UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to
________________
Commission File Number
000-26907
CHEETAH OIL AND GAS
LTD.
(Exact name of registrant as specified in its charter)
Nevada
|
93-1118938
|
(State or other jurisdiction of incorporation or
organization)
|
(IRS Employer Identification No.)
|
|
|
17 Victoria Road, Nanaimo, B.C.
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V9R 4N9
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(Address of principal executive offices)
|
(Zip Code)
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250-714-1101
(Registrants telephone number,
including area code)
N/A
(Former name, former address and
former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] YES
[ ] NO
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§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 whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ]
|
|
Accelerated
filer
[ ]
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Non-accelerated filer [ ]
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(Do not check if a smaller
reporting company)
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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 [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
[ ]
YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date.
13,039,000 common shares issued and outstanding as of May 12, 2011.
1
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements.
Our unaudited interim financial statements for the three month
period ended March 31, 2011 form part of this quarterly report. They are stated
in United States Dollars (US$) and are prepared in accordance with United States
generally accepted accounting principles. These interim unaudited financial
statements should be read in conjunction with our Companys audited financial
statements and the 10-K for the year ended December 31, 2010.
2
Financial Statements
Cheetah Oil & Gas Ltd.
March 31, 2011
Cheetah Oil & Gas Ltd.
BALANCE SHEETS
(Unaudited,
expressed in U.S. dollars)
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March 31,
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December 31,
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2011
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2010
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(Unaudited)
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(Audited)
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$
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$
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ASSETS
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Current
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Cash and cash equivalents
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24,646
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14,262
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Receivables
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24,462
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44,200
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Total Current Assets
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49,108
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58,462
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Oil & gas properties
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308,652
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316,884
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Equipment
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1,269
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1,336
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TOTAL ASSETS
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359,029
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376,682
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LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
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LIABILITIES
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Current
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Accounts payable and accrued liabilities
[note 3]
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298,633
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476,423
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Accrued drilling costs
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11,160
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20,730
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Total Current Liabilities
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309,793
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497,153
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Long term drilling liability
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5,600
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6,800
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Loan payable
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39,283
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39,001
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Asset retirement obligation
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2,515
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2,515
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TOTAL LIABILITIES
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357,191
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545,469
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STOCKHOLDERS' EQUITY (DEFICIT)
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Preferred stock, $0.001 par
value, authorized 100,000,000 shares
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-
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-
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Common stock
[note 3]
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Common stock, $0.001 par
value, authorized 50,000,000
shares
issued and
outstanding: 13,039,000
shares
[December 31, 2010 -
11,103,625 shares]
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13,039
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11,104
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Additional paid in capital
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16,367,822
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16,176,382
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Accumulated deficit
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(16,379,023
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)
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(16,356,273
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)
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Total Stockholders' Equity (Deficit)
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1,838
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(168,787
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)
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
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359,029
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376,682
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See accompanying notes
4
Cheetah Oil & Gas Ltd.
STATEMENTS OF
OPERATIONS
(Unaudited, expressed in U.S. dollars)
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Three months
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Three months
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ended
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ended
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March 31,
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March 31,
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2011
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2010
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$
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$
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Revenue
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Natural oil & gas revenue
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55,844
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13,010
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Cost of revenue
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Natural oil & gas operating costs and production
taxes
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23,643
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7,920
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Depreciation, depletion and amortization
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8,233
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2,152
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23,968
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2,938
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General and administrative expenses
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Accounting, audit and legal
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18,243
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35,844
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Depreciation
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67
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84
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Interest
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1,451
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241
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Consulting fees
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20,800
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30,000
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Other
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5,584
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10,637
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Stock-based compensation
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-
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-
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46,145
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76,806
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Loss before other income (expense)
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(22,177
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)
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(73,868
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)
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Foreign exchange gain (loss)
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(573
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)
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(200
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)
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Forgiveness
of debt
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-
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-
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Net loss
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(22,750
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)
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(74,068
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)
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Loss per share basic and diluted
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Net loss
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$
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(0.00
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)
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$
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(0.01
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)
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Weighted average number of common stock outstanding -
basic and diluted
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12,393,875
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10,728,625
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See accompanying notes
5
Cheetah Oil & Gas Ltd.
STATEMENTS OF CASH
FLOWS
(Unaudited, expressed in U.S. dollars)
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Three
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Three
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months ended
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months ended
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March 31,
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March 31,
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2011
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2010
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$
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$
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OPERATING ACTIVITIES
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Net loss for the period
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(22,750
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)
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(74,068
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)
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Adjustments to reconcile net loss to net
cash provided by operating activities:
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Depreciation & depletion
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8,300
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2,236
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Debt forgiveness
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-
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-
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Interest on warrants
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-
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-
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Non-cash interest fees
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-
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-
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Stock-based compensation
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-
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-
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Change in other assets and liabilities:
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-
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Accounts receivable
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19,738
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|
|
538
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Accounts payable and accrued drilling
liabilities
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5,096
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33,915
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Net cash
provided by (used in) operating activities
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10,384
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(37,379
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)
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FINANCING ACTIVITIES
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Obligation to issues shares
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-
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-
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Net loan proceeds
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-
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-
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Long-term drilling liability
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-
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-
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Purchase of Cheetah shares for cancellation
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-
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-
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Net cash from
financing activities
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-
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-
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INVESTING ACTIVITIES
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Accounts receivable
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-
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62,500
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Purchase of oil & gas properties
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-
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-
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Net cash
provided by (used in) investing activities
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-
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62,500
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Increase (decrease) in cash and cash
equivalents
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10,384
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25,121
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Cash and cash
equivalents, beginning of period
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14,262
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164,006
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Cash and cash equivalents, end of period
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24,646
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189,127
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SUPPLEMENTAL CASH FLOW DISCLOSURES:
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Non-cash investing and financing activities
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|
|
|
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Common stock
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1,935
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|
|
-
|
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Accounts payable settled for shares
|
|
(193,375
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)
|
|
-
|
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Additional paid in capital
|
|
191,440
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|
|
-
|
|
|
|
|
|
|
-
|
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|
|
-
|
|
|
-
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|
See accompanying notes
6
Cheetah Oil & Gas Ltd.
NOTES TO FINANCIAL
STATEMENTS
(expressed in U.S. dollars)
March 31, 2011
1. BASIS OF PRESENTATION
The following interim unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-K
as promulgated by the Securities and Exchange Commission. Accordingly, these
financial statements do not include all of the disclosures required by generally
accepted accounting principles for complete financial statements. These interim
unaudited financial statements should be read in conjunction with the Companys
audited financial statements for the year ended December 31, 2010. In the
opinion of management, the interim unaudited financial statements furnished
herein include all adjustments, all of which are of a normal recurring nature,
necessary for a fair statement of the results for the interim period
presented.
The statements of operations and cash flows reflect the results
of operations and the changes in cash flows of the Company for the three month
period ended March 31, 2011 and 2010. Operating results for the three-month
period ended March 31, 2011 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2011.
2. GOING CONCERN UNCERTAINTY
These financial statements have been prepared in accordance
with accounting principles generally accepted in the United States applicable to
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
The Company has incurred a net loss of $22,750 for the three month period ended
March 31, 2011 [2009 - $74,068] and at March 31, 2011 had a deficit accumulated
during the exploration stage of $16,379,023 [2010 - $16,356,273]. The Company
has generated revenue, however we have a substantial accumulated deficit and
negative working capital of $260,685 as at March 31, 2011 [2010 - $438,691].
Although our Company does not have sufficient funds to acquire new business
assets, the increase in revenues is sufficient to maintain its existing
operations at this time. If the Company decides to acquire new business assets,
Managements plan in this regard would be to raise equity and/or debt financing
when required but there is no certainty that such financing will be available or
that it will be available at acceptable terms. The outcome of these matters
cannot be predicted at this time.
These financial statements do not include any adjustments to
reflect the future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that might result from the outcome
of this uncertainty.
3. COMMON STOCK
Common Stock
On January 31, 2011 the Company closed on a private placement
with its three (3) directors for fees due as at December 31, 2010 totaling
$193,375 for 1,935,375 units at a unit price of $0.10 per unit. Each unit is
comprised of one restricted common share and one warrant to purchase one
additional share of common stock, exercisable until January 31, 2013. The exercise price of the warrants is $0.20.
4. SUBSEQUENT EVENTS
The Companys management has evaluated subsequent events
through May 16, 2011, the date the financial statements were issued.
F-1
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors" that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law and including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our unaudited interim financial statements are stated in United
States dollars and are prepared in accordance with United States generally
accepted accounting principles. The following discussion should be read in
conjunction with our Companys audited financial statements and 10-K for the
year ended December 31, 2010 and unaudited interim financial statements and the
related notes that appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all
references to "common stock" refer to common shares in the capital of our
Company and the terms "we", "us", "our" and "our Company" mean Cheetah Oil &
Gas Ltd.
General Overview
We were incorporated under the laws of the State of Nevada on
May 5, 1992 under the name Bio-American Capital Corporation. On May 25, 2004 we
changed our name to Cheetah Oil & Gas Ltd.
On June 19, 2009 with the approval of our board of directors, a
certificate of change was filed with the Nevada Secretary of State, effecting a
4 for 1 consolidation of our authorized and issued and outstanding shares of
common stock. The certificate of change had an effective date of July 17, 2009.
On July 15, 2009, our board of directors approved an amendment
to the consolidation so that the consolidation would be on a 10 for 1 basis. In
connection with the amendment of the consolidation, our Company filed a
certificate of correction with the Nevada Secretary of State, wherein our
authorized and issued and outstanding shares of common stock would be
consolidated on a 10 for 1 basis, with an August 15, 2009 effective date.
As a result, effective August 15, 2009, our authorized capital
decreased from 500,000,000 shares of common stock with a par value of $0.001 to
50,000,000 shares of common stock with a par value of $0.001 and our issued and
outstanding shares decreased from 37,086,740 shares of common stock to 3,708,674
shares of common stock.
The consolidation became effective with the Over-the-Counter
Bulletin Board at the opening for trading on August 20, 2009 under the stock
symbol COHG. Our CUSIP number is 163076201.
We have not been involved in any bankruptcy, receivership or
similar proceeding.
We are engaged in the exploration for and production of oil and
natural gas, primarily in the State of Mississippi USA. Previously, we were
engaged in the exploration for petroleum and natural gas in the country of Papua
New Guinea through our ten percent equity interest in Cheetah Oil
& Gas B.C. Ltd. (Cheetah BC). On November 25, 2008, we sold our remaining
10% interest in Cheetah BC.
3
Our Current Business
We are engaged in the exploration for and production of oil and
natural gas, primarily in the State of Mississippi, USA.
On April 3, 2009, our Company entered into an asset purchase
agreement with Delta Oil & Gas, Inc. and The Stallion Group wherein our
Company agreed to acquire an 8% interest in certain oil and gas interests
located in the State of Mississippi, known as the Belmont Lake field. The
Belmont Lake field currently has two producing wells. In addition to acquiring
the 8% working interest, we acquired a 40% working interest on an option to
drill wells on over 130,000 acres of exploration lands. These lands have
extensive existing 2-D and 3-D seismic coverage and the project operations have
identified multiple targets for potential future drilling. We acquired these
assets for $179,309.
Effective August 31, 2009, we entered into an assignment
agreement with Golden Aria Corp., now known as Enertopia Corp. The assignment
agreement dated August 28, 2009, provides for the purchase by Enertopia of a
revenue interest of 40.432% of our 8% share of our net revenue after field
operating expenses from our Belmont Lake PP F-12-4 horizontal well, located in
Belmont Lake Field, Wilkinson County, Mississippi. As consideration, Enertopia
has agreed to pay 57.76% of our costs currently budgeted at $77,905, subject to
revision and 57.76% of our 8% share of PP F-12-4 well costs from time to time
for infrastructure, pipes, tanks, compressors, trucking, etc.
Effective August 31, 2009, we entered into an assignment
agreement with David DeMartini. The assignment agreement dated August 28, 2009,
provides for the purchase by DeMartini of a revenue interest of 75% in our
non-perpetual 8% gross interest, 5.20% net working interest in the Belmont Lake
PPF-12-4 horizontal well located in the Belmont Lake Field, Wilkinson County,
Mississippi. As consideration, DeMartini has agreed to pay 100% of our Companys
costs subject to revision. The assignment of the interest is limited to a gross
500% revenue payout based on the total amount paid for the working interest,
after which all rights, interests and benefits cease. As consideration,
DeMartini has agreed to pay 100% of our costs currently budgeted at $77,905,
subject to revision and 100% of our Companys 8% share of PP F-12-4 well costs
from time to time for infrastructure, pipes, tanks, compressors, trucking,
etc.
Effective August 31, 2009, we entered into a partial release
and acknowledgement agreement dated August 29, 2009 with Sage Investments Ltd.
Pursuant to the partial release and acknowledgement, Sage has agreed to release
its security interest in certain assets of our Company.
On October 17, 2009 we received a full release and
acknowledgement with Sage Investments Ltd. by issuing an aggregate of 1,180,000
shares of common stock at a deemed price of $0.05 per share to settle the
existing debt with Sage Investments.
On May 31, 2010, we signed a settlement agreement with
Enertopia Corp. for an assignment agreement that was entered into by our Company
and Enertopia effective August 31, 2009, whereby Enertopia paid a fee of $45,000
to earn a 57.76% share of our 8% interest in a proposed oil well to be drilled
in Wilkinson County, Mississippi. Our Company and Enertopia wished to settle the
assigned interest by making such assignment null and void, and issuing common
shares and warrants of our Company in exchange for the $45,000 earlier received
by Enertopia. We agreed to allot and issue to Enertopia 375,000 restricted
shares of our common stock at a deemed price of $0.12 per share for each $0.12
of the claim amount, and for each such share so issued, will issue one warrant
to purchase a further share of our Company at a price of $0.20 per share for a
term of two years as full and final settlement of the $45,000.00. The shares
were issued on September 13, 2010 to Enertopia.
On July 22, 2010 the board approved the transfer of an
assignment letter dated August 31, 2009 between our Company and David DeMartini
to Emerald Atlantic LLC.
4
On July 22, 2010, we signed an assignment agreement with
Emerald Atlantic LLC., whereby Emerald Atlantic LLC can earn a 75% share of our
8% non-perpetual interest in two of the three proposed oil wells (12-2, 12-4,
and 12-5) to be drilled in Wilkinson County, Mississippi. The old assignment
agreement dated August 28, 2009 was terminated by mutual consent between David
DeMartini, Emerald Atlantic LLC and our Company.
Effective September 13, 2010, we entered into a loan agreement
with Cornelius OConnell wherein OConnell agreed to loan our Company $24,000.
The principal of the loan is to be repaid within two years and accrues interest
at 15% per annum. Pursuant to the terms of the loan agreement, our Company
issued to OConnell 200,000 warrants expiring on September 13, 2013 at an
exercise price of $0.12 per warrant. Each warrant is exercisable into one share
of common stock of our Company.
On September 13, 2010, we also entered into an asset pledge
agreement with OConnell, wherein we have agreed to pledge to OConnell first
charge on our Companys 100% interest in our 8% gross interest held in the
PPF-12 oil well at our Belmont Lake property for a maximum amount owing on the
loan and any accrued interest remaining until the loan is paid in full.
In addition to the loan and asset pledge agreements, we have
entered into a demand promissory note with OConnell representing the $24,000
loan.
Effective November 19, 2010, we entered into a loan agreement
with Hugh W. Reid & Associates Ltd. and David Bond wherein both Hugh W. Reid
& Associates and David Bond agreed to loan our Company $5,000 each. The
principal of the loan is to be repaid within two years and accrues interest at
15% per annum.
On November 19, 2010, we also entered into an asset pledge
agreement with Hugh W. Reid & Associates Ltd and David Bond, wherein we have
agreed to pledge to both parties first charge on our Companys 100% interest in
our 8% gross interest held in the PPF-12-3A oil well at our Belmont Lake
property for the principal and accrued interest owing to the lender until the
loan is paid in full.
In addition to the loan and asset pledge agreements, we have
entered into a demand promissory note with Hugh W. Reid & Associates Ltd.
and David Bond.
On December 14, 2010, we entered into a consulting agreement
with Donald Findlay. The consulting agreement provides for the basic
remuneration of Donald Findlay for services to be rendered as president of our
Company at the rate of $1,500 per month.
Effective December 20, 2010, we entered into a loan agreement
with Renata Manton wherein she agreed to loan our Company $5,000. The principal
of the loan is to be repaid within two years and accrues interest at 15% per
annum.
On December 20, 2010, we also entered into an asset pledge
agreement with Renata Manton, wherein we have agreed to pledge to Renata Manton
first charge on our Companys 100% interest in our 8% gross interest held in the
PPF-12-3A oil well at our Belmont Lake property for the principal and accrued
interest owing to the lender until the loan is paid in full.
In addition to the loan and asset pledge agreement, we have
entered into a demand promissory note with Renata Manton.
Effective December 20, 2010, we entered into an assignment
agreement with Sage Investments Ltd. The assignment agreement, provides for the
purchase by Sage of a revenue interest of 4% share of the PPF 12-5 well
recompletion and injection line expenses until such time the well achieves 500%
revenue payout on the recompletion and injection line expenses.
We are currently seeking opportunities to acquire prospective
or producing oil and gas properties or other oil and gas resource related
projects.
5
We are not able to fund our cash requirements through our
current operations. Historically, we have been able to raise a limited amount of
capital through private placements of our equity stock, but we are uncertain
about our continued ability to raise funds privately. Further, we believe that
our Company may have difficulties raising capital until we locate a prospective
property through which we can pursue our plan of operation. If we are unable to
secure adequate capital to continue our acquisition efforts, our shareholders
may lose some or all of their investment and our business may fail.
Cash Requirements
We currently hold an 8% interest in certain oil and gas
interests located in the State of Mississippi, known as the Belmont Lake field.
The Belmont Lake field currently has four producing wells, which has been
producing approximately 150 bbl/d. In addition to the 8% working interest, we
hold a 40% working interest on an option to drill wells on over 132,000 acres of
exploration lands. These lands have extensive existing 2-D and 3-D seismic
coverage and the project operations have identified multiple targets for
potential future drilling.
Our Company has a limited operating history. There is no
assurance that we will be able to maintain operations at a level sufficient for
an investor to obtain a return on his investment in our common stock. Further,
we may continue to be unprofitable.
Results of Operations Three months Ended March 31, 2011
and 2010
The following summary of our results of operations should be
read in conjunction with our financial statements for the three month period
ended March 31, 2011 which are included herein.
Our operating results for the three months ended March 31,
2011, for the three months ended March 31, 2010 and the changes between those
periods for the respective items are summarized as follows:
|
|
|
|
|
|
|
|
Change Between
|
|
|
|
|
|
|
|
|
|
Three Month Period
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
Three months Ended
|
|
|
Three months Ended
|
|
|
March 31, 2011 and
|
|
|
|
March 31, 2011
|
|
|
March 31, 2010
|
|
|
March 31, 2010
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Revenue
|
|
55,844
|
|
|
13,010
|
|
|
42,834
|
|
Operating costs & production taxes
|
|
(23,643
|
)
|
|
(7,920
|
)
|
|
(15,723
|
)
|
Depletion, amortization &
depreciation
|
|
(8,300
|
)
|
|
(2,236
|
)
|
|
(6,064
|
)
|
Accounting, audit and legal
|
|
(18,243
|
)
|
|
(35,844
|
)
|
|
17,601
|
|
Interest
|
|
(1,451
|
)
|
|
(241
|
)
|
|
(1,210
|
)
|
Consulting fees
|
|
(20,800
|
)
|
|
(30,000
|
)
|
|
9,200
|
|
Other
|
|
(5,584
|
)
|
|
(10,637
|
)
|
|
5,053
|
|
Stock-based compensation
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Foreign exchange gain (loss)
|
|
(573
|
)
|
|
(200
|
)
|
|
(373
|
)
|
Net loss for the period
|
|
(22,750
|
)
|
|
(74,068
|
)
|
|
51,318
|
|
6
Revenues
We had revenues of $55,844 during the three months ended March
31, 2011 as compared to revenues of $13,010 during the three months ended March
31, 2010. The $42,834 increase is due to an increase in oil and gas production.
Natural Oil & Gas Operating Costs.
We had oil & gas operating costs of $23,643 during the
three months ended March 31, 2011 as compared to oil and gas operating costs of
$7,920 during the three months ended March 31, 2010. The $15,723 increase is a
result of increase operating costs due to increased oil and gas production.
The $6,064 increase in depletion costs for the three months ended
March 31, 2011 was due to increase production.
Accounting, Audit and Legal
The $17,601decrease in accounting, audit and legal fees for the
three months ended March 31, 2011 was primarily due to a decrease in auditing
and accounting fees.
Consulting Fees and Directors Fees
Consulting fees decreased by $9,200 during the three months
ended March 31, 2011 compared to the same period in 2010. The decrease is due to
lower fees paid to one director.
Other
Other expenses decreased by $5,053 from the three months ended
March 31, 2011 compared to the three months ended March 31, 2010. The decrease
was primarily due to lower general and administrative expenses for the period.
Liquidity and Financial Condition
Working Capital
|
|
At
|
|
|
At
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
Current assets
|
$
|
49,108
|
|
$
|
58,462
|
|
Current liabilities
|
$
|
309,793
|
|
$
|
497,153
|
|
Working capital
|
$
|
(260,685
|
)
|
$
|
(438,691
|
)
|
Cash Flows
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
Cash flows provided by (used in) operating
activities
|
$
|
10,384
|
|
$
|
(37,379
|
)
|
Cash flows provided by (used in) investing activities
|
$
|
Nil
|
|
$
|
Nil
|
|
Cash flows provided by (used in) financing
activities
|
$
|
Nil
|
|
$
|
62,500
|
|
Increase (decrease) in cash and cash equivalents
|
$
|
10,384
|
|
$
|
25,121
|
|
7
Operating Activities
Net cash provided by operating activities was $10,384 for the
three months ended March 31, 2011 compared with cash used in operating
activities of $37,379 in the same period in 2010. The difference was largely due
to decrease accounts payable and accrued drilling liabilities.
Investing Activities
Net cash used in investing activities was $Nil for the three
months ended March 31, 2011 compared to net cash used in investing activities
of $Nil in the same period in 2010.
Financing Activities
Net cash provided by financing activities for the three months
ended March 31, 2011 was $Nil compared to $62,500 for the three months ended
March 31, 2010. The difference was mainly attributable to proceeds from sale of
Cheetah BC.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.
The discussion and analysis of our financial condition and
results of operations are based upon our financial statements, which have been
prepared in accordance with the accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by managements application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
Going Concern
Our financial statements have been prepared in accordance with
accounting principles generally accepted in the United States applicable to a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. The Company has
incurred a net loss of $22,750 for the three month period ended March 31, 2011
[2009 - $74,068] and at March 31, 2011 had a deficit accumulated during the
exploration stage of $16,379,023 [2010 - $16,356,273]. The Company has generated
revenue, however we have a substantial accumulated deficit and negative working
capital of $260,685 as at March 31, 2011 [2010 - $438,691]. Although our Company
does not have sufficient funds to acquire new business assets, the increase in
revenues is sufficient to maintain its existing operations at this time. If the
Company decides to acquire new business assets, Managements plan in this regard
would be to raise equity and/or debt financing when required but there is no
certainty that such financing will be available or that it will be available at
acceptable terms. The outcome of these matters cannot be predicted at this time.
Our financial statements do not include any adjustments to
reflect the future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that might result from the outcome
of this uncertainty.
8
At this time, we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors, shareholders or investors to meet
our obligations over the next twelve months. We do not have any further
arrangements in place for any future debt or equity financing.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item 4. Controls and Procedures
Managements Report on 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 chief executive
officer (our principal executive officer) and our chief financial officer (our
principal financial officer and principal accounting officer) to allow for
timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried
out an evaluation, under the supervision and with the participation of our chief
executive officer (our principal executive officer) and our chief financial
officer (our principal financial officer and principal accounting officer), of
the effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our chief executive officer (our principal
executive officer) and our chief financial officer (our principal financial
officer and principal accounting officer) concluded that our disclosure controls
and procedures were effective in providing reasonable assurance in the
reliability of our financial reports as of the end of the period covered by this
quarterly report.
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended March 31, 2011 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings
against our Company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, executive officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse to our
interest.
9
Item 1A. Risk Factors
Much of the information included in this quarterly report
includes or is based upon estimates, projections or other "forward-looking
statements". Such forward-looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions,
or other future performance suggested herein. We undertake no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of such statements.
Such estimates, projections or other "forward-looking
statements" involve various risks and uncertainties as outlined below. We
caution readers of this quarterly report that important factors in some cases
have affected and, in the future, could materially affect actual results and
cause actual results to differ materially from the results expressed in any such
estimates, projections or other "forward-looking statements". In evaluating us,
our business and any investment in our business, readers should carefully
consider the following factors.
We have had negative cash flows from operations and if we
are not able to obtain further financing, our business operations may fail.
We had cash in the amount of $24,646 and a working capital
deficit of $260,685 as of March 31, 2011. We do not have sufficient funds to
independently finance the acquisition and development of prospective oil and gas
properties, nor do we have the funds to independently finance our daily
operating costs. We will require additional funds, either from equity or debt
financing, to maintain our daily operations and to develop our property.
Obtaining additional financing is subject to a number of factors, including
market prices for oil and gas, investor acceptance of our property and any
property we may acquire in the future, and investor sentiment. Financing,
therefore, may not be available on acceptable terms, if at all. The most likely
source of future funds presently available to us is through the sale of equity
capital. Any sale of share capital, however, will result in a dilution to
existing shareholders. If we are unable to raise additional funds when required,
we may be forced to delay our plan of operation and our entire business may
fail.
Because we cannot control activities on our property, we may
experience a reduction or forfeiture of our interests in some of our
non-operated projects as a result of our potential failure to fund capital
expenditure requirements.
We do not operate the property in which we have a working
interest and we have limited ability to exercise influence over operations for
this property or its associated costs. Our dependence on the operator and other
working interest owners for this project and our limited ability to influence
operations and associated costs could materially adversely affect the
realization of our returns on capital in drilling or acquisition activities and
our targeted production growth rate. The success and timing of drilling,
development and exploitation activities on this property operated by others
depends on a number of factors that are beyond our control, including the
operators expertise and financial resources, approval of other participants for
drilling wells and utilization of technology. In addition, if we are not willing
or able to fund our capital expenditures relating to such project when required
by the majority owner or operator, our interest in this project may be reduced
or forfeited.
We currently do not generate significant revenues, and as a
result, we face a high risk of business failure.
From the date of our incorporation, we have primarily focused
on the location and acquisition of oil and gas properties. In order to generate
significant revenues, we will incur substantial expenses in the location,
acquisition and development of a prospective property. We therefore expect to
incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from our activities, our entire
business may fail. There is no history upon which to base any assumption as to
the likelihood that we will be successful in our plan of operation, and we can
provide no assurance to investors that we will generate any operating revenues
or achieve profitable operations.
10
Due to the speculative nature of the exploration of oil and
gas properties, there is substantial risk that our business will fail.
The business of oil and gas exploration and development is
highly speculative involving substantial risk. There is generally no way to
recover any funds expended on a particular property unless reserves are
established and unless we can exploit such reserves in an economic manner. We
can provide investors with no assurance that any property interest that we may
acquire will provide commercially exploitable reserves. Any expenditure by our
Company in connection with locating, acquiring and developing an interest in an
oil and gas property may not provide or contain commercial quantities of
reserves.
Even if we discover commercial reserves, we may not be able
to successfully obtain commercial production.
Even if we are successful in acquiring an interest in a
property that has proven commercial reserves of oil and gas, we will require
significant additional funds in order to place the property into commercial
production. We can provide no assurance to investors that we will be able to
obtain the financing necessary to extract such reserves.
If we are unable to hire and retain key personnel, we may
not be able to implement our plan of operation and our business may fail.
Our success will be largely dependent on our ability to hire
and retain highly qualified personnel. This is particularly true in the highly
technical businesses of oil and gas exploration. These individuals may be in
high demand and we may not be able to attract the staff we need. In addition, we
may not be able to afford the high salaries and fees demanded by qualified
personnel, or we may fail to retain such employees after they are hired. At
present, we have not hired any key personnel. Our failure to hire key personnel
when needed will have a significant negative effect on our business.
Competition in the oil and gas industry is highly
competitive and there is no assurance that we will be successful in acquiring
the licenses.
The oil and gas industry is intensely competitive. We compete
with numerous individuals and companies, including many major oil and gas
companies, which have substantially greater technical, financial and operational
resources and staffs. Accordingly, there is a high degree of competition for
desirable oil and gas properties for drilling operations and necessary drilling
equipment, as well as for access to funds. There can be no assurance that the
necessary funds can be raised or that any projected work will be acquired.
Our common stock is illiquid and shareholders may be unable
to sell their shares.
There is currently a limited market for our common stock and we
can provide no assurance to investors that a market will develop. If a market
for our common stock does not develop, our shareholders may not be able to
re-sell the shares of our common stock that they have purchased and they may
lose all of their investment. Public announcements regarding our Company,
changes in government regulations, conditions in our market segment or changes
in earnings estimates by analysts may cause the price of our common shares to
fluctuate substantially. In addition, stock prices for junior mining and oil and
gas companies fluctuate widely for reasons that may be unrelated to their
operating results. These fluctuations may adversely affect the trading price of
our common shares.
11
Penny stock rules will limit the ability of our stockholders
to sell their stock.
The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission which provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a shareholder's ability
to buy and sell our stock.
In addition to the "penny stock" rules described above, FINRA
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for its shares.
Other Risks
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
None.
Item 3. Default upon Senior Securities
None.
12
Item 4. [Removed and Reserved]
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit
|
Description
|
Number
|
|
|
|
(3)
|
(i) Articles of Incorporation; and (ii) Bylaws
|
|
|
3.1
|
Articles of Incorporation (incorporated by reference from
our Form 10-SB filed on August 2, 1999)
|
|
|
3.2
|
Certificate of Amendment (incorporated by reference from
our Form 10-SB filed on August 2, 1999)
|
|
|
3.3
|
Certificate of Amendment dated February 19, 2004
(incorporated by reference from our Registration Statement on Form SB-2/A
filed on August 15, 2005)
|
|
|
3.4
|
Certificate of Amendment dated May 25, 2004 (incorporated
by reference from our Registration Statement on Form SB-2/A filed on
August 15, 2005)
|
|
|
3.5
|
Bylaws (incorporated by reference from our Form 10-SB
filed on August 2, 1999)
|
|
|
3.6
|
Certificate of Change (incorporated by reference from our
Current Report on Form 8-K filed on August 19, 2009)
|
|
|
3.7
|
Certificate of Correction (incorporated by reference from
our Current Report on Form 8-K filed on August 19, 2009
|
|
|
(10)
|
Material Contracts
|
|
|
10.1
|
Loan Agreement dated March 12, 2008 with Invicta Oil
& Gas Ltd. (incorporated by reference from our Current Report on Form
8-K filed on March 20, 2008)
|
|
|
10.2
|
Mutual Release (incorporated by reference from our
Current Report on Form 8-K filed on July 15, 2008)
|
|
|
10.3
|
Share Purchase Agreement dated November 25, 2008
(incorporated by reference from our Current Report on Form 8-K filed on
December 4, 2008)
|
|
|
10.4
|
Assignment Agreement dated August 28, 2009 with Golden
Aria Corp. (incorporated by reference from our Current Report on Form 8-K
filed on September 3, 2009)
|
|
|
10.5
|
Assignment Agreement dated August 28, 2009 with David
DeMartini (incorporated by reference from our Current Report on Form 8-K
filed on September 3, 2009)
|
|
|
10.6
|
Partial Release and Acknowledgement Agreement dated
August 29, 2009 with Sage Investments Ltd. (incorporated by reference from
our Current Report on Form 8-K filed on September 3, 2009)
|
|
|
10.7
|
Debt Settlement and Subscription agreement with Michael
D. Jenks dated October 17, 2009 (incorporated by reference from our
Current Report on Form 8-K filed on December 30, 2009)
|
|
|
10.8
|
Debt Settlement and Subscription agreement with Sage
Investments Ltd. dated October 17, 2009 (incorporated by reference from
our Current Report on Form 8-K filed on December 30, 2009)
|
|
|
10.9
|
Form of Settlement Agreement dated May 31, 2010
(incorporated by reference from our Current Report on Form 8-K filed on
June 8, 2010)
|
|
|
10.10
|
Asset Pledge Agreement dated September 13, 2010 with
Cornelius OConnell (incorporated by reference from our Current Report on
Form 8-K filed on September 17, 2010)
|
|
|
10.11
|
Form of Demand Promissory Note (incorporated by reference
from our Current Report on Form 8-K filed on September 17, 2010)
|
13
* Filed herewith.
14
SIGNATURES
Pursuant to the requirements of Section 13 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.
|
CHEETAH OIL & GAS LTD.
|
|
(Registrant)
|
|
|
|
|
Dated: May 16, 2011
|
/s/
Robert McAllister
|
|
Robert McAllister
|
|
Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated: May 16, 2011
|
/s/
Georgina Martin
|
|
Georgina Martin
|
|
Chief Financial Officer, Secretary, Treasurer
and Director
|
|
(Principal Financial Officer and Principal
|
|
Accounting Officer)
|
15
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