NFiniTi inc. - Quarter Report: 2021 July (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number 333-180164

Nevada
(State or other jurisdiction of incorporation or organization)

Circuito Playa Del Carmen

Av. Los Amores No. 400-68

Bucerias, Nayarit

Mexico  63732

(Address of principal executive offices, including zip code.)

+523221984348
(Telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically 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 such files). Yes ☒    NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, an emerging growth company or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐     NO ☒

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 20,000,000 shares as of September 7, 2021

ITEM 1. FINANCIAL INFORMATION

The Accompanying Notes are an Integral Part of These Condensed Unaudited Financial Statements

The Accompanying Notes are an Integral Part of These Condensed Unaudited Financial Statements

The Accompanying Notes are an Integral Part of These Condensed Unaudited Financial Statements

AMERICAN OIL & GAS INC.

Notes to Condensed Financial Statements

Nine Months Ended July 31, 2021 and 2020

(Unaudited)

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

American Oil and Gas Inc. (the Company) was incorporated under the laws of the State of Nevada on January 23, 2012. The Company was formed to engage in the acquisition, exploration and development of oil and gas properties.

The Company is in the exploration stage. The Company currently does not operate any properties. The Company has not commenced any exploration activities.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected an October 31, year-end.

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2020 as reported in the Form 10-K have been omitted.

Basic Earnings (Loss) Per Share

The Company follows ASC No. 260, “Earnings Per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. 

Basic net earnings (loss) per share amounts is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding.  Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of potentially dilutive items outstanding.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

AMERICAN OIL & GAS INC.

Notes to Condensed Financial Statements

Nine Months Ended July 31, 2021 and 2020

(Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 

Fair Value of Financial Instruments

The carrying amount of cash, account payable and loans payable – related parties approximate their estimated fair value due to the short-term maturities of these financial instruments.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred income taxes. Deferred income taxes are recognized for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Deferred income taxes are also recognized for net operating loss carryforwards that are available to offset future taxable income and research and development credits.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2020 and prior. Based on evaluation of the 2020 transactions and events, the Company does not have any material uncertain tax positions that require measurement. Because the Company had a full valuation allowance on its deferred tax assets as of July 31, 2021 and 2020, the Company has not recognized any tax benefits since inception.

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at July 31, 2021 or 2020, and have not recognized interest and/or penalties in the statement of operations for the three and nine months ended July 31, 2021 or 2020.

Advertising

The Company will expense its advertising when incurred. There has been no advertising since inception.

Oil and Gas Properties

Oil and gas investments are accounted for by the successful efforts’ method of accounting. Accordingly, the costs incurred to acquire property (proved and unproved), all development costs, and successful exploratory costs are capitalized, whereas the costs of unsuccessful exploratory wells are expensed.

Depletion of capitalized oil and gas well costs are provided using the units of production method based on estimated proved developed oil and gas reserves of the respective oil and gas properties.

AMERICAN OIL & GAS INC.

Notes to Condensed Financial Statements

Nine Months Ended July 31, 2021 and 2020

(Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 

Stock Transactions

Transactions, other than stock-based compensation, are in accordance with ASC No. 505. Employee and non-employee stock-based compensation issuances accounted for in accordance with ASC No. 718. These issuances shall be accounted for based on the grant date fair value of the equity instruments issued.

NOTE 3. RECENT ACCOUNTING PRONOUCEMENTS

The Company has evaluated all the recent accounting pronouncements through the date the financial statements were issued and believe that none of them will have a material effect on the Company’s financial statements.

NOTE 4. GOING CONCERN

The accompanying financial statements are presented on a going concern basis. The Company has had limited operations during the period from January 23, 2012 (date of inception) to July 31, 2021 and generated an accumulated deficit of $136,975. This condition raises substantial doubt about the Company’s ability to continue as a going concern. The Company is currently in the exploration stage with no operations and has minimal expenses, however, management believes that the Company’s current cash is insufficient to cover the expenses they will incur during the next twelve months in a limited operations scenario or until it raises additional funding. The Company has depended upon loans from its president and a major shareholder for operating capital. As of July 31, 2021, the Company had a working capital deficit of $76,975 and $0 cash, compared to a working capital deficit of $64,154 and cash of $0 as of October 31, 2020.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 5. RELATED PARTY TRANSACTIONS

As of July 31, 2021, $18,577 is owed to Shane Reeves, a former president of the Company, $1,713 is owed to Michael Noble, current president of the Company and $49,397 is owed to Robert Gelfand, a major shareholder, from funds loaned by them to the Company and are non-interest bearing with no specific repayment terms. At October 31, 2020, $18,577 was owed to Shane Reeves and $38,224 was owed to Robert Gelfand, a major shareholder, from funds loaned by them to the Company and are non-interest bearing with no specific repayment terms.

NOTE 6. STOCKHOLDERS’ DEFICIT

The stockholders’ deficit section of the Company contains the following classes of capital stock as of July 31, 2021 and October 31, 2020:

Common stock, $ 0.001 par value: 75,000,000 shares authorized; 20,000,000 shares issued and outstanding.

NOTE 7. SUBSEQUENT EVENTS

The Company has evaluated events subsequent to the date these financial statements were issued to assess the need for potential recognition or disclosure in this report. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Forward Looking Statements

This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Results of Operations

We are still in our exploration stage and have generated $3,918 in revenues to date.  We generated no revenue for the three and nine-month periods ended July 31, 2021 and 2020.

We incurred operating expenses of $2,569 and $0 for the three-month periods ended July 31, 2021 and 2020, respectively. The operating expenses were comprised of professional fees.

The increase was due to the professional fees associated with keeping the Company current in its filings with the SEC.

We incurred operating expenses of $12,821 and $950 for the nine-month periods ended July 31, 2021 and 2020, respectively.  The operating expenses were comprised of professional fees. 

The increase was due to the current management of the Company bringing the Company current in its filings with the SEC and the audit and other professional fees associated with that.

Our net loss for the three months ended July 31, 2021 and 2020 was $2,569 and $0, respectively.

Our net loss for the nine months ended July 31, 2021 and 2020 was $12,821 and $950, respectively.  

Liquidity and Capital Resources

Our cash balance at July 31, 2021 was $0, with $7,288 in accounts payable and $69,687 in loans payable to related parties. If we experience a shortage of funds in the next twelve months, we may utilize additional funds from our director, Michael Noble and our major shareholder, Robert Gelfand, who have agreed to advance funds for operations, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to us.

Plan of Operation

Our current cash balance is $0, which is not sufficient to cover the expenses we will incur during the next twelve months. In order to achieve our business plan goals, we must lease property and will need to realize revenue from oil & gas sales. We are an exploration stage company and have generated $3,918 in revenue from inception to July 31, 2021. We have sold $60,000 in equity securities to pay for our start-up operations.

Our plan of operation for the fiscal year 2021 will be on pursuing the acquisition of leases and/or existing oil and gas wells which have potential for production. We will also be searching for other business opportunities in the event we cannot acquire any new wells or leases. We anticipate spending $10,000 on professional fees, including fees payable for complying with reporting obligations, $5,000 in general administrative costs and $1,500 in working capital. Total expenditures over the next 12 months are therefore expected to be approximately $16,500. If we are able to secure a new oil or gas lease the cost would be in addition to this anticipated expenditure amount.

New management has brought the Company current in its filings with the Securities and Exchange Commission and will maintain compliance going forward. Prior management failed to maintain compliance and was subsequently removed by a vote of the majority of the shareholders. The Company filed a report on Form 10-K for the years ended October 31, 2020 and 2019. Current management and a majority shareholder will provide funds to pay the costs of compliance until such a time as the Company generates revenue to fund operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Going Concern

Our auditor has issued a going concern opinion on our October 31, 2020 audited financial statements. 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required under Rule 12b-2 of the Securities Exchange Act of 1934 for “smaller reporting companies.”

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of July 31, 2021.

Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Controls over Financial Reporting

As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the quarter ended July 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Our Company is not involved in any material litigation and we are unaware of any threatened material litigation. From time to time, we may become involved in litigation relating to claims arising from the ordinary course of our business.

ITEM 1A. RISK FACTORS

Not required under Rule 12b-2 of the Securities Exchange Act of 1934 for “smaller reporting companies.”

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the period ended July 31, 2021.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS.

The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Registration Statement on Form S-1, filed under SEC File Number 333-180164, at the SEC website at www.sec.gov:

SIGNATURES

Pursuant to the requirements 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.