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

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2017
 
Commission file number 333-180164

 
American Oil & Gas Inc.
(Exact Name of Registrant as Specified in Its Charter)

Nevada
 
99-0372611
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)

2100 West Loop South, Suite 700
Houston, TX  77027
(832) 510-8950
 (Address of Principal Executive Offices, Zip Code & Telephone Number)

Resident Agents of Nevada
711 S. Carson Street #4
Carson City, NV  89701
Telephone (775) 882-4641  Facsimile (775) 882-6818
(Name, Address and Telephone Number of Agent for Service)

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

Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.001 par value

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes    No 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act  Yes    No 
 
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.  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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
(Do not check if a smaller reporting company)
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 
 
As of May 29, 2018, the registrant had 20,000,000 shares of common stock issued and outstanding.  No market value has been computed based upon the fact that no active trading market had been established.
 


AMERICAN OIL & GAS INC.
TABLE OF CONTENTS

   
Page No.
     
 
Part I
 
     
Item 1.
Business
3
Item 1A.
Risk Factors
8
Item 2.
Properties
12
Item 3.
Legal Proceedings
12
Item 4.
Mine Safety Disclosures
12
     
 
Part II
 
     
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
13
Item 6.
Selected Financial Data
14
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 8.
Financial Statements and Supplementary Data
16
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
27
Item 9A.
Controls and Procedures
27
Item 9B. Other Information 28
     
 
Part III
 
     
Item 10.
Directors and Executive Officers
29
Item 11.
Executive Compensation
30
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
31
Item 13.
Certain Relationships and Related Transactions
32
Item 14.
Principal Accounting Fees and Services
32
     
 
Part IV
 
     
Item 15.
Exhibits
33
     
Signatures
 
34
 

2


Part I
 
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
 
This report contains forward-looking statements that involve risk and uncertainties.  We use words such as “anticipate”, “believe”, “plan”, “expect”, “future”, “intend”, and similar expressions to identify such forward-looking statements.  Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this report and actual results may differ materially from historical results or our predictions of future results.
 
Item 1. Business

General Information

We are an exploration stage company with limited revenues and a short operating history.  Our independent auditor has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern.

We locate and lease existing wells for reactivation for the production of oil and gas that we will then sell, through an operator, to oil and gas brokers and gatherers.  The gas sometimes may be sold directly to the public utility companies.

Our focus for the current fiscal year will be on pursuing the acquisition of leases and/or existing oil and gas wells which have potential for production.

Emerging Growth Company Status under the JOBS Act

AO&G qualifies as an “emerging growth company” as defined in the Jumpstart our Business Startups Act (the “JOBS Act”).

The JOBS Act creates a new category of issuers known as "emerging growth companies." Emerging growth companies are those with annual gross revenues of less than $1 billion (as indexed for inflation) during their most recently completed fiscal year. The JOBS Act is intended to facilitate public offerings by emerging growth companies by exempting them from several provisions of the Securities Act of 1933 and its regulations. An emerging growth company will retain that status until the earliest of:

·
The first fiscal year after its annual revenues exceed $1 billion;
·
The first fiscal year after the fifth anniversary of its IPO;
·
The date on which the company has issued more than $1 billion in non-convertible debt during the previous three-year period; and
·
The first fiscal year in which the company has a public float of at least $700 million.
 
Financial and Audit Requirements

Under the JOBS Act, emerging growth companies are subject to scaled financial disclosure requirements. Pursuant to these scaled requirements, emerging growth companies may:

·
Provide only two rather than three years of audited financial statements in their IPO Registration Statement;


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·
Provide selected financial data only for periods no earlier than those included in the IPO Registration Statement in all SEC filings, rather than the five years of selected financial data normally required;
·
Delay compliance with new or revised accounting standards until they are made applicable to private companies; and
·
Be exempted from compliance with Section 404(b) of the Sarbanes-Oxley Act, which requires companies to receive an outside auditor's attestation regarding the issuer's internal controls.

Offering Requirements

In addition, during the IPO offering process, emerging growth companies are exempt from:

·
Restrictions on analyst research prior to and immediately after the IPO, even from an investment bank that is underwriting the IPO;
·
Certain restrictions on communications to institutional investors before filing the IPO registration statement; and
·
The requirement initially to publicly file IPO Registration Statements. Emerging growth companies can confidentially file draft Registration Statements and any amendments with the SEC. Public filings of the draft documents must be made at least 21 days prior to commencement of the IPO "road show."

Other Public Company Requirements

Emerging growth companies are also exempt from other ongoing obligations of most public companies, such as:

·
The requirements under Section 14(i) of the Exchange Act and Section 953(b)(1) of the Dodd-Frank Act to disclose executive compensation information on pay-for-performance and the ratio of CEO to median employee compensation;
·
Certain other executive compensation disclosure requirements, such as the compensation discussion and analysis, under Item 402 of Regulation S-K; and
·
The requirements under Sections 14A(a) and (b) of the Exchange Act to hold advisory votes on executive compensation and golden parachute payments.

We received our initial funding of $10,000 through the sale of common stock to Robert Gelfand, a former officer and director, who purchased 10,000,000 shares of our common stock at $0.001 per share in January, 2012.  On July 12, 2012, the Company completed its registered offering raising $50,000 from the sale of 10,000,000 shares of common stock.

We have a total of 75,000,000 authorized common shares with a par value of $0.001 per share with 20,000,000 common shares issued and outstanding as of January 31, 2017.

Our plan of operation is to search for appropriate oil and gas leases.  In addition to the cost of any potential property lease, we anticipate spending $10,000 on professional fees, including fees payable for complying with reporting obligations, $5,000 in general administrative costs and $1,125 in working capital. Total expenditures over the next 12 months are therefore expected to be approximately $50,000.
 

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Distribution Methods

We plan to distribute oil and gas that we produce through oil and gas gathering companies with the gas sometimes being sold directly to public utility companies.  The operator of the wells generally make the arrangements with the gathering companies.

If we do find a gas well for lease the distribution agreements for gas generally provide for the company to tap into the distribution line of a gas distribution company, and we would be paid for our gas at the market price at the time of delivery less any transportation charge from the gas transmission company. These charges can range from 5% upward of the market value of the gas, depending on the competition among transmission companies in the area of the wells.

Competition

We operate in a highly competitive environment for acquiring properties, modernizing existing wells and marketing oil and natural gas we may produce. The majority of our competitors possess and employ financial, technical and personnel resources substantially greater than ours, which can be particularly important in the areas in which we plan to operate. Those companies may be able to pay more for productive oil and natural gas properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial resources permit. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. Also, there is substantial competition for capital available for investment in the oil and natural gas industry.

Current competitive factors in the domestic oil and gas industry are unique. The actual price range of crude oil is largely established by major international producers. Pricing for natural gas is more regional; however, more favorable prices can usually be negotiated for larger quantities of oil and/or gas product. In this respect, while we believe we have a price disadvantage when compared to larger producers, we view our primary pricing risk to be related to a potential decline in international prices to a level which could render our production uneconomical.

We will be committed to use the services of the existing gathering companies the area of production. This potentially gives such gathering companies certain short-term relative monopolistic powers to set gathering and transportation costs, because obtaining the services of an alternative gathering company may require substantial additional costs.

Bankruptcy or Similar Proceedings

There has been no bankruptcy, receivership or similar proceeding.

Reorganizations, Purchase or Sale of Assets

There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business.

Compliance with Government Regulation

Regulation of Transportation of Oil

Sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.
 

5


Our sales of crude oil will be affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission, or the FERC, regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.

Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by pro-rationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors.

Regulation of Transportation and Sale of Natural Gas

Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and regulations issued under those Acts by the FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, Congress could reenact price controls in the future.

Since 1985, the FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis. The FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry.

Intrastate natural gas transportation is subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state. Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we may eventually operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors.

Regulation of Production

The production of oil and natural gas is subject to regulation under a wide range of local, state and federal statutes, rules, orders and regulations. Federal, state and local statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. All states, in which we may operate in the future, have regulations governing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum allowable rates of production from oil and natural gas wells, the regulation of well spacing, and plugging and abandonment of wells. The effect of these regulations is to limit the amount of oil and natural gas that can be produced from wells and to limit the number of wells or the locations, although companies can apply for exceptions to such regulations or to have reductions in well spacing. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and natural gas liquids within its jurisdiction.
 
6


The failure to comply with these rules and regulations can result in substantial penalties. Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations.

Source and Availability of Raw Materials

We have no significant raw materials. However, if we are successful in our plan of operations we may make use of numerous oil field service companies.

Major Customers

If we are successful in our plan of operation, we will principally sell our oil and natural gas production through our operator to marketers and other purchasers that have access to nearby pipeline facilities. Generally, in areas where there is no practical access to pipelines, oil is trucked to storage facilities. We believe that the loss of any of these oil and gas purchasers would not materially impact our business, because we could readily find other purchasers for our oil and gas as produced.

Patents, Trademarks, Franchises, Royalty Agreements or Labor Contracts

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

Environmental Compliance and Risks

Oil and natural gas exploration, development and production operations are subject to stringent federal, state and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Historically, most of the environmental regulation of oil and gas production has been left to state regulatory boards or agencies in those jurisdictions where there is significant gas and oil production, with limited direct regulation by such federal agencies as the Environmental Protection Agency. However, while we believe this generally to be the case for our production activities in Louisiana, there are various regulations issued by the Environmental Protection Agency (“EPA”) and other governmental agencies that would govern significant spills, blow-outs, or uncontrolled emissions.

At the federal level, among the more significant laws and regulations that may affect our business and the oil and gas industry are: The Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as “CERCLA” or Superfund; the Oil Pollution Act of 1990; the Resource Conservation and Recovery Act, also known as “RCRA”; the Clean Air Act; Federal Water Pollution Control Act of 1972, or the Clean Water Act; and the Safe Drinking Water Act of 1974.

Compliance with these regulations may constitute a significant cost and effort for us. No specific accounting for environmental compliance has been projected by us at this time. We are not presently aware of any environmental demands, claims, or adverse actions, litigation or administrative proceedings in which our acquired property is involved or subject to, or arising out of any predecessor operations.

In the event of a breach of environmental regulations, these environmental regulatory agencies have a broad range of alternative or cumulative remedies which include: ordering a clean-up of any spills or waste material and restoration of the soil or water to conditions existing prior to the environmental violation; fines; or enjoining further drilling, completion or production activities. In certain egregious situations the agencies may also pursue criminal remedies against us or our principal officer.
 

7


Research and Development Costs during the Last Two Years

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

Employees and Employment Agreements

Our only employee is our officer, Shane Reeves.  Mr. Reeves currently devotes 8-10 hours per week to company matters and after receiving funding or a substantial increase in revenues he plans to devote as much time as the board of directors determines is necessary to manage the affairs of the company.  There are no formal employment agreements between the company and our current employee.

Reports to Security Holders

We voluntarily make available an annual report including audited financials on Form 10-K to security holders.  We file the necessary reports with the SEC pursuant to the Exchange Act, including but not limited to, reports on Form 8-K as necessary, annual reports on Form 10-K, and quarterly reports on Form 10-Q.

The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding the Company and filed with the SEC at http://www.sec.gov.

Item 1A. Risk Factors

Risks Associated With Our Company

O ur auditors have issued a going concern opinion, therefore there is substantial uncertainty we will continue activities in which case you could lose your investment.

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment.

We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease activities.

We were incorporated in January 2012. We have no significant operating history upon which an evaluation of our future success or failure can be made. Our net loss was $116,166 from inception to January 31, 2017. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:

·
our ability to locate a profitable oil & gas property
·
our ability to generate revenues
·
our ability to reduce operating costs

Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the research and reactivation of oil & gas properties. As a result, we may not generate revenues in the future. Failure to generate revenues may cause us to suspend or cease activities.

Because we are small and have no capital, we may have to limit our acquisition activity which may result in a loss of your investment.
 

8


Because we are small and have no capital, we must limit our acquisition activity. As such we may not be able to lease as many properties as we would like.  In that event, a profitable oil or gas reserve may go undiscovered. Without producing wells we cannot generate revenues and you will lose your investment.

We will be reliant upon an outside operator to rework the wells and monitor the day to day operation.  If the operator fails to carry out the terms of our agreement or we lose the services of the operator our business may fail.

The re-working of any future wells and monthly maintenance of the wells once production commences will be carried out by an independent operator.  Failure to live up to the terms of any operating agreement or an outright cancellation of that agreement could have an adverse effect on production and future revenues, consequently our operations, earnings and ultimate financial success may suffer irreparable harm as a result.

Because our officer and director has other outside business activities and will only be devoting 5 to 10% of his time or approximately eight to ten hours per week to our operations, our operations may be sporadic which may result in periodic interruptions or suspensions of exploration .

Because our officer and director has other outside business activities and will only be devoting 5 to 10% of their time or two to four hours per week to our operations, our operations may be sporadic and occur at times which are convenient to our officer and director. As a result our business plan may be periodically interrupted or suspended.

A past director will continue to exercise significant control over our company, which means as a minority stockholder, you would have no control over certain matters requiring stockholder approval that could affect your ability to ever resell any shares you purchase.

A past officer and director owns 50% of our common stock. He has significant influence in determining the outcome of all corporate transactions, including the election of directors, approval of significant corporate transactions, changes in control of the company or other matters that could affect your ability to ever resell your shares. His interests may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other stockholders.

Risks Relating to the Oil and Natural Gas Industry and Our Business

A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.

The prices we may receive in the future for our oil and natural gas production will heavily influence our revenue, profitability, access to capital and future rate of growth. Oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile in the future. The prices we may receive for any future production, and the levels of the production, depend on numerous factors beyond our control. These factors include, but are not limited to, the following:

·
changes in global supply and demand for oil and natural gas;
·
the actions of the Organization of Petroleum Exporting Countries, or OPEC;
·
the price and quantity of imports of foreign oil and natural gas;
·
political conditions, including embargoes, in or affecting other oil-producing activity;
·
the level of global oil and natural gas exploration and production activity;
·
the level of global oil and natural gas inventories;
 
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·
weather conditions;
·
technological advances affecting energy consumption; and
·
the price and availability of alternative fuels.

Lower oil and natural gas prices may not only decrease any prospective revenues on a per share basis but also may reduce the amount of oil and natural gas that we may be able to produce economically. Lower prices will also negatively impact the value of a proven reserve when and if we are able to find them. A substantial or extended decline in oil or natural gas prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.

Production of oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

Our future success will depend on the success of exploitation, development and production activities. Oil and natural gas production activities are subject to numerous risks beyond our control, including the risk that an existing well will not result in commercially viable oil or natural gas production. Our decisions to lease, develop or otherwise exploit prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations.

If our assessment of any future leased properties is materially inaccurate, it could have significant impact on future operations and earnings.

The successful acquisition of producing properties requires assessments of many factors, which are inherently inexact and may be inaccurate, including the following:

·
the amount of recoverable reserves;
·
future oil and natural gas prices;
·
estimates of operating costs;
·
estimates of future development costs;
·
estimates of the costs and timing of plugging and abandonment; and
·
potential environmental and other liabilities.

Our assessment will not reveal all existing or potential problems, nor will it permit us to become familiar enough with the properties to assess fully their capabilities and deficiencies.

If oil and natural gas prices decrease, we may be required to take write-downs of the carrying value of our oil and natural gas property, potentially negatively impacting the trading value of our securities.

Accounting rules require that we review periodically the carrying value of our oil and natural gas property for possible impairment. Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and natural gas property. A write-down could constitute a non-cash charge to earnings. It is likely the cumulative effect of a write-down could also negatively impact the trading price of our securities.

Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
 

10


The process of estimating oil and natural gas reserves is complex. It requires interpretations of available technical data and many assumptions, including assumptions relating to economic factors. Any significant inaccuracies in these interpretations or assumptions could materially affect the estimated quantities and present value of our reported reserves.  The process also requires economic assumptions about matters such as oil and natural gas prices, operating expenses, capital expenditures, taxes and availability of funds. Therefore, estimates of oil and natural gas reserves are inherently imprecise.  All of these factors would have a negative impact on earnings and net income, and most likely the trading price of our securities.

We may incur substantial losses and be subject to substantial liability claims as a result of our oil and natural gas operations.

We do not currently have insurance for possible risks. Losses and liabilities arising from uninsured events could materially and adversely affect our business, financial condition or results of operations. The oil and natural gas production activities will be subject to all of the operating risks associated with the production of oil and natural gas, including the possibility of:

·
environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater and shoreline contamination;
·
abnormally pressured formations;
·
mechanical difficulties;
·
fires and explosions;
·
personal injuries and death; and
·
natural disasters.

Any of these risks could adversely affect our ability to conduct operations or result in substantial losses to our company. We may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. If a significant accident or other event occurs and is not fully covered by insurance, then it could adversely affect us.

Our operations may incur substantial liabilities to comply with the environmental laws and regulations.

Oil and natural gas operations are subject to stringent federal, state and local laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection. These laws and regulations may require the acquisition of a permit before production commences, restrict the types, quantities and concentration of substances that can be released into the environment in connection with production activities, limit or prohibit activities on certain lands lying within wilderness, wetlands and other protected areas, and impose substantial liabilities for pollution resulting from our operations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, incurrence of investigatory or remedial obligations or the imposition of injunctive relief. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to maintain compliance, and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition as well as the industry in general. Under these environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or if our operations were standard in the industry at the time they were performed.

Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our cash flows and income.
 

11


Unless we conduct successful development and exploitation activities or acquire properties containing proved reserves, our proved reserves when we find them will decline as those reserves are produced. Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our future oil and natural gas reserves and production, and, therefore our cash flow and income, are highly dependent on our success in efficiently developing and exploiting our current reserves and economically finding or acquiring additional recoverable reserves. If we are unable to develop, exploit, find or acquire additional reserves to replace our current and future production, our cash flow and income will decline as production declines, until our existing property would be incapable of sustaining commercial production.

If access to markets is restricted, it could negatively impact our production, our income and ultimately our ability to retain our lease and any future leases.

Market conditions or the unavailability of satisfactory oil and natural gas gathering arrangements may hinder access to oil and natural gas markets or delay production. The availability of a ready market for our oil and natural gas production depends on a number of factors, including the demand for and supply of oil and natural gas and the proximity of reserves to pipelines and terminal facilities. The ability to market production depends in substantial part on the availability and capacity of gathering systems, pipelines and processing facilities owned and operated by third parties. Our failure to obtain such services on acceptable terms could materially harm our business.

Competition in the oil and natural gas industry is intense, which may adversely affect our ability to compete.

We will operate in a highly competitive environment. Our competitors possess and employ financial, technical and personnel resources substantially greater than ours, which can be particularly important in the areas in which we operate. Those companies may be able to pay more for productive oil and natural gas properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial resources permit. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. We may not be able to compete successfully.

Item 2. Properties

We do not currently own any property.  The Company is currently provided with office space by our officer and director at no charge.   The offices are located at 2100 West Loop South, Suite 700, Houston, TX  77027. Management believes the current premises are sufficient for its needs at this time.

We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages.

Item 3. Legal Proceedings

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

Item 4. Mine Safety Disclosures

None.
 

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Part II

Item 5. Market for Common Equity and Related Stockholder Matters

As of January 31, 2017, we had 20,000,000 shares of $0.0001 par value common stock issued and outstanding held by   27 shareholders of record.

Our common stock was listed on the OTCBB under the symbol “AOIX”.  To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the U.S. Securities and Exchange Commission or applicable regulatory authority. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. Do to lack of capital the company became delinquent in their filings with the U.S. Securities and Exchange Commission.  The Company is now filing the reports required to correct the delinquency.

There has been no active trading of our securities, and, therefore, no high and low bid pricing.  We have paid no cash dividends and have no outstanding options.

Penny Stock Rules

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

A purchaser is purchasing penny stock which limits the ability to sell the stock. Our shares will remain penny stocks for the foreseeable future.  The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment.  Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.  Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:
 
contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended;
contains a brief, clear, narrative description of a dealer market, including "bid" and "ask"  price for the penny stock and the significance of the spread between the bid and ask price;
contains a toll–free telephone number for inquiries on disciplinary actions;
defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;
 
 
13


The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

the bid and offer quotations for the penny stock;
the compensation of the broker–dealer and its salesperson in the transaction;
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
monthly account statements showing the market value of each penny  stock held in the customer's  account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.  These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.

Dividends

We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant.

Section Rule 15(g) of the Securities Exchange Act of 1934

The Company's shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as "bid" and "offer" quotes, a dealers "spread" and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

Securities authorized for issuance under equity compensation plans

We do not have any equity compensation plans and accordingly we have no securities authorized for issuance there under.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during the year ended January 31, 2017.

Item 6. Selected Financial Data

Not required for smaller reporting companies.
 
14


 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

For the years ended January 31, 2017 and 2016 we incurred $5,502 and $3,979, respectively, in operating and general and administrative expenses, $0 and $5,653 in professional fees and $0 and $14,714 in bad debt expenses.  For the year ended January 31, 2016 we recorded a gain of $5,533 in debt forgiveness from legal fees.

The following table provides selected financial data about our company for the years ended January 31, 2017 and 2016.

Balance Sheet Data:
 
1/31/17
   
1/31/16
 
             
Cash
 
$
0
   
$
0
 
Total assets
 
$
0
   
$
0
 
Total liabilities
 
$
56,166
   
$
50,664
 
Shareholders' equity
 
$
(56,166
)
 
$
(50,664
)

Liquidity and Capital Resources

Our cash balance at January 31, 2017 was $0 with $14,442 in accounts payable and $41,724 in loans payable to related parties.  If we experience a shortage of funds in the next twelve months we may utilize additional funds from our director, who has agreed to advance funds for operations, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to us.

Plan of Operation

Our current cash balance is $0, which is not sufficient to cover the expenses we will incur during the next twelve months.  In order to achieve our business plan goals, we must find another lease and will need to realize revenue from oil & gas sales.  We are an exploration stage company and have generated $3,918 in revenue from inception to January 31, 2017.  We have sold $60,000 in equity securities to pay for our start-up operations.

Our auditor has issued a going concern opinion.  This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we generate sufficient revenues from oil & gas sales.  There is no assurance we will ever reach that point.  In the meantime the continuation of the Company is dependent upon the continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations and the attainment of profitable operations.

Our plan of operation is to search for appropriate oil and gas leases.  In addition to the cost of any potential property lease, we anticipate spending $10,000 on professional fees, including fees payable for complying with reporting obligations, $5,000 in general administrative costs and $1,125 in working capital. Total expenditures over the next 12 months are therefore expected to be approximately $50,000.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Going Concern

Our auditor has issued a going concern opinion.  This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills.  This is because no revenues are anticipated until we begin extracting minerals if they are found.  There is no assurance we will ever reach that point.

15


Item 8. Financial Statements
 
AMERICAN OIL & GAS INC.

INDEX TO FINANCIAL STATEMENTS

TABLE OF CONTENTS

     
Page No.
 
         
Report of Independent Registered Public Accounting Firm
 
 
17
 
 
 
 
 
 
Balance Sheets
 
 
18
 
 
 
 
 
 
Statements of Operations
 
 
19
 
 
 
 
 
 
Statements of Changes in Stockholders' Equity
 
 
20
 
 
 
 
 
 
Statements of Cash Flows
 
 
21
 
 
 
 
 
 
Notes to Financial Statements
 
22
 
 

 
16


 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and
Stockholders of American Oil & Gas, Inc.
 
We have audited the accompanying balance sheets of American Oil & Gas, Inc . as of January 31, 2017 and 2016, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended January 31, 2017. American Oil & Gas Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Oil & Gas, Inc. as of January 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note 4 to the financial statements, the Company has had limited operations from the date of inception and has no established source of revenue. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. The financial statements do not include any adjustments that might result in the outcome of this uncertainty.
 
 
 
/s/ Haynie & Company   
Haynie & Company
Denver, Colorado
June 5, 2018
 
 
17


 
AMERICAN OIL & GAS INC.
Balance Sheets

 
   
As of
   
As of
 
   
January 31, 2017
   
January 31, 2016
 
ASSETS
           
             
Current Assets
           
Cash
 
$
-
   
$
-
 
                 
Total Current Assets
   
-
     
-
 
                 
Total Assets
 
$
-
   
$
-
 
                 
LIABILITIES & STOCKHOLDERS' DEFICIT
               
                 
Current Liabilities
               
Accounts Payable
 
$
14,442
   
$
10,415
 
Loan Payable - Related Party
   
41,724
     
40,249
 
                 
Total Current Liabilities
   
56,166
     
50,664
 
                 
Commitments and Contingencies
               
                 
Stockholders' Deficit
               
Common stock, $0.001 par value, 75,000,000 shares  authorized;
               
20,000,000 shares issued and outstanding as of January 31, 2017 and January 31, 2016
    20,000       20,000  
Additional Paid-In Capital
   
40,000
     
40,000
 
Accumulated deficit
   
(116,166
)
   
(110,664
)
                 
Total Stockholders' Deficit
   
(56,166
)
   
(50,664
)
                 
Total Liabilities & Stockholders' Deficit
 
$
-
   
$
-
 
 
 
 
 
The Accompanying Notes are an Integral Part of These Financial Statements
 
18


AMERICAN OIL & GAS INC.
Statements of Operations
 
 
   
Year ended
   
Year ended
 
   
January 31, 2017
   
January 31, 2016
 
             
Revenues
 
$
-
   
$
-
 
                 
Expenses
               
General and Administration
   
5,502
     
3,979
 
Bad Debt
   
-
     
14,714
 
Professional Fees
   
-
     
5,653
 
Total Expenses
   
5,502
     
24,345
 
                 
Net Ordinary (Loss)
   
(5,502
)
   
(24,345
)
                 
Other Income
               
Debt Forgiveness
   
-
     
5,533
 
Total Other Income
   
-
     
5,533
 
                 
                 
Net (Loss)
 
$
(5,502
)
 
$
(18,812
)
                 
Net Loss Per Basic and Diluted share
 
$
(0.00
)
 
$
(0.00
)
                 
Weighted average number of Common Shares outstanding
   
20,000,000
     
20,000,000
 
 
 
 
 
The Accompanying Notes are an Integral Part of These Financial Statements

19


AMERICAN OIL & GAS INC.
Statements of Changes in Stockholders' Equity
For the years ended January 31, 2017 and 2016
 
 
                     
Deficit
       
                     
Accumulated
       
         
Common
   
Additional
   
During
       
   
Common
   
Stock
   
Paid-in
   
Exploration
       
   
Stock
   
Amount
   
Capital
   
Stage
   
Total
 
                               
Balance, January 31, 2015
   
20,000,000
   
$
20,000
   
$
40,000
   
$
(91,852
)
 
$
(31,852
)
                                         
Net loss,  January 31, 2016
                           
(18,812
)
   
(18,812
)
                                         
Balance, January 31, 2016
   
20,000,000
   
$
20,000
   
$
40,000
   
$
(110,664
)
 
$
(50,664
)
                                         
Net loss,  January 31, 2017
                           
(5,502
)
   
(5,502
)
                                         
Balance, January 31, 2017
   
20,000,000
   
$
20,000
   
$
40,000
   
$
(116,166
)
 
$
(56,166
)

 
 
The Accompanying Notes are an Integral Part of These Financial Statements

20


AMERICAN OIL & GAS INC.
Statements of Cash Flows
 
 
   
Year ended
   
Year ended
 
   
January 31, 2017
   
January 31, 2016
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net (loss)
 
$
(5,502
)
 
$
(18,812
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Changes in operating assets and liabilities:
               
Bad Debt
   
-
     
14,714
 
Accounts Payable
   
4,027
     
310
 
Net cash (used in) operating activities
   
(1,475
)
   
(3,788
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Loan Payable - Related Party
   
1,475
     
3,248
 
Net cash provided by financing activities
   
1,475
     
3,248
 
                 
Net (decrease) in cash
   
-
     
(540
)
                 
Cash at beginning of period
   
-
     
540
 
                 
Cash at end of period
 
$
-
   
$
-
 
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
               
                 
Cash paid during year for :
               
Interest
 
$
-
   
$
-
 
Income Taxes
 
$
-
   
$
-
 

 
 
 
The Accompanying Notes are an Integral Part of These Financial Statements
 
21


 
AMERICAN OIL & GAS INC.
Notes to Financial Statements


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 Accounting

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

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.

Fair Value of Financial Instruments

The carrying amount of cash, account payable, 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.
 
22

AMERICAN OIL & GAS INC.
Notes to Financial Statements


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 2017 and prior. Based on evaluation of the 2017 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, 2017 and 2016, 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, 2017 or 2016, and have not recognized interest and/or penalties in the statement of operations for the years ended January 31, 2017 or 2016.

Revenue

The Company records revenue on the accrual basis when all goods and services have been performed and delivered, the amounts are readily determinable, and collection is reasonably assured.  The Company has not generated any revenue since its inception.

Advertising

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

Oil and Gas Properties

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

Depletion of capitalized oil and gas well costs is 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 employees’ stock issuance, are in accordance with ASC No. 505. Thus issuances shall be accounted for based on the fair value of the consideration received.  Transactions with employees’ stock issuance are in accordance with ASC No. 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.

NOTE 3.  RECENT ACCOUNTING PRONOUCEMENTS

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

23

AMERICAN OIL & GAS INC.
Notes to 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, 2017 and generated a net loss of $116,166.  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, 2017, the Company had a working capital deficit of $56,166 and $0 cash, compared to a working capital deficit of $50,664 and cash of $0 as of January 31, 2016.

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

NOTE 5.  WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional shares of common stock.

NOTE 6.  RELATED PARTY TRANSACTIONS
 
The sole officer and director of the Company may, in the future, become involved in other business opportunities as they become available, he may face a conflict in selecting between the Company and his other business opportunities.  The Company has not formulated a policy for the resolution of such conflicts.
 
As of January 31, 2017, $3,500 is owed to Shane Reeves, president and $38,224 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.

NOTE 7.  INCOME TAXES AND NET OPERATING LOSSES

Income Taxes

a)
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended January 31, 2017 and 2016

   
2017
   
2016
 
             
Net (loss) before income taxes
 
$
(5,502
)
 
$
(18,812
)
Adjusted net loss for tax purposes
   
(5,502
)
   
(18,812
)
Statutory rate
   
26
%
   
26
%
                 
     
(1,431
)
   
(4,891
)
Valuation allowance
   
1,431
     
4,891
 
Provision for income taxes
 
$
-
   
$
-
 
 

 
24

AMERICAN OIL & GAS INC.
Notes to Financial Statements


NOTE 7. INCOME TAXES AND NET OPERATING LOSSES (Continued)

b)
Deferred Income Tax Assets

Deferred taxes are provided on a liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  The Tax Cuts and Job Act was enacted on December 22, 2017 which reduced the U.S. corporate statutory tax rate from 35% to 21% beginning on January 1, 2018.  We used 26% as an effective rate.

The tax effects of temporary differences that give rise to the deferred income tax assets at January 31, 2017 and 2016 are as follows:

   
2017
   
2016
 
                 
NOL Carryover
 
$
30,203
   
$
28,773
 
Valuation Allowance
 
$
30,203
   
$
28,773
 
 
c)
Cumulative Non-Capital Losses

The Company has non-capital losses carried forward of approximately $116,166 available to reduce future years' taxable income. These losses will expire as follows:

2032
 
$
566
 
2033
   
18,684
 
2034
   
42,331
 
2035
   
30,271
 
2036
   
18,812
 
2037
   
5,502
 
 
 
$
116,166
 

At January 31, 2017, the Company had net operating loss carryforwards of approximately $116,166 that may be offset against future taxable income for the year 2018 through 2037. No tax benefit from continuing or discontinued operations have been reported in the January 31, 2017 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to change in ownership provisions of the Tax Reform Act of 1986, net operation loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

The Company had no accruals for interest and tax penalties at January 31, 2017 and 2016.

The Company does not expect the amount of unrecognized tax benefits to materially change within the next twelve months.

The Company is required to file income tax returns in the U.S. and the state of Nevada.
 

25

AMERICAN OIL & GAS INC.
Notes to Financial Statements


NOTE 8. GAIN ON FORGIVENESS OF DEBT

During the year ended January 31, 2016 we had a gain on forgiveness of debt of $5,533 from the cancellation of a payable debt to our legal counsel.  During the year ended January31, 2017 there was no gain on forgiveness of debt.

NOTE 9. STOCKHOLDERS’ EQUITY

The stockholders’ equity section of the Company contains the following classes of capital stock as of January 31, 2017 and 2016:

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

NOTE 10.  SUBSEQUENT EVENTS

On April 12, 2018 the Company’s Board of Directors accepted the resignation of Ronald Pantin Carvallo as CEO and director.  Mr. Carvallo had served as CEO and director since June 13, 2017.  Shane Reeves, Chief Financial Officer and director, assumed the position of CEO.

The Company has evaluated events subsequent to the date these financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation, it was determined that, other than the event noted above, no subsequent events occurred that require recognition or disclosure in the financial statements.
 

26


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Changes in Registrant's Certifying Accountant

On September 29, 2017, the Board of Directors of the registrant engaged Haynie & Company, PC of Littleton, Colorado as its independent accountant. During the most recent fiscal year (since inception) and the interim periods preceding the engagement, the registrant has not consulted Haynie & Company, PC regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.  The engagement of Haynie & Company was pursuant to the registrant being informed the previous auditor had retired.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer (our president), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report.  Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our Securities and Exchange Commission reports was not accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
 

27

Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of January 31, 2017, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties : We have an inadequate number of personnel to properly implement control procedures.

Lack of Audit Committee & Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.

Management, including our president, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended January 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Subsequent Event
 
Item 5.01 Changes in Control of Registrant
 
On April 12, 2018 the Company’s Board of Directors accepted the resignation of Ronald Pantin Carvallo as CEO and director.  Mr. Carvallo had served as CEO and director since June 13, 2017.  Shane Reeves, Chief Financial Officer and director, assumed the position of CEO.
 

28


PART III

Item 10.  Director and Executive Officer

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

Name & Address
 
Age
 
Position
 
Date First Elected
 
Term Expires
                 
Shane Reeves
 
42
 
President,
 
10/27/14
 
1/31/19
2100 West Loop South
     
Secretary,
       
Suite 700
     
Treasurer,
       
Houston, TX  77027
     
CEO, CFO & Director
       
 
The foregoing person is a promoter of AO&G, as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933.  Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified.  Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Shane Reeves currently devotes 8-10 hours per week to company matters, in the future he intends to devote as much time as the board of directors deems necessary to manage the affairs of the company.

No executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

Background Information

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

Code of Ethics
 
We do not currently have a code of ethics, because we have only limited business operations and only one officer and director, we believe a code of ethics would have limited utility. We intend to adopt such a code of ethics as our business operations expand and we have more directors, officers and employees.
 

29


Item 11.  Executive Compensation

Our current officers receive no compensation.  The current Board of Directors is comprised of Shane Reeves.  The following tables represent the time periods covered by this annual report through the year ended January 31, 2017 and the positions held by Mr. Reeves at January 31, 2017.
 
SUMMARY COMPENSATION TABLE

Name and
Principal
Position
 
Year
 
Salary
 
Bonus
 
Stock
Awards
 
Option
Awards
 
Non-Equity
Incentive
Plan
Compensation
 
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
 
All Other
Compensation
 
Total
                                     
Shane Reeves,  
 
2015
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
President,     2016   0   0   0   0   0   0   0   0
CEO & CFO
  2017   0   0   0   0   0   0   0   0

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

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

DIRECTOR COMPENSATION

Name
 
Fees Earned
or Paid
in Cash
   
Stock
Awards
   
Option
Awards
   
Non-Equity
Incentive Plan
Compensation
   
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
   
All Other
Compensation
   
Total
 
                                           
Shane Reeves,
Director
 
 
0
     
0
     
0
     
0
     
0
     
0
     
0
 
 
 
30


There are no current employment agreements between the company and its executive officers. The officers have agreed to work with no remuneration until such time as the company receives sufficient revenues necessary to provide management salaries.  At this time, we cannot accurately estimate when sufficient revenues will occur to implement this compensation, or what the amount of the compensation will be.

In January 2012 a past officer and director, Robert Gelfand, purchased 10,000,000 shares of our common stock at $0.001 per share.  The terms of these stock issuances were as fair to the company, in the opinion of the board of directors, as could have been made with an unaffiliated third party.

As of January 31, 2017, $38,224 is owed to a past officer and director, Mr. Gelfand, from funds loaned by him to the Company and is non-interest bearing with no specific terms of repayment.

As of January 31, 2017, $3,500 is owed to Mr. Reeves, a current officer and director, from funds loaned by him to the Company and is non-interest bearing with no specific terms of repayment.

There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any.

Item 12. Security Ownership of Certain Beneficial Owners and Management
 
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of January 31, 2017 of: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
 
       
Amount and
   
   
Name and Address of
 
Nature of
 
Percentage of
Title of Class
 
Beneficial Owner
 
Beneficial Ownership
 
Common Stock (1)
             
Common Stock
 
Robert Gelfand
 
10,000,000
   
   
Suite 400-601 West Broadway
 
Direct
 
50%
   
Vancouver, BC  V5Z 4C2
       
             
   
Shane Reeves
  None  
0%
   
6860 S. Yosemite Court
       
   
Centennial, CO  80112
       
             
Common Stock
 
Officer/Director and Holders of More than 5% of Our Common Stock
 
10,000,000
 
50%
 
(1)
A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this report.  As of the date of this report, there were 20,000,000 shares of our common stock issued and outstanding, 10,000,000 shares being held by a past officer and director.
 
31


 
Future Sales by Existing Stockholders

As of January 31, 2017, a total of 10,000,000 shares have been issued to Robert Gelfand, a past officer/director, and are restricted securities, as that term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Act. Under Rule 144, such shares can be publicly sold, subject to volume restrictions and certain restrictions on the manner of sale, commencing six months after their acquisition.

Rule 144(i)(1) states that the Rule 144 safe harbor is not available for the resale of securities “initially issued” by a shell company (other than a business combination related shell company) or an issuer that has “at any time previously” been a shell company (other than a business combination related shell company). Consequently, the Rule 144 safe harbor is not available for the resale of such securities unless and until all of the conditions in Rule 144(i)(2) are satisfied at the time of the proposed sale.

Any sale of shares held by the existing stockholder (after applicable restrictions expire) may have a depressive effect on the price of our common stock in any market that may develop, of which there can be no assurance.   Mr. Gelfand does not have any plans to sell his shares at this time.

Item 13.   Certain Relationships and Related Transactions

In January 2012 Mr. Gelfand, a past officer and director, purchased 10,000,000 shares of our common stock at $0.001 per share.  All of such shares are “restricted” securities, as that term is defined by the Securities Act of 1933, as amended. (See "Principal Stockholders".)

As of January 31, 2017, $38,224 is owed to Mr. Gelfand from funds loaned by him to the Company and is non-interest bearing with no specific terms of repayment.

As of January 31, 2017, $3,500 is owed to Mr. Reeves, a current officer and director, from funds loaned by him to the Company and is non-interest bearing with no specific terms of repayment.

We do not currently have any conflicts of interest by or among our current officer, director, key employee or advisors. We have not yet formulated a policy for handling conflicts of interest; however, we intend to do so prior to hiring any additional employees.

Item 14. Principal Accounting Fees and Services

The total fees charged to the Company by Haynie and Company, PC, for audit services, including quarterly reviews, were $5,500 for audit-related services were $0, for tax services were $0 and for other services were $0 for the year ended January 31, 2017.

The total fees charged to the Company by Haynie and Company, PC, for audit services, including quarterly reviews, were $5,500 for audit-related services were $0, for tax services were $0 and for other services were $0 for the year ended January 31, 2016.

Pre-Approval Policies

Our board of directors approves the engagement of the auditor before the firm renders audit and non-audit services.
 
32



PART IV

Item 15.  Exhibits

The following exhibits are included with this filing:

Exhibit
   
Number
 
Description
     
3(i)
 
Articles of Incorporation*
3(ii)
 
Bylaws*
31
 
Sec. 302 Certification of CEO and CFO
32
 
Sec. 906 Certification of CEO and CFO
101
 
Interactive Data Files pursuant to Regulation S-T

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

33


Signatures

Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
American Oil & Gas Inc.
   
   
Date June 5, 2018
By: /s/ Shane Reeves
 
 
Shane Reeves, Chief Executive Officer,
Chief Financial and Accounting Officer
 
and Director
 
 
 
34
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