U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X .. Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2016
.. Transition Report under Section 13 or 15(d) of the Exchange Act
For the Transition Period from ________to __________
Commission File Number: 333-144504
Pacific Oil Company
(Exact Name of Registrant as Specified in its Charter)
| NEVADA | 20-4057712 |
| (State of other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification Number) |
| 9500 W. Flamingo Rd. Suite 205 | |
| Las Vegas, NV | 89147 |
| (Address of principal executive offices) | (Zip Code) |
|
Registrant's Phone: 1-888-303-2272 |
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes . No X ..
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer .
Accelerated filer .
Non-accelerated filer .
Smaller reporting company X .
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes X . No ..
As of August 15, 2016, the issuer had 440,949 shares of common stock issued and outstanding.
Table of Contents
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PART I – FINANCIAL INFORMATION |
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| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 11 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 14 |
| Item 4. | Controls and Procedures | 14 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 15 |
| Item 1A. | Risk Factors | 15 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3. | Defaults Upon Senior Securities | 15 |
| Item 4. | Mine Safety Disclosures | 15 |
| Item 5. | Other Information | 15 |
| Item 6. | Exhibits | 15 |
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ITEM 1. FINANCIAL STATEMENTS
PACIFIC OIL COMPANY
FINANCIAL STATEMENTS
C O N T E N T S
| Condensed Balance Sheets as of June 30, 2016 (unaudited) and September 30, 2015 | 4 |
| Condensed Statements of Operations for the three and nine month periods ended | |
| June 30, 2016 and 2015 (unaudited) | 5 |
| Condensed Statements of Cash Flows for the nine month periods ended | |
| June 30, 2016 and 2015 (unaudited) | 6 |
| Notes to the Condensed Financial Statements (unaudited) | 7 |
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PACIFIC OIL COMPANY
Condensed Balance Sheets
| June 30, | September 30, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 2,022 | $ | 248 | ||||
| Total Current Assets | 2,022 | 248 | ||||||
| TOTAL ASSETS | $ | 2,022 | $ | 248 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 25,000 | $ | 3,344 | ||||
| Advances payable | 75,382 | 60,883 | ||||||
| Advances payable-related party | 24,867 | 23,488 | ||||||
| Note payable | 1,174 | 1,174 | ||||||
| Total Current Liabilities | 126,424 | 88,889 | ||||||
| Total Liabilities | 126,424 | 88,889 | ||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Common stock: $0.001 par value; 300,000,000 shares authorized, 440,949 and 300,404 shares issued and outstanding, respectively | 441 | 301 | ||||||
| Additional paid-in capital | 702,227 | 702,367 | ||||||
| Accumulated Deficit | (827,070 | ) | (791,309 | ) | ||||
| Total Stockholders' Deficit | (124,402 | ) | (88,641 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 2,022 | $ | 248 | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
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PACIFIC OIL COMPANY
Condensed Statements of Operations
(Unaudited)
| For the Three | For the Nine | |||||||||||||||
| Months Ended | Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUES | $ | — | $ | — | $ | — | $ | — | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | 1,922 | 3,046 | 35,761 | 16,369 | ||||||||||||
| Total operating expenses | 1,922 | 3,046 | 35,761 | 16,369 | ||||||||||||
| Other Expenses | ||||||||||||||||
| Interest Expense | — | 1,130 | — | 1,130 | ||||||||||||
| Amortization of debt discount on convertible note payable, related party | — | 6,335 | — | 6,335 | ||||||||||||
| Total other expenses | — | 7,465 | — | 7,465 | ||||||||||||
| NET LOSS | $ | (1,922 | ) | $ | (10,511 | ) | $ | (35,761 | ) | $ | (23,834 | ) | ||||
| BASIC AND DILUTIVE LOSS PER SHARE | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.07 | ) | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES | ||||||||||||||||
| OUTSTANDING - BASIC AND DILUTIVE* | 440,949 | 385,564 | 440,949 | 329,154 | ||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
* On February 19, 2015, the board of directors authorized a further reverse stock split of 1 for 200. All share amounts have been adjusted retroactively, and reflect stock splits as if they had occurred at the beginning of all periods presented.
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PACIFIC OIL COMPANY
Condensed Statements of Cash Flows (unaudited)
| For the Nine Months Ended | ||||||||
| June 30, | ||||||||
| 2016 | 2015 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (35,761 | ) | $ | (23,834 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Amortization of debt discount on convertible note | — | 6,335 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Increase (decrease) in accounts payable | 21,655 | 372 | ||||||
| Increase (decrease) in interest payable | — | 1,130 | ||||||
| Net Cash Used in Operating Activities | (14,106 | ) | (15,997 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Increase in advances payable | 14,500 | — | ||||||
| Increase in advances payable – related party | 1,380 | 16,200 | ||||||
| Net Cash Provided by Financing Activities | 15,880 | 16,200 | ||||||
| NET INCREASE (DECREASE) IN CASH | 1,774 | 203 | ||||||
| CASH AT BEGINNING OF PERIOD | 248 | 87 | ||||||
| CASH AT END OF PERIOD | $ | 2,022 | $ | 290 | ||||
| SUPPLEMENTAL DISCLOSURES OF | ||||||||
| CASH FLOW INFORMATION | ||||||||
| CASH PAID FOR: | ||||||||
| Interest | $ | — | $ | — | ||||
| Income Taxes | $ | — | $ | — | ||||
| NON CASH INVESTING AND FINANCING ACTIVITIES: ASSETS AND LIABILITIES ACQUIRED FOR STOCK AND DEBT | ||||||||
| Oil and gas property at cost, full cost method of accounting; unproved | $ | — | $ | 237,400 | ||||
| Equipment | $ | — | $ | 44,000 | ||||
| Accrued liabilities | $ | — | $ | (15,000 | ) | |||
| STOCK AND DEBT ISSUED FOR ACQUISITION OF ASSETS AND LIABILITIES | ||||||||
| Shares | $ | — | $ | 141,400 | ||||
| Convertible note payable | $ | — | $ | 125,000 | ||||
| Settlement of accounts payable for stock | $ | — | $ | — | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
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PACIFIC OIL COMPANY
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2016 and 2015
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Pacific Oil Company (the “Company”) was originally incorporated in Nevada on December 5, 2005 (“inception’) as Kat Racing, Inc. On January 4, 2013, the Articles of Incorporation of the Company were amended to change the name of the Company to Prairie West Oil & Gas, Ltd. On July 26, 2013, the Company’s Articles of Incorporation were amended to change the name of the registrant to Pacific Oil Company.
From the Company’s inception until the Company’s transition into the oil and natural gas business in early 2013, Kat Racing’s business plan was to design, manufacture, market, sell and distribute custom off-road racing and recreational vehicles and provide marketing and lead services. Kat Racing never generated any revenue from this proposed business plan.
As the market for high end off road vehicles suffered due to the downturn in the economy, Kat Racing sought to arrange the purchase of certain oil and gas properties which were owned by Prairie West Oil and Gas Ltd., a Canadian company, through a share exchange. Pursuant to this transaction, the Company changed its name from Kat Racing to Prairie West Oil and Gas Ltd. This transaction was never completed. When it was determined the acquisition would not be completed, the Company did not want to continue with the Prairie West name and changed its name to Pacific Oil Company.
On October 1, 2013, the Company issued a newly appointed officer and director 190,500 shares of common stock of the Company to retain his services to attempt to secure certain assets the Company needs to launch its oil and gas operations.
On May 6, 2015, the Company entered into a purchase and sale agreement with the Emporium Group to purchase certain rights, title, estate, and interest in the unproved petroleum and natural gas rights, together with certain tangible assets and liabilities, on a 40-acre site located in Saskatchewan, Canada. The purchase consideration for this transaction was part stock and part debt. The Company issued to Emporium Group 140,000 shares of its common stock, valued at $1,400, based on the market price of $0.01 per share of our shares on the date the transaction was completed, along with a convertible note payable in the amount of $125,000 with a 6% cumulative interest rate, due and payable in 3 years, with the right to convert into 6,250,000 shares of our commons stock at $0.02 per share. The lease acquired has not been in operation since 2011 and we have been advised that we will need to spend approximately $75,000 to $100,000 to get the well back into production. Effective September 30, 2015, the Company and Emporium Group cancelled the above agreement. Under the terms of the cancelation, Emporium Group took back all assets and liabilities in exchange for canceling the note payable and associated interest and Emporium Group retained the 140,000 shares of the Company’s common stock.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, has incurred accumulated deficit of $827,070 through June 30, 2016 and had a working capital deficit of $124,402 at June 30, 2016. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
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In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying financial statements have been prepared by the Company without audit in accordance with SEC rules for quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2016, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2015 audited financial statements. The results of operations for the three and nine month periods ended June 30, 2016 and 2015 are not necessarily indicative of the operating results for the full years.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Fair Value Measurements
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
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ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying value of cash, accounts payable and accrued expenses, advances payable, advances payable – related party and note payable and convertible note payable related party approximates their fair value due to the short-term maturity of these financial instruments.
Income Taxes
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized. The Company classifies tax-related penalties and interest as a component of income tax expense for financial statement presentation.
Basic and Diluted Loss per Share
The Company computes loss per share in accordance with ASC-260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
The Company has potentially dilutive debt instruments outstanding in the form of a convertible notes payable – related party. However, as the Company has incurred losses since Inception, these potentially dilutive shares of common stock have been excluded from the calculation of loss per share as their effect would have been anti-dilutive. Consequently, the basic and diluted loss per share were identical for the three and nine months ended June 30, 2016 and 2015.
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Stock-based Compensation
The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505.
Recent Accounting Pronouncements
The Company does not believe that other than disclosed above, recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
NOTE 4 – ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties and non-related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
The Company received $24,867 and $23,488 as of June 30, 2016 and September 30, 2015, respectively, as advances from a related party to fund ongoing operations.
In addition, as of June 30, 2016 and September 30, 2015, the Company had received advances totaling $75,382 and $60,883, respectively, from a former officer and majority shareholder and her spouse.
All of the related party and non-related party accounts and notes payable are non-interest bearing, unsecured and due upon demand.
NOTE 5 – COMMON STOCK
The authorized share capital of the Company consists of 300 million shares of $0.001 par value common stock and no shares of preferred stock.
On February 19, 2015, the board of directors authorized a further reverse stock split of 1 for 200.
All share amounts have been adjusted retroactively, and reflect both stock splits as if they had occurred at the beginning of all periods presented.
On May 6, 2015, the Company includes consideration 140,000 shares of common stock for the acquisition of an unproved oil and gas property, certain equipment and liabilities. On September 30, 2015, we unwound this transaction. The seller retained these shares per the agreement but has not been issued as of September 30, 2015. We recognized an expense at fair value of $42,000 associated with this transaction. The 140,000 shares were issued during the nine months ended June 30, 2016.
As of June 30, 2016, there were 440,949 shares of common stock were issued and outstanding.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. Such risks include inadequate funding the company's inability to anticipate and adapt to a developing market, the failure of the company's infrastructure, changes in laws that adversely affect the company's business, the ability of the Company to manage its operations, including the amount and timing of capital expenditures and other costs relating to the expansion of the company's operations, the introduction and development of different or more extensive communities by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions.
The Company expects that its operating expenses will increase significantly, especially as it implements its business plan. To the extent that increases in its operating expenses precede or are not followed by commensurate increases in revenues, or that the Company is unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition would be materially and adversely affected. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.
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GENERAL DESCRIPTION OF BUSINESS
Pacific Oil Company (the “Company”) was originally incorporated in Nevada on December 5, 2005 (“inception’) as Kat Racing, Inc. On January 4, 2013, the Articles of Incorporation of the Company were amended to change the name of the Company to Prairie West Oil & Gas, Ltd. On July 26, 2013, the Company’s Articles of Incorporation were amended to change the name of the registrant to Pacific Oil Company.
From the Company’s inception until the Company’s transition into the oil and natural gas business in early 2013, Kat Racing’s business plan was to design, manufacture, market, sell and distribute custom off-road racing and recreational vehicles and provide marketing and lead services. Kat Racing never generated any revenue from this proposed business plan.
As the market for high end off road vehicles suffered due to the downturn in the economy, Kat Racing sought to arrange the purchase of certain oil and gas properties which were owned by Prairie West Oil and Gas Ltd., a Canadian company, through a share exchange. Pursuant to this transaction, the Company changed its name from Kat Racing to Prairie West Oil and Gas Ltd. This transaction was never completed. When it was determined the acquisition would not be completed, the Company did not want to continue with the Prairie West name and changed its name to Pacific Oil Company.
On October 1, 2013, the Company issued a newly appointed officer and director 190,500 shares of common stock of the Company to retain his services to attempt to secure certain assets the Company needs to launch its oil and gas operations.
On May 6, 2015, the Company entered into a purchase and sale agreement with the Emporium Group to purchase certain rights, title, estate, and interest in the unproved petroleum and natural gas rights, together with certain tangible assets and liabilities, on a 40-acre site located in Saskatchewan, Canada. The purchase consideration for this transaction was part stock and part debt. The Company issued to Emporium Group 140,000 shares of its common stock, valued at $1,400, based on the market price of $0.01 per share of our shares on the date the transaction was completed, along with a convertible note payable in the amount of $125,000 with a 6% cumulative interest rate, due and payable in 3 years, with the right to convert into 6,250,000 shares of our commons stock at $0.02 per share. The lease acquired has not been in operation since 2011 and we have been advised that we will need to spend approximately $75,000 to $100,000 to get the well back into production.
Effective September 30, 2015, the Company and Emporium Group cancelled the above agreement. Under the terms of the cancelation, Emporium Group took back all assets and liabilities in exchange for canceling the note payable and associated interest. The Emporium Group retained the 140,000 shares of the Company’s common stock. At this time, the price of oil does not make the well economically viable and we do not have the funds to get the well back in production.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2016 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2015
The Company has achieved no revenue or profits to date and the Company anticipates that it will continue to incur net losses for the foreseeable future.
The Company incurred a net loss of $1,922 for the three months ended June 30, 2016, compared with a net loss of $10,511 for the three months ended June 30, 2015. The year to year variance was due to lower professional fees in 2016.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 2016 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2015
The Company has achieved no revenue or profits to date and the Company anticipates that it will continue to incur net losses for the foreseeable future.
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The Company incurred a net loss of $35,761 for the nine months ended June 30, 2016, compared with a net loss of $23,834 for the nine months ended June 30, 2015. The year to year variance was largely due to increase in professional fees in the nine months ended June 30, 2016.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2016 the Company’s current assets, comprising solely of cash, were $2,022 compared to $248 in current assets, also solely cash, at September 30, 2015. As at June 30, 2016, the Company’s current liabilities were $126,424 compared to $88,889 at September 30, 2015. Stockholder’s deficit was $124,402 as of June 30, 2016 compared to stockholders’ deficit of $88,641 as of September 30, 2015.
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, has incurred losses of $827,070 at June 30, 2016 and had a working capital deficit of $124,402 at June 30, 2016. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
Cash Flows from Operating Activities
For the nine month period ended June 30, 2016, net cash used by operating activities was $14,106 compared to $15,997 used in operating activities in the nine months ended June 30, 2015. During the nine months ended June 30, 2016, the Company incurred a loss of $35,761 which was reduced for cash flow purpose by a $21,655 increase in the balance of its accounts payable. By comparison during the nine months ended June 30, 2015, the Company incurred a loss of $23,834, which was increased by a $372 reduction in accounts payable.
Cash Flows from Financing Activities
During the nine months ended June 30, 2016, the Company received from nonrelated parties $14,500 in advances payable as compared to $16,200 in advances payable during the nine months ended June 30, 2015. During the nine months ended June 30, 2016, the Company received from related parties $1,380 in advances payable as compared to $0 in advances payable during the nine months ended June 30, 2015.The decrease in funding between the two periods reflects the decrease in the amount of funds used in operating activities between the two periods.
CRITICAL ACCOUNTING POLICIES
In Financial Reporting release No. 60, "CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES" ("FRR 60"), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our secretary, treasurer and chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.
As of June 30, 2016 we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer and our chief financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this Quarterly Report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses.
CHANGES IN INTERNAL CONTROLS.
There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
| -14- |
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was not subject to any legal proceedings during the nine month periods ended June 30, 2016 or 2015 and, to the best of its knowledge; no legal proceedings are pending or threatened.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine months ended June 30, 2015, the Company issued 140,000 shares of common stock as partial consideration for the unwinding of the acquisition of an unproved oil and gas property, certain equipment and liabilities.
The above transaction was exempt under Section 4(2) and 3(b) of the Securities Act of 1933, as amended, and the rules and regulations promulgated there under, including Regulations D, due to the fact that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution, had access to sufficient information concerning the Company, and the certificate(s) representing such shares will bear a restrictive legend.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no senior securities issued or outstanding during the nine month periods ended June 30, 2016 or 2015.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14 and 15d-14. | ||
| 32 | Certification of the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
| 101.INS | INS XBRL Instance Document * | ||
| 101.SCH | SCH XBRL Schema Document * | ||
| 101.CAL | CAL XBRL Calculation Linkbase Document * | ||
| 101.DEF | DEF XBRL Definition Linkbase Document * | ||
| 101.LAB | LAB XBRL Label Linkbase Document * | ||
| 101.PRE | PRE XBRL Presentation Linkbase Document * | ||
| -15- |
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 15, 2016
Pacific Oil Company
Registrant
By: /s/ Anthony Sarvucci
Anthony Sarvucci
Chief Executive Officer and Chief Financial Officer
Exhibit 31
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Sarvucci of Pacific Oil Company (the “Company”), certify that:
Date: August 15, 2016
/s/ Anthony Sarvucci
Anthony Sarvucci
Chief Executive Officer and Chief Financial Officer
Exhibit 32
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Sarvucci, Chief Executive Officer and Chief Financial Officer, of Pacific Oil Company (the “Company”) certify that:
Date: August 15, 2016
/s/ Anthony Sarvucci
Anthony Sarvucci
Chief Executive
Officer and Chief
Financial Officer
Document and Entity Information - USD ($) |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 |
Aug. 15, 2016 |
|
| Document And Entity Information | ||
| Entity Registrant Name | PACIFIC OIL Co | |
| Entity Central Index Key | 0001377167 | |
| Document Type | 10-Q | |
| Document Period End Date | Jun. 30, 2016 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --09-30 | |
| Is Entity a Well-known Seasoned Issuer? | No | |
| Is Entity a Voluntary Filer? | No | |
| Is Entity's Reporting Status Current? | No | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Public Float | $ 110,334 | |
| Entity Common Stock, Shares Outstanding | 440,949 | |
| Document Fiscal Period Focus | Q3 | |
| Document Fiscal Year Focus | 2016 |
Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Sep. 30, 2015 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common Stock Par Value | $ 0.001 | $ .001 |
| Common Stock Shares Authorized | 300,000,000 | 300,000,000 |
| Common Stock Shares Issued | 440,949 | 300,404 |
| Common Stock Shares Outstanding | 440,949 | 300,404 |
Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
| Income Statement [Abstract] | ||||
| REVENUES | $ 0 | $ 0 | $ 0 | $ 0 |
| OPERATING EXPENSES | ||||
| General and administrative | 1,922 | 3,046 | 35,761 | 16,369 |
| Total operating expenses | 1,922 | 3,046 | 35,761 | 16,369 |
| OTHER (INCOME) EXPENSE | ||||
| Interest expense adn other | 0 | 7,465 | 0 | 7,465 |
| Total other (income) expense | 0 | 7,465 | 0 | 7,465 |
| NET LOSS | $ (1,922) | $ (10,511) | $ (35,761) | $ (23,834) |
| LOSS PER SHARE - BASIC AND DILUTIVE | $ (0.00) | $ (0.03) | $ (0.08) | $ (0.07) |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTIVE | 440,949 | 385,564 | 440,949 | 329,154 |
Statements of Cash Flows - USD ($) |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
| OPERATING ACTIVITIES | ||
| Net loss | $ (35,761) | $ (23,834) |
| Adjustments to reconcile net loss to net cash used by operating activities: | ||
| Amortization of debt discount on convertible note | 0 | 6,335 |
| Changes in operating assets and liabilities | ||
| Increase (decrease) in accounts payable | 21,655 | 372 |
| Increase (decrease) in accrued interest | 0 | 1,130 |
| Net Cash Used in Operating Activities | (14,106) | (15,997) |
| INVESTING ACTIVITIES | ||
| Net Cash Provided by (Used in) Investing Activities | 0 | 0 |
| FINANCING ACTIVITIES | ||
| Increase (decrease) in advances payable | 15,880 | 16,200 |
| Net Cash Provided by Financing Activities | 15,880 | 16,200 |
| NET INCREASE (DECREASE) IN CASH | 1,774 | 203 |
| CASH AT BEGINNING OF PERIOD | 248 | 87 |
| CASH AT END OF PERIOD | 2,022 | 290 |
| CASH PAID FOR: | ||
| Interest | 0 | 0 |
| Income Taxes | $ 0 | $ 0 |
1. ORGANIZATION AND BUSINESS OPERATIONS |
9 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| 1. ORGANIZATION AND BUSINESS OPERATIONS |
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Pacific Oil Company (the “Company”) was originally incorporated in Nevada on December 5, 2005 (“inception’) as Kat Racing, Inc. On January 4, 2013, the Articles of Incorporation of the Company were amended to change the name of the Company to Prairie West Oil & Gas, Ltd. On July 26, 2013, the Company’s Articles of Incorporation were amended to change the name of the registrant to Pacific Oil Company.
From the Company’s inception until the Company’s transition into the oil and natural gas business in early 2013, Kat Racing’s business plan was to design, manufacture, market, sell and distribute custom off-road racing and recreational vehicles and provide marketing and lead services. Kat Racing never generated any revenue from this proposed business plan.
As the market for high end off road vehicles suffered due to the downturn in the economy, Kat Racing sought to arrange the purchase of certain oil and gas properties which were owned by Prairie West Oil and Gas Ltd., a Canadian company, through a share exchange. Pursuant to this transaction, the Company changed its name from Kat Racing to Prairie West Oil and Gas Ltd. This transaction was never completed. When it was determined the acquisition would not be completed, the Company did not want to continue with the Prairie West name and changed its name to Pacific Oil Company.
On October 1, 2013, the Company issued a newly appointed officer and director 190,500 shares of common stock of the Company to retain his services to attempt to secure certain assets the Company needs to launch its oil and gas operations.
On May 6, 2015, the Company entered into a purchase and sale agreement with the Emporium Group to purchase certain rights, title, estate, and interest in the unproved petroleum and natural gas rights, together with certain tangible assets and liabilities, on a 40-acre site located in Saskatchewan, Canada. The purchase consideration for this transaction was part stock and part debt. The Company issued to Emporium Group 140,000 shares of its common stock, valued at $1,400, based on the market price of $0.01 per share of our shares on the date the transaction was completed, along with a convertible note payable in the amount of $125,000 with a 6% cumulative interest rate, due and payable in 3 years, with the right to convert into 6,250,000 shares of our commons stock at $0.02 per share. The lease acquired has not been in operation since 2011 and we have been advised that we will need to spend approximately $75,000 to $100,000 to get the well back into production. Effective September 30, 2015, the Company and Emporium Group cancelled the above agreement. Under the terms of the cancelation, Emporium Group took back all assets and liabilities in exchange for canceling the note payable and associated interest and Emporium Group retained the 140,000 shares of the Company’s common stock. |
2. GOING CONCERN |
9 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| 2. GOING CONCERN |
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern, has incurred accumulated deficit of $827,070 through June 30, 2016 and had a working capital deficit of $124,402 at June 30, 2016. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
3. SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Accounting Policies [Abstract] | |
| 3. SIGNIFICANT ACCOUNTING POLICIES |
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying financial statements have been prepared by the Company without audit in accordance with SEC rules for quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2016, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2015 audited financial statements. The results of operations for the three and nine month periods ended June 30, 2016 and 2015 are not necessarily indicative of the operating results for the full years.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Fair Value Measurements
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying value of cash, accounts payable and accrued expenses, advances payable, advances payable – related party and note payable and convertible note payable related party approximates their fair value due to the short-term maturity of these financial instruments.
Income Taxes
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized. The Company classifies tax-related penalties and interest as a component of income tax expense for financial statement presentation.
Basic and Diluted Loss per Share
The Company computes loss per share in accordance with ASC-260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
The Company has potentially dilutive debt instruments outstanding in the form of a convertible notes payable – related party. However, as the Company has incurred losses since Inception, these potentially dilutive shares of common stock have been excluded from the calculation of loss per share as their effect would have been anti-dilutive. Consequently, the basic and diluted loss per share were identical for the three and nine months ended June 30, 2016 and 2015.
Stock-based Compensation
The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505.
Recent Accounting Pronouncements
The Company does not believe that other than disclosed above, recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
4. ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS |
9 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Related Party Transactions [Abstract] | |
| 4. ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS |
NOTE 4 – ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties and non-related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
The Company received $24,867 and $23,488 as of June 30, 2016 and September 30, 2015, respectively, as advances from a related party to fund ongoing operations.
In addition, as of June 30, 2016 and September 30, 2015, the Company had received advances totaling $75,382 and $60,883, respectively, from a former officer and majority shareholder and her spouse.
All of the related party and non-related party accounts and notes payable are non-interest bearing, unsecured and due upon demand.
|
5. COMMON STOCK |
9 Months Ended |
|---|---|
Jun. 30, 2016 | |
| Equity [Abstract] | |
| 6. COMMON STOCK |
NOTE 5 – COMMON STOCK
The authorized share capital of the Company consists of 300 million shares of $0.001 par value common stock and no shares of preferred stock.
On February 19, 2015, the board of directors authorized a further reverse stock split of 1 for 200.
All share amounts have been adjusted retroactively, and reflect both stock splits as if they had occurred at the beginning of all periods presented.
On May 6, 2015, the Company includes consideration 140,000 shares of common stock for the acquisition of an unproved oil and gas property, certain equipment and liabilities. On September 30, 2015, we unwound this transaction. The seller retained these shares per the agreement but has not been issued as of September 30, 2015. We recognized an expense at fair value of $42,000 associated with this transaction. The 140,000 shares were issued during the nine months ended June 30, 2016.
As of June 30, 2016, there were 440,949 shares of common stock were issued and outstanding. |
3. SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | ||||||||||
| Accounting Policies [Abstract] | ||||||||||
| Cash and cash equivalents | Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
|||||||||
| Use of Estimates and Assumptions | Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
|||||||||
| Fair Value Measurements | Fair Value Measurements
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
The carrying value of cash, accounts payable and accrued expenses, advances payable, advances payable – related party and note payable and convertible note payable related party approximates their fair value due to the short-term maturity of these financial instruments. |
|||||||||
| Income Taxes |
Income Taxes
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized. The Company classifies tax-related penalties and interest as a component of income tax expense for financial statement presentation. |
|||||||||
| Basic and Diluted Loss per Share |
Basic and Diluted Loss per Share
The Company computes loss per share in accordance with ASC-260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
The Company has potentially dilutive debt instruments outstanding in the form of a convertible notes payable – related party. However, as the Company has incurred losses since Inception, these potentially dilutive shares of common stock have been excluded from the calculation of loss per share as their effect would have been anti-dilutive. Consequently, the basic and diluted loss per share were identical for the three and nine months ended June 30, 2016 and 2015. |
|||||||||
| Stock-based Compensation |
Stock-based Compensation
The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505. |
|||||||||
| Recent Accounting Pronouncements |
Recent Accounting Pronouncements
The Company does not believe that other than disclosed above, recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
2. GOING CONCERN (Details Narrative) |
127 Months Ended |
|---|---|
|
Jun. 30, 2016
USD ($)
| |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Incurred Loss | $ (827,070) |
| Shareholder Deficit | $ (124,402) |
4. ADVANCES PAYABLE AND ADVANCES PAYABLE, RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
Jun. 30, 2016 |
Sep. 30, 2015 |
|---|---|---|
| Payable, Related Party | $ 24,867 | $ 23,488 |
| Advances Payable | $ 75,883 | $ 60,883 |
6. COMMON STOCK (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Sep. 30, 2015 |
|
| Equity [Abstract] | |||
| Common Stock Shares Authorized | 300,000,000 | 300,000,000 | |
| Common Stock, Par Value | $ 0.001 | $ .001 | |
| Stock issued for services, Value | $ 0 | $ 0 | |
| Shares issued and outstanding | 440,949 | 300,404 | |