production data, economics and other
factors, we may be required to write down the carrying value of our oil and
natural gas property. A write-down could constitute a non-cash charge to
earnings. It is likely the cumulative effect of a write-down could also
negatively impact the trading price of our securities.
13
RESERVE ESTIMATES DEPEND ON MANY ASSUMPTIONS THAT MAY TURN OUT TO BE INACCURATE.
ANY MATERIAL INACCURACIES IN THESE RESERVE ESTIMATES OR UNDERLYING ASSUMPTIONS
WILL MATERIALLY AFFECT THE QUANTITIES AND PRESENT VALUE OF OUR RESERVES.
The process of estimating oil and natural gas reserves is complex. It requires
interpretations of available technical data and many assumptions, including
assumptions relating to economic factors. Any significant inaccuracies in these
interpretations or assumptions could materially affect the estimated quantities
and present value of our reported reserves. The process also requires economic
assumptions about matters such as oil and natural gas prices, operating
expenses, capital expenditures, taxes and availability of funds. Therefore,
estimates of oil and natural gas reserves are inherently imprecise. All of these
factors would have a negative impact on earnings and net income, and most likely
the trading price of our securities.
WE MAY INCUR SUBSTANTIAL LOSSES AND BE SUBJECT TO SUBSTANTIAL LIABILITY CLAIMS
AS A RESULT OF OUR OIL AND NATURAL GAS OPERATIONS.
We do not currently have insurance for possible risks. Losses and liabilities
arising from uninsured events could materially and adversely affect our
business, financial condition or results of operations. The oil and natural gas
production activities will be subject to all of the operating risks associated
with the production of oil and natural gas, including the possibility of:
* environmental hazards, such as uncontrollable flows of oil, natural
gas, brine, well fluids, toxic gas or other pollution into the
environment, including groundwater and shoreline contamination;
* abnormally pressured formations;
* mechanical difficulties;
* fires and explosions;
* personal injuries and death; and
* natural disasters.
Any of these risks could adversely affect our ability to conduct operations or
result in substantial losses to our company. We may elect not to obtain
insurance if we believe that the cost of available insurance is excessive
relative to the risks presented. In addition, pollution and environmental risks
generally are not fully insurable. If a significant accident or other event
occurs and is not fully covered by insurance, then it could adversely affect us.
OUR OPERATIONS MAY INCUR SUBSTANTIAL LIABILITIES TO COMPLY WITH THE
ENVIRONMENTAL LAWS AND REGULATIONS.
Oil and natural gas operations are subject to stringent federal, state and local
laws and regulations relating to the release or disposal of materials into the
environment or otherwise relating to environmental protection. These laws and
regulations may require the acquisition of a permit before production commences,
restrict the types, quantities and concentration of substances that can be
released into the environment in connection with production activities, limit or
prohibit activities on certain lands lying within wilderness, wetlands and other
protected areas, and impose substantial liabilities for pollution resulting from
our operations. Failure to comply with these laws and regulations may result in
the assessment of administrative, civil and criminal penalties, incurrence of
investigatory or remedial obligations or the imposition of injunctive relief.
Changes in environmental laws and regulations occur frequently, and any changes
14
that result in more stringent or costly waste handling, storage, transport,
disposal or cleanup requirements could require us to make significant
expenditures to maintain compliance, and may otherwise have a material adverse
effect on our results of operations, competitive position or financial condition
as well as the industry in general. Under these environmental laws and
regulations, we could be held strictly liable for the removal or remediation of
previously released materials or property contamination regardless of whether we
were responsible for the release or if our operations were standard in the
industry at the time they were performed.
UNLESS WE REPLACE OUR OIL AND NATURAL GAS RESERVES, OUR RESERVES AND PRODUCTION
WILL DECLINE, WHICH WOULD ADVERSELY AFFECT OUR CASH FLOWS AND INCOME.
Unless we conduct successful development and exploitation activities or acquire
properties containing proved reserves, our proved reserves when we find them
will decline as those reserves are produced. Producing oil and natural gas
reservoirs generally are characterized by declining production rates that vary
depending upon reservoir characteristics and other factors. Our future oil and
natural gas reserves and production, and, therefore our cash flow and income,
are highly dependent on our success in efficiently developing and exploiting our
current reserves and economically finding or acquiring additional recoverable
reserves. If we are unable to develop, exploit, find or acquire additional
reserves to replace our current and future production, our cash flow and income
will decline as production declines, until our existing property would be
incapable of sustaining commercial production.
IF ACCESS TO MARKETS IS RESTRICTED, IT COULD NEGATIVELY IMPACT OUR PRODUCTION,
OUR INCOME AND ULTIMATELY OUR ABILITY TO RETAIN OUR LEASE AND ANY FUTURE LEASES.
Market conditions or the unavailability of satisfactory oil and natural gas
gathering arrangements may hinder access to oil and natural gas markets or delay
production. The availability of a ready market for our oil and natural gas
production depends on a number of factors, including the demand for and supply
of oil and natural gas and the proximity of reserves to pipelines and terminal
facilities. The ability to market production depends in substantial part on the
availability and capacity of gathering systems, pipelines and processing
facilities owned and operated by third parties. Our failure to obtain such
services on acceptable terms could materially harm our business.
COMPETITION IN THE OIL AND NATURAL GAS INDUSTRY IS INTENSE, WHICH MAY ADVERSELY
AFFECT OUR ABILITY TO COMPETE.
We will operate in a highly competitive environment. Our competitors possess and
employ financial, technical and personnel resources substantially greater than
ours, which can be particularly important in the areas in which we operate.
Those companies may be able to pay more for productive oil and natural gas
properties and exploratory prospects and to evaluate, bid for and purchase a
greater number of properties and prospects than our financial resources permit.
Our ability to acquire additional prospects and to find and develop reserves in
the future will depend on our ability to evaluate and select suitable properties
and to consummate transactions in a highly competitive environment. We may not
be able to compete successfully.
ITEM 2. PROPERTIES
We do not currently own any property. The Company leases shared office
facilities at Suite 400 - 601 West Broadway, Vancouver, BC V5Z 4C2 on a
month-to-month basis for approximately $50 per month. The facilities include
15
answering services, fax services, reception area and shared office and meeting
facilities as well as secretarial services which are available on a pay as
needed basis. The telephone number is (888)609-1173. Management believes the
current premises are sufficient for its needs at this time.
We currently have no investment policies as they pertain to real estate, real
estate interests or real estate mortgages.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any
knowledge of any threatened litigation.
ITEM 4. MINE SAFETY DISCLOSURES
None.
16
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of January 31, 2014, we had 20,000,000 shares of $0.0001 par value common
stock issued and outstanding held by 27 shareholders of record.
Our common stock is currently listed on the OTCBB under the symbol "AOIX". The
OTCBB is a regulated quotation service that displays real-time quotes, last sale
prices and volume information in over-the-counter (OTC) securities. The OTCBB is
not an issuer listing service, market or exchange. Although the OTCBB does not
have any listing requirements per se, to be eligible for quotation on the OTCBB,
issuers must remain current in their filings with the U.S. Securities and
Exchange Commission or applicable regulatory authority. Market Makers are not
permitted to begin quotation of a security whose issuer does not meet this
filing requirement. Securities already quoted on the OTCBB that become
delinquent in their required filings will be removed following a 30 or 60 day
grace period if they do not make their required filing during that time.
There has been no active trading of our securities, and, therefore, no high and
low bid pricing. We have paid no cash dividends and have no outstanding options.
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. Our shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
- contains a description of the nature and level of risk in the market
for penny stock in both public offerings and secondary trading;
- contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
Securities Act of 1934, as amended;
- contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the
significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary
actions;
17
- defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
- contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the
transaction;
- the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
- monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
DIVIDENDS
We have never declared or paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the development
and expansion of our business, and we do not anticipate paying any cash
dividends on our common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then
existing conditions, including our financial condition and results of
operations, capital requirements, contractual restrictions, business prospects,
and other factors that the board of directors considers relevant.
SECTION RULE 15(g) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's shares are covered by Section 15(g) of the Securities Exchange Act
of 1934, as amended that imposes additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a special
suitability determination for the purchase and have received the purchaser's
written agreement to the transaction prior to the sale. Consequently, the Rule
may affect the ability of broker/dealers to sell our securities and also may
affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one page summary
18
of certain essential items. The items include the risk of investing in penny
stocks in both public offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as "bid" and
"offer" quotes, a dealers "spread" and broker/dealer compensation; the
broker/dealer compensation, the broker/dealers duties to its customers,
including the disclosures required by any other penny stock disclosure rules;
the customers rights and remedies in causes of fraud in penny stock
transactions; and, FINRA's toll free telephone number and the central number of
the North American Administrators Association, for information on the
disciplinary history of broker/dealers and their associated persons.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans and accordingly we have no
securities authorized for issuance there under.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during
the year ended January 31, 2014.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
We are an exploration stage company and have generated $2,951 in revenues since
inception (January 23, 2012) and have incurred $64,531 in expenses through
January 31, 2014. For the years ended January 31, 2014 and 2013 we incurred
$24,395 and $10,779, respectively, in operating and general and administrative
expenses, $14,227 and $9,000 in professional fees and recorded $3,710 and $1,855
in depletion expenses.
The following table provides selected financial data about our company for the
years ended January 31, 2014 and 2013.
Balance Sheet Data: 1/31/14 1/31/13
------------------- ------- -------
Cash $ 6,728 $ 10,117
Total assets $ 38,265 $ 45,551
Total liabilities $ 39,845 $ 4,800
Shareholders' equity $ (1,580) $ 40,751
Cash provided by financing activities since inception through January 31, 2014
was $10,000 from the sale of 10,000,000 shares of common stock to our officer
and director in January 2012 and $50,000 from the sale of 10,000,000 shares of
common stock to 27 individuals for cash in the amount of $0.005 per share on
July 12, 2012 pursuant to a Registration Statement on Form S-1.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at January 31, 2014 was $6,728 with $14,845 in accounts payable
and $25,000 in a loan payable to a related party. If we experience a shortage of
funds in the next twelve months we may utilize additional funds from our
director, who has agreed to advance funds for operations, however he has no
formal commitment, arrangement or legal obligation to advance or loan funds to
us.
19
PLAN OF OPERATION
Our current cash balance is $6,728. We believe our cash balance along with
anticipated revenues from the reworked well will be sufficient to cover the
expenses we will incur during the next twelve months. In order to achieve our
business plan goals, we will need to continue to realize revenue from our oil &
gas sales. We are an exploration stage company and have generated $2,951 revenue
to date. We have sold $60,000 in equity securities to pay for our start-up
operations.
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we generate sufficient revenues from our oil & gas sales.
There is no assurance we will ever reach that point. In the meantime the
continuation of the Company is dependent upon the continued financial support
from our shareholders, our ability to obtain necessary equity financing to
continue operations and the attainment of profitable operations.
During the year ended January 31, 2013 we spent $10,000 for the purchase of the
Cecil Barlow #1 bore hole and $27,102 to complete the re-work and production
program.
Our plan of operation for the next twelve months is to continue production on
the current lease while also searching for other appropriate leases. We
anticipate spending an additional $3,875 (approx. $387.50 per month) for monthly
maintenance fees, $10,000 on professional fees, including fees payable for
complying with reporting obligations, $5,000 in general administrative costs and
$1,125 in working capital. Total expenditures over the next 12 months are
therefore expected to be approximately $20,000.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
GOING CONCERN
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated until we
begin extracting minerals, if they are found. There is no assurance we will ever
reach that point.
20
ITEM 8. FINANCIAL STATEMENTS
GEORGE STEWART, CPA
316 17TH AVENUE SOUTH
SEATTLE, WASHINGTON 98144
(206) 328-8554 FAX(206) 328-0383
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
American Oil & Gas Inc.
I have audited the accompanying balance sheets of American Oil & Gas Inc. (An
Exploration Stage Company) as of January 31, 2014 and 2013, and the related
statements of operations, stockholders' equity and cash flows for the years
ended January 31, 2014 and 2013 and for the period from January 23, 2012
(inception), to January 31, 2014. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of American Oil & Gas Inc., (An
Exploration Stage Company) as of January 31, 2014 and 2013, and the results of
its operations and cash flows for the years ended January 31, 2014 and 2013 and
the period from January 23, 2012 (inception), to January 31, 2014 in conformity
with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note # 4 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
# 4. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ George Stewart
---------------------------------
Seattle, Washington
May 1, 2014
21
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
As of As of
January 31, 2014 January 31, 2013
---------------- ----------------
ASSETS
CURRENT ASSETS
Cash $ 6,728 $ 10,117
Accounts Receivable -- 187
-------- --------
TOTAL CURRENT ASSETS 6,728 10,304
OIL AND GAS PROPERTY (SUCCESSFUL EFFORTS METHOD)
Unproven 37,102 37,102
Accumulated Depletion (5,565) (1,855)
-------- --------
TOTAL OIL AND GAS PROPERTY 31,537 35,247
-------- --------
TOTAL ASSETS $ 38,265 $ 45,551
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 14,845 $ 4,800
Loan Payable - Related Party 25,000 0
-------- --------
TOTAL CURRENT LIABILITIES 39,845 4,800
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares authorized;
20,000,000 and 10,000,000 shares issued and outstanding
as of January 31, 2014 and January 31, 2013 20,000 20,000
Additional Paid-In Capital 40,000 40,000
Deficit accumulated during exploration stage (61,580) (19,249)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (1,580) 40,751
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 38,265 $ 45,551
======== ========
See Notes to Financial Statements
22
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Statement of Operations
--------------------------------------------------------------------------------
January 23, 2012
(inception)
Year ended Year ended through
January 31, 2014 January 31, 2013 January 31, 2014
---------------- ---------------- ----------------
REVENUES
Oil and Gas $ -- $ 2,951 $ 2,951
------------ ------------ ------------
TOTAL REVENUES -- 2,951 2,951
EXPENSES
Operating Expenses 7,212 2,763 9,976
General and Administration 17,183 8,016 25,764
Depletion 3,710 1,855 5,565
Professional Fees 14,227 9,000 23,227
------------ ------------ ------------
TOTAL EXPENSES 42,331 21,635 64,531
------------ ------------ ------------
NET INCOME (LOSS) $ (42,331) $ (18,684) $ (61,580)
============ ============ ============
NET LOSS PER BASIC AND DILITED SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20,000,000 15,573,770
============ ============
See Notes to Financial Statements
23
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity
From January 23, 2012 (Inception) through January 31, 2014
--------------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid-in Exploration
Stock Amount Capital Stage Total
----- ------ ------- ----- -----
BALANCE, JANUARY 23, 2012 -- $ -- $ -- $ -- $ --
Stock issued for cash on January 23, 2012
@ $0.001 per share 10,000,000 10,000 -- -- 10,000
Net loss, January 31, 2012 (565) (565)
---------- ---------- ---------- ---------- ----------
BALANCE, JANUARY 31, 2012 10,000,000 10,000 -- (565) 9,435
========== ========== ========== ========== ==========
Stock issued for cash on July 12, 2012
@ $0.005 per share 10,000,000 10,000 40,000 -- 50,000
Net loss, January 31, 2013 (18,684) (18,684)
---------- ---------- ---------- ---------- ----------
BALANCE, JANUARY 31, 2013 20,000,000 20,000 40,000 (19,249) 40,751
========== ========== ========== ========== ==========
Net loss, January 31, 2014 (42,331) (42,331)
---------- ---------- ---------- ---------- ----------
BALANCE, JANUARY 31, 2014 20,000,000 $ 20,000 $ 40,000 $ (61,580) $ (1,580)
========== ========== ========== ========== ==========
See Notes to Financial Statements
24
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Statement of Cash Flows
--------------------------------------------------------------------------------
January 23, 2012
(inception)
Yaer ended Year ended through
January 31, 2014 January 31, 2013 January 31, 2014
---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(42,331) $(18,684) $(61,580)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Depletion 3,710 1,855 5,565
Accounts Receivable 187 (187) --
Accounts Payable 10,045 4,235 14,845
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (28,389) (12,781) (41,170)
CASH FLOWS FROM INVESTING ACTIVITIES
Oil and Gas Property -- (37,102) (37,102)
-------- -------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- (37,102) (37,102)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan Payable - Related Party 25,000 (15,000) 25,000
Issuance of common stock -- 50,000 60,000
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 25,000 35,000 85,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (3,389) (14,883) 6,728
CASH AT BEGINNING OF PERIOD 10,117 25,000 --
-------- -------- --------
CASH AT END OF PERIOD $ 6,728 $ 10,117 $ 6,728
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See Notes to Financial Statements
25
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2014
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
American Oil and Gas Inc. (the Company) was incorporated under the laws of the
State of Nevada on January 23, 2012. The Company was formed to engage in the
acquisition, exploration and development of oil and gas properties.
The Company is in the exploration stage. The Company currently operates a single
well. The Company has not commenced any exploration activities.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a January 31, year-end.
BASIC EARNINGS (LOSS) PER SHARE
ASC No. 260, "Earnings Per Share", specifies the computation, presentation and
disclosure requirements for earnings (loss) per share for entities with publicly
held common stock. The Company has adopted the provisions of ASC No. 260.
Basic net earnings (loss) per share amounts is computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding.
Diluted earnings (loss) per share are the same as basic earnings (loss) per
share due to the lack of dilutive items in the Company.
CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with ASC No. 250
all adjustments are normal and recurring.
26
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2014
--------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income taxes are provided in accordance with ASC No. 740, Accounting for Income
Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carryforwards. Deferred tax expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.
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. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
REVENUE
The Company records revenue on the accrual basis when all goods and services
have been performed and delivered, the amounts are readily determinable, and
collection is reasonably assured. The Company has not generated any revenue
since its inception.
ADVERTISING
The Company will expense its advertising when incurred. There has been no
advertising since inception.
OIL AND GAS PROPERTIES
Oil and gas investments are accounted for by the successful efforts method of
accounting. Accordingly, the costs incurred to acquire property (proved and
unproved), all development costs, and successful exploratory costs are
capitalized, whereas the costs of unsuccessful exploratory wells are expensed.
Depletion of capitalized oil and gas well costs is provided using the units of
production method based on estimated proved developed oil and gas reserves of
the respective oil and gas properties.
NOTE 3. RECENT ACCOUNTING PRONOUCEMENTS
The Company has evaluated all the recent accounting pronouncements through the
date the financial statements were issued and filed with the Securities and
Exchange Commission and believe that none of them will have a material effect on
the Company's financial statements.
27
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2014
--------------------------------------------------------------------------------
NOTE 4. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company has had limited operations during the period from January 23, 2012
(date of inception) to January 31, 2014 and generated a net loss of $61,580.
This condition raises substantial doubt about the Company's ability to continue
as a going concern. The Company is currently in the exploration stage with
limited operations on a single well and has minimal expenses, however,
management believes that the Company's current cash of $6,728 is insufficient to
cover the expenses they will incur during the next twelve months in a limited
operations scenario or until it raises additional funding.
NOTE 5. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common stock.
NOTE 6. INVESTMENTS IN OIL AND GAS PROPERTIES
Cecil Barlow
On February 2, 2012 the Company acquired the Cecil Barlow lease in Caddo Parish,
Louisiana for $10,000. Subsequently, the Company has spent an additional $27,102
in upgrades to the well.
As of January 31, 2014 the Company has depleted the asset by $5,565.
NOTE 7. RELATED PARTY TRANSACTIONS
The sole officer and director of the Company may, in the future, become involved
in other business opportunities as they become available, he may face a conflict
in selecting between the Company and his other business opportunities. The
Company has not formulated a policy for the resolution of such conflicts.
As of January 31, 2014, $25,000 is owed to Robert Gelfand, President, from funds
loaned by him to the Company and is non-interest bearing with no specific
repayment terms.
28
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2014
--------------------------------------------------------------------------------
NOTE 8. INCOME TAXES
As of January 31, 2014
----------------------
Deferred tax assets:
Net operating tax carryforwards $ 61,580
Tax rate 34%
--------
Gross deferred tax assets 20,937
Valuation allowance (20,937)
--------
Net deferred tax assets $ --
========
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
NOTE 9. NET OPERATING LOSSES
As of January 31, 2014, the Company has a net operating loss carryforward of
approximately $61,580. Net operating loss carryforwards expire twenty years from
the date the loss was incurred.
NOTE 10. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with ASC
No. 505. Thus issuances shall be accounted for based on the fair value of the
consideration received. Transactions with employees' stock issuance are in
accordance with ASC No. 718. These issuances shall be accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, or whichever is more readily determinable.
On January 23, 2012, the Company issued a total of 10,000,000 shares of common
stock to its sole officer/director for cash in the amount of $0.001 per share
for a total of $10,000.
On July 12, 2012, the Company completed its registered offering raising $50,000
from the sale of 10,000,000 shares of common stock, par value $.001.
As of January 31, 2014 the Company had 20,000,000 shares of common stock issued
and outstanding.
29
AMERICAN OIL & GAS INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2014
--------------------------------------------------------------------------------
NOTE 11. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of January 31, 2014:
Common stock, $ 0.001 par value: 75,000,000 shares authorized; 20,000,000 shares
issued and outstanding.
NOTE 12. SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred after January 31,
2014 up through the date the Company issued these financial statements.
30
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer (our
president), we have conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the
end of the period covered by this report. Based on this evaluation, our
principal executive officer and principal financial officer concluded as of the
evaluation date that our disclosure controls and procedures were effective such
that the material information required to be included in our Securities and
Exchange Commission reports is accumulated and communicated to our management,
including our principal executive and financial officer, recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms relating to our company, particularly during
the period when this report was being prepared.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures
that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.
Under the supervision and with the participation of our president, management
conducted an evaluation of the effectiveness of our internal control over
financial reporting, as of January 31, 2014, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our evaluation under
this framework, management concluded that our internal control over financial
reporting was not effective as of the evaluation date due to the factors stated
below.
31
Management assessed the effectiveness of the Company's internal control over
financial reporting as of evaluation date and identified the following material
weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite
expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to
properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS:
We do not have a functioning audit committee or outside directors on our board
of directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue
to use third party specialists to address shortfalls in staffing and to assist
the Company with accounting and finance responsibilities, (2) increase the
frequency of independent reconciliations of significant accounts which will
mitigate the lack of segregation of duties until there are sufficient personnel
and (3) may consider appointing outside directors and audit committee members in
the future.
Management, including our president, has discussed the material weakness noted
above with our independent registered public accounting firm. Due to the nature
of this material weakness, there is a more than remote likelihood that
misstatements which could be material to the annual or interim financial
statements could occur that would not be prevented or detected.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter for our fiscal year ended January 31,
2014 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
32
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICER
The name, age and title of our executive officer/director at January 31, 2013 is
as follows:
Name & Address Age Position Date First Elected Term Expires
-------------- --- -------- ------------------ ------------
Robert Gelfand 48 President, 1/23/12 1/31/15
Suite 400 - 601 W Broadway Secretary,
Vancouver, BC Treasurer,
V5Z 4C2 CFO, CEO &
Director
The foregoing person is a promoter of AO&G, as that term is defined in the rules
and regulations promulgated under the Securities and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the board of directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
Robert Gelfand currently devotes 2-4 hours per week to company matters, in the
future he intends to devote as much time as the board of directors deems
necessary to manage the affairs of the company.
No executive officer or director of the corporation has been the subject of any
order, judgment, or decree of any court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring, suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No executive officer or director of the corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
BACKGROUND INFORMATION
ROBERT GELFAND has been the President, CEO, Treasurer, CFO, Secretary, and
Director of the Company since inception. From July 1996 to the present he has
been a Director of StarAsia Capital Inc., a venture capital company for
development and start-up stage companies in Bangkok, Thailand and Vancouver,
Canada. Mr. Gelfand has held officer and director positions of several publicly
traded companies over the past 15 years.
Mr. Gelfand holds a Bachelor of Commerce Degree (Finance major) from The
University of British Columbia, in Vancouver, BC, Canada where he received it in
1989. Mr. Gelfand also holds the Chartered Financial Analyst designation (CFA)
which he received from the CFA Institute in Charlottesville, Virginia. He
intends to devote his time as required to the business of the Company.
33
CODE OF ETHICS
We do not currently have a code of ethics, because we have only limited business
operations and only one officer and director, we believe a code of ethics would
have limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and employees.
ITEM 11. EXECUTIVE COMPENSATION
Our current officer receives no compensation. The current Board of Directors is
comprised of Robert Gelfand.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Robert 2013 0 0 0 0 0 0 0 0
Gelfand, 2012 0 0 0 0 0 0 0 0
President,
CFO & CEO
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Robert 0 0 0 0 0 0 0 0 0
Gelfand,
CEO & CFO
34
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Robert Gelfand, 0 0 0 0 0 0 0
Director
There are no current employment agreements between the company and its executive
officer.
In January 2012 Robert Gelfand purchased 10,000,000 shares of our common stock
at $0.001 per share. The terms of these stock issuances were as fair to the
company, in the opinion of the board of directors, as could have been made with
an unaffiliated third party.
Mr. Gelfand currently devotes approximately 2-4 hours per week to manage the
affairs of the company. He has agreed to work with no remuneration until such
time as the company receives sufficient revenues necessary to provide management
salaries. At this time, we cannot accurately estimate when sufficient revenues
will occur to implement this compensation, or what the amount of the
compensation will be.
As of January 31, 2014 $25,000 is owed to Mr. Gelfand from funds loaned by him
to the Company and is non-interest bearing with no specific terms of repayment.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of January 31, 2013 of: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) our director, and or (iii) our
officer. Unless otherwise indicated, the stockholder listed possesses sole
voting and investment power with respect to the shares shown.
Amount and Nature Percentage of
Name and Address of Beneficial Common
Title of Class of Beneficial Owner Ownership Stock(1)
-------------- ------------------- --------- --------
Common Stock Robert Gelfand, Director 10,000,000 50%
Suite 400-601 West Broadway Direct
Vancouver, BC V5Z 4C2
Common Stock Officer and/or director as a Group 10,000,000 50%
HOLDERS OF MORE THAN 5% OF OUR COMMON STOCK
35
----------
(1) A beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to
vote, or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if,
for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason
of these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily reflect
the person's actual ownership or voting power with respect to the number of
shares of common stock actually outstanding as of the date of this report.
As of the date of this report, there were 20,000,000 shares of our common
stock issued and outstanding, 10,000,000 shares being held by our officer
and director.
FUTURE SALES BY EXISTING STOCKHOLDERS
As of January 31, 2014, a total of 10,000,000 shares have been issued to Robert
Gelfand, an officer/director, and are restricted securities, as that term is
defined in Rule 144 of the Rules and Regulations of the SEC promulgated under
the Act. Under Rule 144, such shares can be publicly sold, subject to volume
restrictions and certain restrictions on the manner of sale, commencing six
months after their acquisition.
Rule 144(i)(1) states that the Rule 144 safe harbor is not available for the
resale of securities "initially issued" by a shell company (other than a
business combination related shell company) or an issuer that has "at any time
previously" been a shell company (other than a business combination related
shell company). Consequently, the Rule 144 safe harbor is not available for the
resale of such securities unless and until all of the conditions in Rule
144(i)(2) are satisfied at the time of the proposed sale.
Any sale of shares held by the existing stockholder (after applicable
restrictions expire) may have a depressive effect on the price of our common
stock in any market that may develop, of which there can be no assurance. Our
principal shareholder does not have any plans to sell his shares at this time.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2012 Mr. Gelfand purchased 10,000,000 shares of our common stock at
$0.001 per share. All of such shares are "restricted" securities, as that term
is defined by the Securities Act of 1933, as amended, and are held by the
officer and director of the Company. (See "Principal Stockholders".)
As of January 31, 2014 $25,000 is owed to Mr. Gelfand from funds loaned by him
to the Company and is non-interest bearing with no specific terms of repayment.
We do not currently have any conflicts of interest by or among our current
officer, director, key employee or advisors. We have not yet formulated a policy
for handling conflicts of interest; however, we intend to do so prior to hiring
any additional employees.
36
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total fees charged to the Company for audit services, including quarterly
reviews, were $8,800 for audit-related services were $Nil, for tax services were
$Nil and for other services were $Nil during the year ended January 31, 2014.
The total fees charged to the Company for audit services, including quarterly
reviews, were $8,800 for audit-related services were $Nil, for tax services were
$Nil and for other services were $Nil during the year ended January 31, 2013.
37
PART IV
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
Exhibit
Number Description
------ -----------
3(i) Articles of Incorporation*
3(ii) Bylaws*
31.1 Sec. 302 Certification of CEO
31.2 Sec. 302 Certification of CFO
32.1 Sec. 906 Certification of CEO
23.2 Sec. 906 Certification of CFO
101 Interactive Data Files pursuant to Regulation S-T
----------
* Included in our Registration Statement of Form S-1 under Commission File
Number 333-180164.
38
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
May 2, 2014 American Oil & Gas Inc.
/s/ Robert Gelfand
---------------------------------------------------
By: Robert Gelfand
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Director)
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
May 2, 2014 American Oil & Gas Inc.
/s/ Robert Gelfand
---------------------------------------------------
By: Robert Gelfand
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Director)
39