NFiniTi inc. - Annual Report: 2016 (Form 10-K)

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $0.001 par value

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 (§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 ☑  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.  ☐

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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:

·	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, a former officer and director, 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.

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, 2016.

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. 

On October 31, 2014 the Company sold the Cecil Barlow lease in Caddo Parish, Louisiana for $36,000.  The purchase price was to be paid with an initial deposit of $6,000 minus outstanding taxes and invoices due to the operator.  The balance being paid over several installments of $6,000 every 6 months with a balloon payment of $12,000 on the eighteenth month.

 

On July 31, 2015 after not receiving, and being unable to collect any of the funds that it was owed, the Company chose to write off those funds.

Our plan of operation is to search for appropriate oil and gas leases.  In addition to the cost of any potential property lease, we anticipate spending $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 $50,000.

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 of the wells generally 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 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.

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 the 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.

There has been no bankruptcy, receivership or similar proceeding.

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.

 

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.

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.

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.

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.

We have no patents, trademarks, licenses, concessions, or labor contracts. We will pay royalties to mineral owners and owners of overriding royalties on any future oil and gas leases. These royalties usually are 25%. The leases are good and royalties are owed as long as there is production on the property.

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.

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.

 

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 officer.

We have not expended funds for research and development costs since inception.

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.

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. We have no significant operating history upon which an evaluation of our future success or failure can be made. Our net loss was $108,724 from inception to January 31, 2016. 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 have no capital, we may have to limit our acquisition activity which may result in a loss of your investment.

Because we are small and have no 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 any future wells and monthly maintenance of the wells once production commences will be carried out by an independent operator.  Failure to live up to the terms of any operating agreement or an outright cancellation of that 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 officers and directors have other outside business activities and will only be devoting 5 to 10% of their time or approximately eight to ten hours per week to our operations, our operations may be sporadic which may result in periodic interruptions or suspensions of exploration.

Because our officers and directors have other outside business activities and will only be devoting 5 to 10% of their 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 officers and directors. As a result our business plan may be periodically interrupted or suspended.

A past director will continue to exercise significant control over our company, 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.

A past 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.

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;

·	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 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.

 

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 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.

We do not currently own any property.  The Company is currently provided with office space by our officer and director at no charge.  The offices are located at 2100 West Loop South, Suite 700, Houston, TX  77027. 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.

We are not currently involved in any legal proceedings nor do we have any knowledge of any threatened litigation.

None.

 

Part II

As of January 31, 2016, 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 was listed on the OTCBB under the symbol “AOIX”.  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. Do to lack of capital the company became delinquent in their filings with the U.S. Securities and Exchange Commission.  The Company is now filing the reports required to correct the delinquency.

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.

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:

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contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;

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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;

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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;

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contains a toll–free telephone number for inquiries on disciplinary actions;

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defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

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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:

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the bid and offer quotations for the penny stock;

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the compensation of the broker–dealer and its salesperson in the transaction;

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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

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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.

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.

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 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.

We do not have any equity compensation plans and accordingly we have no securities authorized for issuance there under.

We did not purchase any of our shares of common stock or other securities during the year ended January 31, 2016.

 

 

The following table provides selected financial data about our company for the years ended January 31, 2016 and 2015.

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 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.

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. 

 

On October 31, 2014 the Company sold the Cecil Barlow lease in Caddo Parish, Louisiana for $36,000.  The purchase price was to be paid with an initial deposit of $6,000 minus outstanding taxes and invoices due to the operator.  The balance being paid over several installments of $6,000 every 6 months with a balloon payment of $12,000 on the eighteenth month.

On July 31, 2015 after not receiving and being unable to collect any of the funds that it was owed, the Company chose to write off those funds.

Our plan of operation is to search for appropriate oil and gas leases.  In addition to the cost of any potential property lease, we anticipate spending $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 $50,000.

We have no off-balance sheet arrangements.

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 no revenues are anticipated until we begin extracting minerals, if they are found.  There is no assurance we will ever reach that point.

 

 

 

		As of				As of
		January 31, 2016				January 31, 2015
ASSETS
Current Assets
Cash		$	-			$	540
Note Receivable			-				6,000
Total Current Assets			-				6,540
Long Term Note Receivable			-				8,714
Total Assets		$	-			$	15,254
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable		$	10,415			$	10,105
Loans Payable - Related Parties			40,249				37,000
Total Current Liabilities			50,664				47,105
Commitments and Contingencies
Stockholders' Deficit
Common stock, $0.001 par value, 75,000,000 shares authorized;
20,000,000 shares issued and outstanding as of January 31, 2016 and January 31, 2015			20,000				20,000
Additional Paid-In Capital			40,000				40,000
Accumulated Deficit			(110,664	)			(91,852	)
Total Stockholders' Deficit			(50,664	)			(31,852	)
Total Liabilities & Stockholders' Deficit		$	0			$	15,254

 

 

 

AMERICAN OIL & GAS INC.

		Year ended				Year ended
		January 31, 2016				January 31, 2015
Revenues
Oil and Gas		$	-			$	967
Total Revenues			-				967
Expenses
Operating Expenses			-				12,222
General and Administration			3,979				5,858
Depletion			-				2,933
Bad Debt			14,714				-
Professional Fees			5,653				14,615
Total Expenses			24,345				35,628
Net Ordinary (Loss)			(24,345	)			(34,661	)
Other Income
Other Income
Debt Forgiveness			5,533				-
Gain on Disposal of Asset			-				4,389
Total Other Income			5,533				4,389
Net Income (Loss)		$	(18,812	)		$	(30,271	)
Net Loss Per Basic and Dilited share		$	(0.00	)		$	(0.00	)
Weighted average number of Common Shares outstanding			20,000,000				20,000,000

 

 

 

 

See Notes to Financial Statements

 

AMERICAN OIL & GAS INC.

 

						Common				Additional				Accumulated
		Common				Stock				Paid-in				Deficit
		Stock				Amount				Capital				January 31, 2015 and 2016				Total
Balance, January 31, 2014			20,000,000			$	20,000			$	40,000			$	(61,580	)		$	(1,580	)
Net loss,  January 31, 2015															(30,271	)			(30,271	)
Balance, January 31, 2015			20,000,000				20,000				40,000				(91,851	)			(31,851	)
Net loss, January 31, 2016															(18,812	)			(18,812	)
Balance, January 31, 2016			20,000,000			$	20,000			$	40,000			$	(110,664	)		$	(50,664	)

 

 

 

See Notes to Financial Statements

 

 

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, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

The name, age and title of our executive officers/directors at the date of this report is as follows:

The foregoing persons are 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.

 

 

Shane Reeves and Ronald Pantin Carvallo currently devote 8-10 hours per week to company matters, in the future they intend 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.

Shane Reeves has held executive level positions in public and private oil and gas companies in the United States and Colombia.  He is the founder and president of Outlaw Operating Ltd, a Colorado oil and gas operator.  He is the founder and president of Omni Capital Ltd. Omni Capital is a consulting firm to the natural resources sector, raising debt and equity capital, locating distressed opportunities, identifying exploration and developmental projects throughout North and South America.  Mr. Reeves is a co-founder and director of a private company focused in Latin America with assets in the Lower Magdalena Basin of Colombia.  Mr. Reeves has been operating in the Republic of Colombia since 2008. He was the former president of an ANH approved Colombian oil and gas operator which was sold to a public oil and gas company.

Ronald Pantin Carvallo was the co-founder, Chief Executive Officer and Executive Director of Pacific Exploration & Production until the end of November 2016.  Mr. Pantin worked in the Venezuelan oil industry for twenty-three years prior to his appointment as CEO of Pacific Rubiales in 2007.  He held numerous positions at Petróleos de Venezuela (PDVSA), including Vice Chairman of Corpoven, Vice President of PDVSA E&P, President of CVP, President of PDVSA Exploration, President of PDVSA Servicios, and Executive Vice President of PDVSA Oil & Gas. Immediately after PDVSA, Mr. Pantin joined Enron Venezuela as its President. Mr. Pantin holds two bachelor degrees in Petroleum Engineering and Management Science from Mississippi State University with the highest distinction in 1975, and two M.Sc. In Petroleum Engineering and Industrial Engineering from Stanford University in 1977.  He is a member of the Board of Directors of several international companies in the energy and mining sector.  Mr. Pantin has been awarded several internationals awards: “Latin Trade, Pioneering CEO of the year 2010”, "SPE Leadership, growth and performance Colombia SPE 2010”, "SPE Young Professional Colombia 2009".

Code of Ethics

 

We do not currently have a code of ethics, because we have only limited business operations and only two officers and directors, 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.

Our current officers receive no compensation.  The current Board of Directors is comprised of Shane Reeves and Ronald Pantin Carvallo, who joined the company in 2017.  The following tables represent the time periods covered by this annual report through the year ended January 31, 2016 and the positions held by Mr. Reeves at January 31, 2016.

 

 

Name and Principal Position		Year		Salary		Bonus		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and Non-qualified Deferred Compensation Earnings		All Other Compensation		Total
Shane Reeves,		2014		0		0		0		0		0		0		0		0
President,		2015		0		0		0		0		0		0		0		0
CFO & CEO		2016		0		0		0		0		0		0		0		0

		Option Awards																												Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Shane Reeves, CEO & CFO			0				0				0				0				0				0				0				0				0

Name		Fees Earned or Paid in Cash				Stock Awards				Option Awards				Non-Equity Incentive Plan Compensation				Change in Pension Value and Nonqualified Deferred Compensation Earnings				All Other Compensation				Total
Shane Reeves, Director			0				0				0				0				0				0				0

 

There are no current employment agreements between the company and its executive officers. The officers have 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.

In January 2012 a past officer and director, 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.

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.

 

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of January 31, 2016 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
		Name and Address of		Nature of		Percentage of
Title of Class		Beneficial Owner		Beneficial Ownership		Common Stock(1)
Common Stock		Robert Gelfand		10,000,000
		Suite 400-601 West Broadway		Direct		50%
		Vancouver, BC  V5Z 4C2
		Shane Reeves				None
		6860 S. Yosemite Court
		Centennial, CO  80112
Common Stock		Officer/Director and Holders of More than 5% of Our Common Stock		10,000,000		50%

 

(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 a past officer and director.

 

 

As of January 31, 2016, a total of 10,000,000 shares have been issued to Robert Gelfand, a past 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.  Mr. Gelfand does not have any plans to sell his shares at this time.

In January 2012 Mr. Gelfand, a past officer and director, 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. (See "Principal Stockholders".)

We do not currently have any conflicts of interest by or among our current officers, directors, key employees 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.

PART IV

The following exhibits are included with this filing:

* Included in our Registration Statement of Form S-1 under Commission File Number 333-180164.

 

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.