Financial Gravity Companies, Inc. - Quarter Report: 2015 June (Form 10-Q)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X .. Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2015
.. Transition Report under Section 13 or 15(d) of the Exchange Act
For the Transition Period from ________to __________
Commission File Number: 333-144504
Pacific Oil Company
(Exact Name of Registrant as Specified in its Charter)
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NEVADA | 20-4057712 |
(State of other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification Number) |
9500 W. Flamingo Rd. Suite 205 |
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Las Vegas, NV | 89147 |
(Address of principal executive offices) | (Zip Code) |
Registrant's Phone: 1-888-303-2272 |
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Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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 . No X ..
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer .
Accelerated filer .
Non-accelerated filer .
Smaller reporting company X .
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 October 8, 2015, the issuer had 440,949 shares of common stock issued and outstanding.
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ITEM 1. FINANCIAL STATEMENTS
PACIFIC OIL COMPANY
FINANCIAL STATEMENTS
C O N T E N T S
Condensed Balance Sheets as of June 30, 2015 (unaudited) and September 30, 2014 | 4 |
Condensed Statements of Operations for the Three and Nine month periods ended |
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June 30, 2015 and 2014 (unaudited) | 5 |
Condensed Statements of Cash Flows for the Nine month periods ended |
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June 30, 2015 and 2014 (unaudited) | 6 |
Notes to the Condensed Financial Statements (unaudited) | 7 |
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3
PACIFIC OIL COMPANY
Condensed Balance Sheets
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| June 30, |
| September 30, |
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| 2015 |
| 2014 |
ASSETS |
| (unaudited) |
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CURRENT ASSETS |
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Cash | $ | 290 | $ | 87 |
Total Current Assets |
| 290 |
| 87 |
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PROPERTY AND EQUIPMENT |
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Oil and gas property at cost, full cost method of accounting: unproved |
| 237,400 |
| - |
Equipment |
| 44,000 |
| - |
Total Property and Equipment |
| 281,400 |
| - |
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TOTAL ASSETS | $ | 281,690 | $ | 87 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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CURRENT LIABILITIES |
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Accounts payable and accrued expenses | $ | 17,074 | $ | 1,702 |
Advances payable |
| 59,383 |
| 43,183 |
Advances payable-related party |
| 23,488 |
| 23,488 |
Note payable |
| 1,174 |
| 1,174 |
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Total Current Liabilities |
| 101,118 |
| 69,546 |
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LONG TERM LIABILITIES |
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Convertible note payable-related party, net of debt discount |
| 7,465 |
| - |
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Total Long Term Liabilities |
| 7,465 |
| - |
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Total Liabilities |
| 108,584 |
| 69,546 |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Common stock: $0.001 par value; 300,000,000 shares authorized, 440,949 (unaudited) and 300,949 shares issued and outstanding at June 30, 2015 and September 30, 2014, respectively |
| 441 |
| 301 |
Additional paid-in capital |
| 926,627 |
| 660,367 |
Accumulated deficit |
| (753,962) |
| (730,127) |
Total Stockholders' Equity (Deficit) |
| 173,106 |
| (69,459) |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 281,690 | $ | 87 |
The accompanying notes are an integral part of these condensed unaudited financial statements.
4
PACIFIC OIL COMPANY
Condensed Statements of Operations (unaudited)
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| For the Three |
| For the Nine | ||||
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| Months Ended | ||||
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| June 30, |
| June 30, | ||||
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| 2015 |
| 2014 |
| 2015 |
| 2014 |
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REVENUES | $ | - | $ | - | $ | - | $ | - |
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OPERATING EXPENSES |
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General and administrative |
| 896 |
| 1,270 |
| 5,449 |
| 4,735 |
Professional fees |
| 2,150 |
| 7,160 |
| 10,920 |
| 14,660 |
Compensation expense |
| - |
| - |
| - |
| 335,280 |
Total operating expenses |
| 3,046 |
| 8,430 |
| 16,369 |
| 354,675 |
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OTHER (INCOME) EXPENSE |
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Interest expense |
| 1,130 |
| - |
| 1,130 |
| 3,866 |
Amortization of debt discount on on convertible note payable, related party |
| 6,335 |
| - |
| 6,335 |
| - |
Change in fair value of derivative |
| - |
| - |
| - |
| (2,380) |
Gain on settlement of accounts payable |
| - |
| - |
| - |
| (16,314) |
Total other (income) expense |
| 7,465 |
| - |
| 7,465 |
| (14,828) |
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NET LOSS | $ | (10,511) | $ | (8,430) | $ | (23,834) | $ | (339,847) |
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LOSS PER SHARE - BASIC AND DILUTIVE | $ | (0.03) | $ | (0.03) | $ | (0.07) | $ | (1.17) |
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WEIGHTED AVERAGE NUMBER OF SHARES |
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OUTSTANDING - BASIC AND DILUTIVE |
| 385,564 |
| 300,949 |
| 329,154 |
| 291,001 |
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The accompanying notes are an integral part of these condensed unaudited financial statements.
5
PACIFIC OIL COMPANY
Condensed Statements of Cash Flows (unaudited)
The accompanying notes are an integral part of these condensed unaudited financial statements.
6
PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Pacific Oil Company (the “Company”) was originally incorporated in Nevada on December 5, 2005 (“inception’) as Kat Racing, Inc. On January 4, 2013, the Articles of Incorporation of the Company were amended to change the name of the Company to Prairie West Oil & Gas, Ltd. On July 26, 2013, the Company’s Articles of Incorporation were amended to change the name of the registrant to Pacific Oil Company.
From the Company’s inception until the Company’s transition into the oil and natural gas business in early 2013, Kat Racing’s business plan was to design, manufacture, market, sell and distribute custom off-road racing and recreational vehicles and provide marketing and lead services. Kat Racing never generated any revenue from this proposed business plan.
As the market for high end off road vehicles suffered due to the downturn in the economy, Kat Racing sought to arrange the purchase of certain oil and gas properties which were owned by Prairie West Oil and Gas Ltd., a Canadian company, through a share exchange. Pursuant to this transaction, the Company changed its name from Kat Racing to Prairie West Oil and Gas Ltd. This transaction was never completed. When it was determined the acquisition would not be completed, the Company did not want to continue with the Prairie West name and changed its name to Pacific Oil Company.
On October 1, 2013, the Company issued a newly appointed officer and director 190,500 shares of common stock of the Company to retain his services to attempt to secure certain assets the Company needs to launch its oil and gas operations.
On May 6, 2015, the Company entered into a purchase and sale agreement with the Emporium Group to purchase certain rights, title, estate, and interest in the unproved petroleum and natural gas rights, together with certain tangible assets and liabilities, on a 40-acre site located in Saskatchewan, Canada. The purchase consideration for this transaction was part stock and part debt. The Company issued to Emporium Group 140,000 shares of its common stock, valued at $141,400, based on the market price of $1.01 per share of our shares on the date the transaction was completed, along with a convertible note payable in the amount of $125,000 with a 6% cumulative interest rate, due and payable in 3 years, with the right to convert into 6,250,000 shares of our commons stock at $0.02 per share.
The lease acquired has not been in operation since 2011 and we have been advised that we will need to spend approximately $75,000 to $100,000 to get the well back into production. At this time we do not have the funds to get the well back in production, nor is there any guarantee that we will be successful in raising the necessary funds to get the well back into production or that the well will be able to operate on a profitable basis if it were to be returned to production.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, has incurred losses of $753,962 since inception (December 5, 2005) through June 30, 2015 and had a working capital deficit of $100,828 at June 30, 2015. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 2 - GOING CONCERN (CONTINUED)
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying financial statements have been prepared by the Company without audit in accordance with SEC rules for quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2015, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2014 audited financial statements. The results of operations for the three and nine periods ended June 30, 2015 and 2014 are not necessarily indicative of the operating results for the full years.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Development Stage Company
The Company is in the development stage as defined under the then current Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915-205 “Development-Stage Entities,” and among the additional disclosures required as a development stage company are that our financial statements were identified as those of a development stage company, and that the statements of operations, movement in stockholders’ equity (deficit) and cash flows disclosed activity since the date of our inception (December 5, 2005) as a development stage company. Effective June 10, 2014 FASB changed its regulations with respect to Development Stage Entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2014 with the option for entities to early adopt these new provisions. The Company has elected to early adopt these provisions and consequently these additional disclosures are not included in these financial statements.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Oil and Gas Properties, Full Cost Method
The Company uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells, including directly related overhead costs and related asset retirement costs, are capitalized. Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. The Company assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management’s intention with regard to future exploration and development of individually significant properties and the ability of the Company to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.
Costs of proved oil and gas properties, including future development costs, if any, are amortized using the units of production method over the estimated proved reserves.
In applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the “estimated present value,” of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense.
Depletion
Depletion is provided using the unit-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment (ceiling test) indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.
In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense.
Asset Retirement Obligations
The Company follows the provisions of the Accounting Standards Codification (“ASC”) 410 - Asset Retirement and Environmental Obligations. The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and is subject to amortization. The Company’s asset retirement obligations relate to the abandonment of oil and gas producing facilities. The amounts recognized are based upon numerous estimates and assumptions, including future retirement costs, future recoverable quantities of oil and gas, future inflation rates and the credit-adjusted risk-free interest rate.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derivative Liability
The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments (the Convertible Note), in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.
Fair Value Measurements
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
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Level 1. Observable inputs such as quoted prices in active markets;
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Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
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Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying value of cash, accounts payable and accrued expenses, advances payable, advances payable – related party and note payable and convertible note payable related party approximates their fair value due to the short-term maturity of these financial instruments.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
Basic and Diluted Loss per Share
The Company computes loss per share in accordance with ASC-260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
The Company has potentially dilutive debt instruments outstanding in the form of a convertible notes payable – related party. However, as the Company has incurred losses since Inception, these potentially dilutive shares of common stock have been excluded from the calculation of loss per share as their effect would have been anti-dilutive. Consequently basic and diluted loss per share were identical for the three and nine month periods ended June 30, 2015 and 2014.
Advertising
The Company follows the policy of charging the costs of advertising to expenses incurred. The Company incurred $0 in advertising costs during the three and nine month periods ended June 30, 2015 and 2014.
Stock-based Compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 718 (Accounting for Share Based Payments) which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
Revenue Recognition
The Company will recognize revenue in accordance with Accounting Standards Codification No. 605, Revenue Recognition (“ASC-605”). ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassifications
Certain amounts in the prior periods may have been reclassified to conform to the current period presentation.
Correction of an error in previously issued financial statements
The Company follows guidance under ASC 250-10-45-23 for reporting any error in the financial statements of a prior period discovered after the financial statements are issued or are available to be issued. The current comparative statements as presented reflect the retroactive application of any error corrections. Certain of the balances reported in the unaudited condensed interim financial statements for the three and nine months ended June 30, 2014 reported on Form 10-Q, have been retroactively adjusted to reflect the adjustments made as a result of the audit of the financial statements for the year ended September 30, 2014. The details are summarized in Note 9 Correction of Errors in Previously Issued Financial Statements below.
Recent Accounting Pronouncements
The Company does not believe that other than disclosed above, recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
NOTE 4 – ACQUISITION OF UNPROVED OIL AND GAS PROPERTY, EQUIPMENT AND LIABILITIES
On May 6, 2015, Pacific Oil Company acquired the following assets from The Emporium Group:
1)
The mineral rights to well license number 76B009. The well site is located near Maidstone, Saskatchewan, Canada.
2)
The equipment located at the well site includes:
a)
Onsite 750 barrel oil storage tank (1)
b)
Skid (1)
c)
Direct Drive Well Pump (1)
d)
Compressor (1)
e)
Onsite storage facility (1)
a.
d) Down Hole rods (Multiple)
f)
Metal Containment Burm
3)
Accrued liabilities relating to unpaid mineral rights and property taxes.
The purchase price of the acquisition was $266,400 and was satisfied through the issuance of a convertible note payable of $125,000 and 140,000 shares of our common stock valued at $141,400, based on the $1.01 closing price of the stock on May, 6, 2015.
The purchase price consideration has been allocated to the assets and liabilities acquired as follows:
Unproved oil and gas property | $237,400 |
Equipment | 44,000 |
Accrued liabilities | (15,000) |
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Net assets and liabilities acquired | $266,400 |
The value of the equipment on site was estimated at $44,000. The estimate was provided by Calroc Industries Inc, which is a supplier of new and used oilfield equipment to oil and gas companies located in Alberta, Saskatchewan and throughout Western Canada.
12
PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 4 – ACQUISITION OF UNPROVED OIL AND GAS PROPERTY, EQUIPMENT AND LIABILITIES (CONTINUED)
The accrued liabilities relating to unpaid mineral rights and property taxes for the period 2011 thru 2015 are estimated at $15,000.
The balance of the purchase consideration, $237,400 has been allocated to unproved oil and gas property under the full cost basis of accounting.
Unaudited proforma financial statements – unproved oil and gas lease acquired
| Three Months Ended June 30, 2015 | Three Months ended June 30, 2014 | Nine Months ended June 30, 2015 | Nine Months ended June 30, 2014 | Year ended September 30, 2014 | Year ended September 30, 2013 | ||||||
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Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
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Operating expenses | $ | (750) | $ | (750) | $ | (2,250) | $ | (2,250) | $ | (3,000) | $ | (3,000) |
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Net Loss | $ | (750) | $ | (750) | $ | (2,250) | $ | (2,250) | $ | (3,000) | $ | (3,000) |
Since the well has not been in operation since when 2011, no revenue have been generated in any of the periods presented. . Similarly, the only expenses incurred in the periods presented while the well was dormant, relate to property taxes, mineral rights, land fees and other fees.
The expenses relating to the lease are included in Pacific Oil’s financial statements from the date of its acquisition on May 6, 2015
The Company’s profoma financial statements showing what its results would have been if the acquisition had been completed effective at the beginning of each period presented would be as follows:
| Three Months Ended June 30, 2015 | Three Months ended June 30, 2014 | Nine Months ended June 30, 2015 | Nine Months ended June 30, 2014 | Year ended September 30, 2014 | Year ended September 30, 2013 | ||||||
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Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
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Operating expenses | $ | 3,796 | $ | 9,180 | $ | 18,619 | $ | 356,925 | $ | 363,385 | $ | 41,638 |
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Other expense | $ | 7,465 | $ | - | $ | 7,465 | $ | (14,828) | $ | (14,828) | $ | 125,148 |
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Net Loss | $ | (11,261) | $ | (9,180) | $ | (26,084) | $ | (342,097) | $ | (348,557) | $ | (166,786) |
13
PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 5 – RELATED PARTY CONVERTIBLE NOTES PAYABLE
As part of the acquisition of the unproved oil and gas property, equipment and liabilities described in Note 4 Acquisition of Unproved Oil and Gas Property, Equipment and Liabilities above, the Company issued to Emporium Group 140,000 shares of its common stock along with a convertible note payable in the amount of $125,000. The convertible note payable carries a 6% cumulative interest rate and is due and payable in 3 years. This note has a conversion feature which allows Emporium Group to convert any part of the debt including accrued interest at $0.02 per share. The Company assessed the beneficial conversion feature and determined that the fair value of the underlying common stock ($1.01) at inception exceeded the conversion price of this note ($0.02) and accordingly recorded a beneficial conversion feature, capped at the face value of the note of $125,000. The beneficial conversion feature is accounted for as a debt discount which is amortized to interest expense, on a straight line basis, approximating the effective interest rate method, over the life of the note.
| Principal | Debt Discount | Accrued Interest | Principal and Accrued Interest, net of Debt Discount | ||||
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|
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|
|
May 6, 2015 (unaudited) | $ | 125,000 | $ | (125,000) | $ | - | $ | - |
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|
|
|
|
|
Interest accrued during the period |
| - |
| (1,130) |
| 1,130 |
| - |
|
|
|
|
|
|
|
|
|
Debt discount amortized in the period |
| - |
| 6,335 |
| - |
| 6,335 |
|
|
|
|
|
|
|
|
|
June 30, 2015 (unaudited) | $ | 125,000 | $ | (118,665) | $ | 1,130 | $ | 7,465 |
NOTE 6 – ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties and non-related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
The Company had received $23,488 as of June 30, 2015 and September 30, 2014, as advances from a related party to fund ongoing operations. In addition, as of June 30, 2015 and September 30, 2014, the Company had received advances totaling $59,383 and $43,183, respectively, from a former officer and majority shareholder and her spouse. All of the related party and non-related party accounts and notes payable are non-interest bearing, unsecured and due upon demand.
NOTE 7 – CONVERTIBLE NOTES PAYABLE – RELATED PARTY AND DERIVATIVE LIABILITIES
On July 1, 2013, the Company issued convertible notes payable to a related party in the amount of $77,824 that provided for the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes were variable based on certain factors, such as the future price of the Company’s common stock. Therefore, the number of shares of common stock issuable upon conversion of the promissory note was indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.
14
PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 7 – CONVERTIBLE NOTES PAYABLE – RELATED PARTY AND DERIVATIVE LIABILITIES (CONTINUED)
The fair values of the Company’s derivative liabilities were estimated at the issuance date and were revalued at each subsequent reporting date, using a lattice model. The Company recorded a discount on the convertible note payable, related party of $57,618, leaving a net balance of $20,206, and current derivative liabilities of $173,856 at September 30, 2013. The change in fair value of the derivative liabilities resulted in a gain of $2,380 for the three months ended December 31, 2013, which has been reported as gain from changes in fair value of derivative liabilities in other income (expense) in the statements of operations.
On October 4, 2013, the Company issued 29,100,002 shares of its common stock to the note holders to satisfy $76,650 of the total outstanding convertible notes payable of $77,824. Effective January 1, 2014, the Company, with the consent of the holder of the remaining note convertible totaling $1,174, amended the terms of the note payable to remove the conversion feature. The remaining $2,632 balance of the derivative liability relating to the note payable was credited to gain from changes in fair value of derivative liabilities in other income on removal of the conversion feature from the note payable.
The following is a summary of changes in the fair market value of the derivative liability during the three months ended December 31, 2013:
Balance, September 30, 2013 | $ | 173,856 |
Debt Conversion |
| (171,476) |
Change in fair market value of derivative liabilities due to the mark to market adjustment |
| 252 |
Cancellation of the conversion feature |
| (2,632) |
Balance at December 31, 2013 | $ | − |
NOTE 8 – COMMON STOCK
The authorized share capital of the Company consists of 300 million shares of $0.001 par value common stock and no shares of preferred stock.
On April 25, 2013, the board of directors authorized a reverse stock split of 1 for 100.
On February 19, 2015, the board of directors authorized a further reverse stock split of 1 for 200.
All share amounts have been adjusted retroactively, and reflect both stock splits as if they had occurred at the beginning of all periods presented.
On October 1, 2013, the Company issued 190,500 shares to a newly appointed officer and director which resulted in a change in control of the Company. The shares were valued at $335,280 or $1.76 per share, and this expense has been recognized as stock based compensation in our statement of operations. The value of these shares was determined by a valuation expert as there had been no active market trading of the Company’s stock at the date of the conversion.
On October 4, 2013, the Company issued 109,500 shares of its common stock to satisfy an outstanding convertible note payable and its bifurcated derivative liability. The outstanding convertible note payable relieved was $76,650, less unamortized discount of $57,618, along with its bifurcated derivative liability of $171,476. The shares were valued at $192,720, or $1.76 per share. These shares were valued by a valuation expert as there had been no active market trading of the Company’s stock at the date of the conversion. The following table summarizes allocation of the common shares issued in this transaction:
15
PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
NOTE 8 – COMMON STOCK (CONTINUED)
Derivative liability | $ | 171,476 |
Convertible notes payable |
| 76,650 |
Unamortized discount on convertible notes payable |
| (57,618) |
Interest expense to October 4, 2013 |
| 2,212 |
Value of shares issued to settle liabilities | $ | 192,720 |
On December 31, 2013, the Company issued 116 shares of its common stock in settlement of accounts payable, relating to services provided to the Company in the amount of $16,519. The Company valued the shares at $1.76 as determined by the valuation expert, or $205. The Company recognized a gain on the conversion of $16,314.
On May 6, 2015, the Company issued 140,000 shares of common stock for the acquisition of an unproved oil and gas property, certain equipment and liabilities described in Note 4 Acquisition of Unproved Oil and Gas Property, Equipment and Liabilities Above. The shares were valued at $1.01 per share based on the closing price of the stock on May 6, 2015.
As of June 30, 2015, there were 440,949 shares of common stock were issued and outstanding
NOTE 9 – CORRECTION OF ERRORS IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company follows guidance under ASC 250-10-45-23 for reporting any error in the financial statements of a prior period discovered after the financial statements are issued or are available to be issued. The current comparative statements as presented reflect the retroactive application of any error corrections. Certain of the balances reported in the unaudited condensed interim financial statements for the nine months ended June 30, 2014 reported on Form 10-Q, have been retroactively adjusted to reflect the adjustments made as a result of the audit of the financial statements for the year ended September 30, 2014. The accounting errors that were corrected in the previously issued financial statements are summarized below and the description of the principal transactions, as restated, are included in the Note 7 Convertible Notes Payable – Related Party and Derivative Liabilities and Note 8 Common Stock above.
NOTE 10 – SUBSEQUENT EVENTS
There are no other subsequent events for the period ended June 30, 2015 through the date these financial statements are available to be issued that would warrant further disclosures.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. Such risks include inadequate funding the company's inability to anticipate and adapt to a developing market, the failure of the company's infrastructure, changes in laws that adversely affect the company's business, the ability of the Company to manage its operations, including the amount and timing of capital expenditures and other costs relating to the expansion of the company's operations, the introduction and development of different or more extensive communities by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions.
The Company expects that its operating expenses will increase significantly, especially as it implements its business plan. To the extent that increases in its operating expenses precede or are not followed by commensurate increases in revenues, or that the Company is unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition would be materially and adversely affected. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.
GENERAL DESCRIPTION OF BUSINESS
The Company was originally incorporated in Nevada on December 5, 2005 as Kat Racing, Inc. On January 4, 2013, the Company changed its name to Prairie West Oil & Gas, Ltd and subsequently on July 26, 2013 to Pacific Oil Company.
From the Company’s inception until the Company’s transition into the oil and natural gas business in early 2013, Kat Racing’s business plan was to design, manufacture, market, sell and distribute custom off-road racing and recreational vehicles and provide marketing and lead services. Kat Racing never generated any revenue from this proposed business plan.
17
On May 6, 2015 the Company entered into a purchase and sale agreement with the Emporium Group to purchase certain rights, title, estate, and interest in the unproved petroleum and natural gas rights together with tangible assets and liabilities on a 40-acre site located in Saskatchewan, Canada. The purchase consideration for this transaction part stock and part debt. The Company issued to Emporium Group 140,000 shares of its common stock, valued at $141,400 based on the market price of $1.01 per share of our shares on the date the transaction was completed, along with a convertible note payable in the amount of $125,000 with a 6% cumulative interest rate due and payable in 3 years and the right to convert into 6,250,000 shares of our commons stock at $0.02 per share.
The lease acquired has not been in operation since 2011, and Pacific Oil Company estimates we will need to spend approximately $75,000 to $100,000 to get the well back into production. At this time we do not have the funds to get the well back in production, nor is there any guarantee that we will be successful in raising the necessary funds to get the well back into production or that the well will be able to operate on a profitable basis if it were to be returned to production.
If the Company is successful in raising the necessary $75,000 to $100,000 in funding, moving forward the plans for the acquisition are as follows:
1)
Contract an experienced heavy oil technician to go in and clean up, tune up, rework, and reactivate the well to fully producing status.
2)
Contract a service rig to clean out the well bore to increase throughput from enhanced optimization. The well in the past has produced out of the Waseca formation and our plans through this optimization is to co-mingle both the Waseca and the Sparky formation. Through this process we will increase the production, viability and profitability of the acquired well.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2015 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2014
The Company has achieved no revenue or profits to date and the Company anticipates that it will continue to incur net losses, until the recently acquired, currently non-producing, well is place into production. However, at this time we do not have the funds to get the well back in production, nor is there any guarantee that we will be successful in raising the necessary funds to get the well back into production or that the well will be able to operate on a profitable basis if it were to be returned to production.
The Company incurred a net loss of $10,511 for the three months ended June 30, 2015, compared with a net loss of $8,430 for the three months ended June 30, 2014, an increase of $2,081. The year to year variance was due to a $7,465 increase in other expenses relating to the amortization of debt discount and interest expense arising on the convertible note payable issued during the period as partial consideration for acquisition of an unproved oil and gas property, certain equipment and liabilities during the period, partially offset by a decrease in professional fees of $5,010 related to accounting and audit fees.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 2015 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2014
The Company has achieved no revenue or profits to date and the Company anticipates that it will continue to incur net losses, until the recently acquired, currently non-producing, well is place into production. However, at this time we do not have the funds to get the well back in production, nor is there any guarantee that we will be successful in raising the necessary funds to get the well back into production or that the well will be able to operate on a profitable basis if it were to be returned to production
The Company incurred a net loss of $23,834 for the nine months ended June 30, 2015, compared with a net loss of $339,847 for the nine months ended June 30, 2014, a decrease of $316,013. The year to year variance was largely due to stock issued for services of $335,280 related to the issuance of 190,500 shares of common stock to the sole officer and director of the Company during the nine months ended June 30, 2015, partially offset by a $22,293 change in other income (expense) between the two periods. During the nine months ended June 30, 2014, we recognized other income of $14,828 in respect of a gain on conversion of accounts payable and the change in fair value of derivative, compared to $7,465 in other expense that we recognized in the nine months ended June 30, 2015 relating to the amortization of debt discount and interest arising on the convertible note payable issued during the period as partial consideration for acquisition of an unproved oil and gas property, certain equipment and liabilities during the period.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2015 the Company’s current assets, comprising solely of cash, were $290 compared to $87 in current assets, also solely cash, at September 30, 2014. As at June 30, 2015, the Company’s current liabilities were $101,118 compared to $69,546 at September 30, 2014.
18
Stockholder’s equity was $173,106 as of June 30, 2015 compared to stockholders’ deficit of $69,459 as of September 30, 2014.
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, has incurred losses of $753,962 at June 30, 2015 and had a working capital deficit of $100,828 at June 30, 2015. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
During the nine month period ended June 30, 2015, the Company entered into a purchase and sale agreement with the Emporium Group to purchase rights, title, estate, and interest in the petroleum and natural gas rights together with certain equipment and related liabilities on a 40-acre site located in Saskatchewan, Canada for $261,400. We have been advised that the cost of bringing the well back to a producing status will be approximately $75,000 to $100,000. In order to raise the required capital, the Company has been in contact with several broker dealers who have expressed interest in raising the necessary funds to bring the well back into production as well as additional capital for potential future acquisitions. However, at this time we do not have the funds to get the well back in production, nor is there any guarantee that we will be successful in raising the necessary funds to get the well back into production or that the well will be able to operate on a profitable basis if it were to be returned to production
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Cash Flows from Operating Activities
For the nine month period ended June 30, 2015, net cash used by operating activities was $15,997 compared to $13,535 used in operating activities in the nine months ended June 30, 2014. During the nine months ended June 30, 2015, the Company incurred a loss of $23,834 which was reduced for cash flow purpose by $6,335 in noncash expenses, a $372 increase in the balance of its accounts payable, and a $1,130 increase in accrued interest on our convertible note payable. By comparison during the nine months ended June 30, 2014, the Company incurred a loss of $339,846, which was increased for cash flow purposes by $18,694 non cash gains on the settlement of accounts payable and the change in value of derivative, largely offset for cash flow purposes by $335,280 in non-cash expenses related to stock issued for services and a $5,859 increase in accounts payable.
Cash Flows from Investing Activities
We neither used, nor provided, cash flow from investing activities during the nine month period ended June 30, 2015 or 2014.
Cash Flows from Financing Activities
During the nine months ended June 30, 2015, the Company received $16,200 in advances payable as compared to $12,815 in advances payable during the nine months ended June 30, 2014. The increase in funding between the two periods reflects the increase in the amount of funds used in operating activities between the two periods.
19
CRITICAL ACCOUNTING POLICIES
In Financial Reporting release No. 60, "CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES" ("FRR 60"), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include: non-cash compensation valuation that affects the total expenses reported in the current period and the valuation of shares. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our secretary, treasurer and chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.
As of June 30, 2015 we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer and our chief financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this Quarterly Report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses.
CHANGES IN INTERNAL CONTROLS.
There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was not subject to any legal proceedings during the three and nine month periods ended June 30, 2015 or 2014 and, to the best of its knowledge; no legal proceedings are pending or threatened.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended June 30, 2014, the Company issued 140,000 shares of common stock as partial consideration for the acquisition of an unproved oil and gas property, certain equipment and liabilities.
The above transaction was exempt under Section 4(2) and 3(b) of the Securities Act of 1933, as amended, and the rules and regulations promulgated there under, including Regulations D, due to the fact that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution, had access to sufficient information concerning the Company, and the certificate(s) representing such shares will bear a restrictive legend.
20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no senior securities issued or outstanding during the three and nine month periods ended June 30, 2015 or 2014.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following documents are included or incorporated by reference as exhibits to this report.
Exhibit
Number
Description
31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002
101.INS †
XBRL Instance
101.SCH †
XBRL Taxonomy Extension Schema
101.CAL †
XBRL Taxonomy Extension Calculation
101.DEF †
XBRL Taxonomy Extension Definition
101.LAB †
XBRL Taxonomy Extension Labels
101.PRE †
XBRL Taxonomy Extension Presentation
* Previously filed.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: October 8, 2015
Pacific Oil Company
Registrant
By: /s/ Anthony Sarvucci
Anthony Sarvucci
Chief Executive Officer and Chief Financial Officer
21