The Accompanying Notes are an Integral Part of These Condensed Unaudited Financial Statements
Notes to Condensed Financial Statements
(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
ASC No. 260, “Earnings Per Share”, specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. The Company has adopted the provisions of ASC No. 260.
Basic net earnings (loss) per share amounts is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
AMERICAN OIL & GAS INC.
Notes to Condensed Financial Statements
(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 January 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 January 31, 2021 or 2020, and have not recognized interest and/or penalties in the statement of operations for the three months ended January 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.
AMERICAN OIL & GAS INC.
Notes to Condensed Financial Statements
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 January 31, 2021 and generated an accumulated deficit of $132,194. 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 January 31, 2021, the Company had a working capital deficit of $72,194 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.
COVID-19
In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. Due to the outbreak and spread of COVID-19, the Company’s management and advisors responsible for financial reporting have experienced administrative delays, include travel restrictions and reduced work hours. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at January 31, 2021. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Form 10-Q. These estimates may change, as new events occur and additional information is obtained.
NOTE 5. RELATED PARTY TRANSACTIONS
As of January 31, 2021, $18,577 is owed to Shane Reeves, a former president of the Company and $47,214 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 January 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.