Filed
Pursuant to Rule 253(g)(4)
File
No. 024-10846
Offering
Circular dated October 15, 2019
OFFERING
CIRCULAR
12,995,000
SHARES OF COMMON STOCK
CW
PETROLEUM CORP
Common
Stock
This
is the initial public offering of securities of CW Petroleum Corp, a Wyoming corporation (the “Company,” “CW,”
“we,” “our” and “us”). We are offering for sale a total of 10,000,000 shares of its common
stock (“Common Stock”) at a fixed price of $1.50 per share in a “Tier 2 Offering” under Regulation A (the
“Offering”). The selling shareholders identified in this offering circular are offering an additional 2,995,000 shares
of common stock. We will not receive any proceeds from sales by the selling shareholders. Selling shareholders will sell at a
fixed price of $1.50 per share. The Offering will terminate at the earlier of: (1) the date at which 12,995,000 Shares have been
sold (including 2,995,000 shares of selling shareholders), (2) the date which is one year after this Offering being qualified
by the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”), or (3) the date on which
this Offering is earlier terminated by the Company in its sole discretion (the “Termination Date”). This Offering
is being conducted on a “best efforts” basis without any minimum offering amount pursuant to Regulation A of Section
3(6) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 offerings.
Subscriptions
are irrevocable, and the purchase price is non-refundable as expressly stated in this Offering Circular. The proceeds of this
offering will not be placed into an escrow account. As there is no minimum offering, upon the approval of any subscription to
this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may utilize
the proceeds immediately in accordance with the Use of Proceeds.
The
Company, by determination of the board of directors of the Company, in its sole discretion, may issue Common Stock under this
Offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. The aggregate offering
price is to be based on the price at which the Common Stock is offered for cash. Any portion of the aggregate offering price or
aggregate sales attributable to cash received in a foreign currency will be translated into United States currency at a currency
exchange rate in effect on, or at a reasonable time before, the date of the sale of the Common Stock. If the Common Stock is not
sold for cash, the aggregate offering price or aggregate sales will be based on the value of the consideration as established
by bona fide sales of that consideration made within a reasonable time, or, in the absence of sales, on the fair value as determined
by an accepted standard. Valuations of non-cash consideration will be reasonable at the time made.
Generally,
in the case of trading on the over-the-counter markets, no sale may be made to you in this Offering if the aggregate purchase
price you pay is more than 10% of the greater of your annual income or net worth (please see under How to calculate your net
worth elsewhere in this offering circular). Different rules apply to accredited investors and non-natural persons. Before
making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C)
of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
We
commenced the offer and sale of the Shares as of the date on which the offering statement of which this Offering Circular is a
part (the “Offering Statement”) was qualified by the SEC on October 4, 2018. Prior to this Offering, there has been
no public market for our Common Stock. We intend to apply to list our Common Stock on the OTCQB. A market maker has filed Rule
211 application with the Financial Industry Regulatory Authority (“FINRA”) to obtain a trade symbol for our common
stock and such symbol “CWPE” was obtained on September 3, 2019. In any event, our common stock will not be quoted
on the OTCQB Marketplace, until after the termination of this Offering.
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and, as such,
may elect to comply with certain reduced reporting requirements for this Offering Circular and future filings after this Offering.
THIS
INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE
“RISK FACTORS” BEGINNING ON PAGE 7.
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Maximum
Number of Shares
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Offering
Price
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Commissions
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Net Proceeds to the Company before expenses
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Per Share
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1
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$
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1.50
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-
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$
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1.50
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Total
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10,000,000
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$
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1.50
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-
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$
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15,000,000
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(a)
(1)
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The
Company has not entered into any broker-dealer agreement as of the date of this Offering. The Company may enter into a broker-dealer
agreement with a registered FINRA for the administration of this Offering.
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THE
SEC DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT
PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED
PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT
THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
The
date of this offering circular is October 15, 2019
TABLE
OF CONTENTS
Contents
OFFERING
CIRCULAR SUMMARY
About
CW Petroleum Corp
CW
was founded as a Texas corporation by Christopher Williams and began operations in 2011. It reincorporated in Wyoming as a C corporation
in April 2018. CW supplies and distributes Biodiesel, Biodiesel Blends, Ultra Low Sulfur Diesel and Gasoline Blends to distributors
and end-users. It intends to sell directly to consumers using fuel stations at convenience stores when it has the resources to
do so.
The
Offering
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Shares
of common stock offered by us
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A
maximum of 10,000,000 shares. There is no minimum number of shares that must be sold by us for the offering to close.
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Use
of proceeds
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CW
will apply the proceeds from the offering to pay for projects and product development underway, create a marketing program,
professional fees and other general expenses of the offering and reduce its existing accrued liabilities.
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Termination
of the offering
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The
Offering will terminate at the earlier of: (1) the date at which 12,995,000 Shares (including selling shareholders’
shares) has been sold, (2) the date which is one year after this Offering was qualified by the SEC on October 4, 2018 or (3)
the date on which this Offering is earlier terminated by the Company in its sole discretion.
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Risk
factors
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The
purchase of our common stock involves a high degree of risk. The common stock offered
in this offering circular is for investment purposes only and currently no market for
our common stock exists nor may ever exist.
Please
refer to the sections entitled “Risk Factors” and “Dilution” before making an investment in this
stock.
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Trading
Market
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A
market maker filed a Rule 211 application with FINRA to obtain a trade symbol for our
common stock, and such trading symbol “CWPE” was obtained on September 3,
2019,
Even
after CW’s common stock is quoted or granted listing, a market for the common shares may not develop.
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Implications
of Being an Emerging Growth Company
As
a company with less than $1.0 billion in revenue during its last fiscal year, we qualify as an “emerging growth company”
as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified
reduced reporting and other regulatory requirements that are generally unavailable to other public companies. These provisions
include:
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a
requirement to have only two years of audited financial statements and only two years of related Management’s Discussion
and Analysis included in an initial public offering registration statement;
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an
exemption to provide less than five years of selected financial data in an initial public offering registration statement;
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an
exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal controls
over financial reporting;
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an
exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;
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an
exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory
audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional
information about the audit and the financial statements of the issuer;
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reduced
disclosure about the emerging growth company’s executive compensation arrangements; and
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be
exempt from the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain
executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to
approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business
combinations) of The Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and certain
disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;
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As
an emerging growth company, we are also exempt from:
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Section
404(b) of Sarbanes Oxley which requires that the registered accounting firm shall attest to and report on the assessment on
the effectiveness of the internal control structure and procedures for financial reporting.
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Section
14A (a) and (b) of the Securities Exchange Act of 1934 which require shareholder approval of executive compensation and golden
parachutes.
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Section
107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging
growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private
companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
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We
would cease to be an emerging growth company upon the earliest of:
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the
first fiscal year following the fifth anniversary of this offering,
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the
first fiscal year after our annual gross revenues are $1 billion or more,
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the
date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities,
or
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as
of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as
of the end of the second quarter of that fiscal year.
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RISK
FACTORS
You
should be aware that there are various risks to an investment in our common stock. You should carefully consider these risk factors,
together with all of the other information included in this offering circular, before you decide to invest in shares of our common
stock.
If
any of the following risks were to develop, then our business, financial condition, results of operations and/or prospects could
be materially adversely affected. If that happens, the market price of our common stock, if any, could decline, and investors
may lose all or part of their investment.
Risks
Related to the Business
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1.
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CW
is an early stage company and has limited financial resources.
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CW
is an early stage company with a business plan to sell fuel products but limited financial resources. Our independent registered
auditors included an explanatory paragraph in their opinion on our financial statements as of and for the year ended December
31, 2018 that states that this lack of resources causes substantial doubt about our ability to continue as a going concern. No
assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern.
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2.
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CW
is and will continue to be completely dependent on the services of our CEO, Christopher Williams, the loss of whose services
may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further
implement our strategy.
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CW’s
operations and business strategy are completely dependent upon the knowledge and business connections of Christopher Williams.
If he should choose to leave us for any reason or if he becomes ill and unable to work for an extended period of time before we
have hired additional personnel, our operations will likely stagnate or fail. Even if we are able to find additional personnel,
it is uncertain whether we could find someone who could develop our business along the lines described in this Form 1-A. We will
fail without the services of Christopher Williams or an appropriate replacement(s).
We
intend to acquire key-man life insurance on the life of Christopher Williams naming CW as the beneficiary when and if we obtain
the resources to do so and if he is insurable. We have not yet procured such insurance, and there is no guarantee that we will
be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain
highly qualified and talented personnel and independent contractors.
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3.
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Many
of our competitors have significantly greater financial and marketing resources than do we.
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Many
of our competitors have significantly greater financial and marketing resources than do we. Many of these competitors have sophisticated
management, are in a position to purchase inventory at the lowest prices and have the ability to advertise in a wide variety of
media, including television. Their products are also already well known in the marketplace. There are no assurances that our brand
will be successful.
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4.
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Our
CEO, Christopher Williams, has no experience managing a public company and no meaningful financial reporting education or
experience and, accordingly, our ability to meet Exchange Act reporting requirements on a timely basis will be dependent to
a significant degree upon third party consultants and advisors.
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Christopher
Williams has no experience managing a public company and no meaningful financial reporting education or experience. He is and
will be heavily dependent on engaging and dealing with outside professional advisors, primarily lawyers and financial advisors/accountants
who are and will not be affiliated with our independent auditors. We have no formal arrangements with professionals to help Mr.
Williams and cannot provide any assurances that we will be able to establish arrangements with professionals on terms or costs
that are acceptable or affordable to us.
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5.
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We
will become subject to the periodic reporting requirements of the Securities Exchange Act of 1934, which requires us to incur
accounting and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate
our ability to fund our operations and may prevent us from meeting our normal business obligations.
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We
will elect to become subject to file periodic reporting requirements of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. In order to comply with these regulations,
our independent registered public accounting firm has to review our financial statements on a quarterly basis and audit our financial
statements on an annual basis. Moreover, our legal counsel or other professional has to review and assist in the preparation of
such reports. The future costs charged by these professionals for such services cannot be accurately predicted at this time because
factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at
this time and will have a major effect on the amount of time to be spent by our auditors and attorneys.
We
do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or
engaging outside consultants or professionals to overcome our lack of employees. Moreover, effective internal controls, particularly
those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent
financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be
harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a
market ever develops, could drop significantly.
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6.
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We
have only three directors, two of whom are also officers. The two officers are father and son.
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We
have only three directors, two of whom are also officers and are related to each other as father and son. Accordingly, we cannot
establish board committees comprised of independent members to oversee functions like the decisions of the chief executive officer,
compensation or audit issues.
Until
we have a larger board of directors which would include some independent members, if ever, there will be limited oversight of
our president’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities
and decisions, even if they are not in the best interests of minority shareholders.
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7.
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Various
regulatory and economic matters may impact our business.
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Federal
and local governments may pass laws or impose regulations that could negatively impact the demand for oil-based products. We would
have no control over these laws or regulations.
It
is also possible that increased drilling will one day result in large supplies of fuel being available resulting in increased
competition and significantly lower prices. We would have no control over these conditions.
Risks
Related to Our Common Stock
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8.
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Our
Offering is being conducted on a “best efforts” basis and does not require a minimum amount to be raised. As a
result, we may not be able to raise enough funds to fully implement our business plan and our investors may lose their entire
investment.
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The
Offering is on a “best efforts” basis and does not require a minimum amount to be raised. If we are not able to raise
sufficient funds, we may not be able to fund our operations as planned, and our growth opportunities may be materially adversely
affected. This could increase the likelihood that an investor may lose their entire investment.
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9.
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You
will experience immediate and substantial dilution as a result of this Offering.
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You
will incur immediate and substantial dilution as a result of this Offering. Purchasers may be diluted by a significant percentage
of their purchase value depending on how many shares are sold.
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10.
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Shareholders
may be diluted significantly because of the issuance of convertible financial instruments through our efforts to obtain financing
and satisfy obligations through issuance of additional shares of our common stock.
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We
have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to
satisfy obligations or other products. In many instances, we believe that the non-cash consideration will consist of restricted
shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or
part of the authorized but unissued shares. In addition, if a trading market develops for our common stock, we may attempt to
raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of
the ownership interests of existing shareholders may further dilute common stock book value, and that dilution may be material.
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11.
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The
interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support
existing management with such issuances serving to enhance existing management’s ability to maintain control of our
Company.
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Our
executive president owns a significant majority of outstanding shares. In addition, our board of directors has authority, without
action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued
to parties or entities committed to supporting existing management and the interests of existing management which may not be the
same as the interests of other shareholders. Although transactions, other than those described in this offering circular, are
not currently being contemplated or discussed, our ability to issue shares without shareholder approval serves to enhance existing
management’s ability to maintain control of our Company or participate in other transactions, including entering into possible
business combinations, without the support of other shareholders.
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12.
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Our
president controls all corporate activities and can approve all transactions, including mergers, without the approval of other
shareholders.
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Our
principal officer holds preferred shares that give him the right to 51% in all shareholder votes. Therefore, he effectively control
all corporate activities and can approve transactions, including possible mergers, issuance of shares and compensation levels,
without the approval of other shareholders. Their decisions may not be consistent with or in the best interests of other shareholders.
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13.
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Our
articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that
may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for
the benefit of officers and/or directors.
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Our
Articles of Incorporation, as amended, at Article XIII provide that the Company indemnify its officers and directors to the fullest
extent allowed under the laws of the State of Wyoming.
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against
public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification
for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer
or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled
by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process
relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either
of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.
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14.
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Currently,
there is no public market for our securities, and there can be no assurances that any established public market will ever
develop and, even if trading begins, it is likely to be subject to significant price fluctuations.
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Prior
to the date of this offering circular, there has not been any trading market for our common stock, and there is currently no public
market whatsoever for our securities. A market maker filed an application with FINRA on our behalf so as to be able to quote the
shares of our common stock on the OTCQB or Pinksheets, and such trading symbol “CWPE” was obtained on September 3,
2019. However, there is still no trading market for our common stock.
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15.
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Any
market that develops in shares of our common stock will become subject to the penny stock regulations and restrictions pertaining
to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
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Our
shares are considered a “penny stock.” Rule 3a51-1 of the Exchange Act establishes the definition of a “penny
stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us.
This classification will severely and adversely affect any market liquidity for our common stock.
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16.
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Our
board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial
to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control.
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Our
articles of incorporation, as amended, allow us to issue shares of preferred stock without any vote or further action by our stockholders.
Our
board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of
directors also has the authority to issue preferred stock without further stockholder approval. Thus, our board of directors could
authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation,
the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption
of the shares, together with a premium, prior to the redemption of our common stock.
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17.
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The
ability of our executive officers and directors to control our business may limit or eliminate minority shareholders’
ability to influence corporate affairs.
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Our
executive officers and directors will beneficially own preferred stock that grants them a 51% vote in all shareholder elections.
Because of this beneficial stock ownership, they will be in a position to continue to elect our board of directors, decide all
matters requiring stockholder approval, including potential mergers or business changes, and determine our policies. The interests
of our executive officers and directors may differ from the interests of other shareholders with respect to the issuance of shares,
business transactions with or sales to other companies, selection of officers and directors and other business decisions. The
other shareholders would have no way of overriding decisions made by our executive officers and directors. This level of control
may also have an adverse impact on the market value of our shares because our two executive officers may institute or undertake
transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial
community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
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18.
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All
of our presently issued and outstanding common shares are restricted under rule 144 of the Securities Act, as amended. If
and when the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of
our common stock could be adversely affected.
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All
of the presently outstanding shares of common stock are “restricted securities” as defined under Rule 144 promulgated
under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration,
if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed
period of at least six months if purchased from a reporting issuer or 12 months (as is the case herein) if purchased from a non-reporting
Company, may, under certain conditions, sell all or any of his/her shares without volume limitation, in brokerage transactions.
Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock each three months. As
a result of revisions to Rule 144 which became effective on February 15, 2008, there is no limit on the amount of restricted securities
that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least
90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time.
A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common
stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.
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19.
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We
do not expect to pay cash dividends in the foreseeable future.
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We
have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in
the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial
requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on
our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common
stock.
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20.
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As
an emerging growth company, our independent auditor is not required to attest to the effectiveness of our internal controls.
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Our
independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial
reporting while we are an emerging growth company. This means that the effectiveness of our financial operations may differ from
our peer companies in that they may be required to obtain independent registered public accounting firm attestations as to the
effectiveness of their internal controls over financial reporting and we are not. While our management will be required to attest
to internal control over financial reporting and we will be required to detail changes to our internal controls on a quarterly
basis, we cannot provide assurance that the independent registered public accounting firm’s review process in assessing
the effectiveness of our internal controls over financial reporting, if obtained, would not find one or more material weaknesses
or significant deficiencies. Further, once we cease to be an emerging growth company we will be subject to independent registered
public accounting firm attestation regarding the effectiveness of our internal controls over financial reporting. Even if management
finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness
of such internal controls and issue a qualified report.
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21.
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Because
we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders
have limited protection against interested director transactions, conflicts of interest and similar matters.
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The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and NYSE Market and the Nasdaq
Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance.
These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities
that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the
corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such
compliance any sooner than legally required, we have not yet adopted these measures.
We
do not currently have independent audit or compensation committees. As a result, our president and our only other officer have
the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance
measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our
stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters
and investors may be reluctant to provide us with funds necessary to expand our operations.
We
intend to comply with all corporate governance measures relating to director independence as and when required. However, we may
find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required
to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of
2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors
and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or
deter qualified individuals from accepting these roles.
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22.
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Our
shares may not become eligible to be traded electronically which would result in brokerage firms being unwilling to trade
them.
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A
broker-dealer and its clearing firm is applying to have the shares of our common stock to become eligible with the Depository
Trust Company (“DTC”) which, if successful, would permit our shares to trade electronically. The status of this application
is currently pending. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between
brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCQB), means that shares
of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not
a realistic option for companies relying on broker dealers for stock transactions - like all companies on the OTCQB. What this
means is that while DTC-eligibility is not a requirement to trade on the OTCQB, it is a necessity to process trades on the OTCQB
if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible
or, if they do, how long it will take.
|
23.
|
Upon
the completion of this Offering, we expect to elect to become a public reporting company under the Exchange Act, and thereafter
publicly report on an ongoing basis as an “emerging growth company” under the reporting rules set forth under
the Exchange Act. If we elect not to do so, we will be required to publicly report on an ongoing basis under the reporting
rules set forth in Regulation A for Tier 2 issuers. In either case, we will be subject to ongoing public reporting requirements
that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies”, and our
stockholders could receive less information than they might expect to receive from more mature public companies
|
Upon
the completion of this Offering, we expect to elect to become a public reporting company under the Exchange Act. If we elect to
do so, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the
JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company,”
we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting
companies that are not “emerging growth companies,” including but not limited to:
|
|
●
|
not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
|
|
|
●
|
taking
advantage of extensions of time to comply with certain new or revised financial accounting standards;
|
|
|
●
|
being
permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements; and
|
|
|
●
|
being
exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved.
|
We
expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging
growth company for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700
million before that time, we would cease to be an emerging growth company.
If
we elect not to become a public reporting company under the Exchange Act, we will be required to publicly report on an ongoing
basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation
A are more relaxed than for emerging growth companies under the Exchange Act. The differences include, but are not limited to,
being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within
120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after
the end of the first six months of the issuer’s fiscal year. If we elect not to become a public reporting company our Common
Stock will not be permitted to trade on a national securities exchange such as the NYSE MKT.
In
either case, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies
that are not “emerging growth companies,” and our stockholders would receive less information than they might expect
to receive from more mature public companies.
|
24.
|
Our
financial statements may not be comparable to those of companies that comply with new or revised accounting standards.
|
We
have elected to take advantage of the benefits of the extended transition period that Section 107 of the JOBS Act provides an
emerging growth company, as provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised
accounting standards.
Because
the JOBS Act has only recently been enacted, we cannot predict if investors will find our common stock less attractive because
we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active
trading market for our common stock and our stock price may be more volatile.
|
25.
|
Our
status as an “emerging growth company” under the JOBS Act OF 2012 may make it more difficult to raise capital
when we need to do so.
|
Because
of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we
will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive
to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare
our business with other companies in our industry if they believe that our financial accounting is not as transparent as other
companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results
of operations may be materially and adversely affected.
|
26.
|
We
will not be required to comply with certain provisions of the Sarbanes-Oxley Act for as long as we remain an “emerging
growth company.”
|
We
are not currently required to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, and are
therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for
that purpose. Upon becoming a public company, we will be required to comply with certain of these rules, which will require management
to certify financial and other information in our quarterly and annual reports and provide an annual management report on the
effectiveness of our internal control over financial reporting. Though we will be required to disclose changes made in our internal
control procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over
financial reporting pursuant to Section 404 until the later of (i) the year following our first annual report required to be filed
with the SEC or (ii) the date we are no longer an “emerging growth company” as defined in the JOBS Act.
Our
independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control
over financial reporting until the later of the year following our first annual report required to be filed with the SEC, or the
date we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm
may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed
or operating.
|
27.
|
Reduced
disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
|
As
an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not “emerging growth companies” including not being required to
comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We
cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors
find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock
price may be more volatile.
For
all the foregoing reasons and others set forth herein, an investment in the Company’s securities in any market which may
develop in the future involves a high degree of risk.
USE
OF PROCEEDS
CW
will apply the proceeds from the offering as follows assuming the entire offering is completed:
|
|
●
|
$350,000
for a Letter of Credit needed for the Colonial Pipeline so we can start trading on that pipe which would, among other things,
give us access to supply diesel fuel and gasoline from Texas to the entire North Eastern USA;
|
|
|
●
|
Purchase
of inventory and working capital ($4,000,000)
|
|
|
●
|
Establishment
of a fuel blending facilities ($1,500,000);
|
|
|
●
|
Acquisition
of fuel trucks and equipment ($650,000);
|
|
|
●
|
Reduction
of existing accrued expenses relating to operations ($500,000), including $140,000 in accrued compensation; and
|
|
|
●
|
Establishment
of convenience store network ($8,000,000);
|
If
the entire offering is not completed, we will use the proceeds in the sequence of items listed above. The most important near-term
items are increasing availability to more pipelines and having greater amounts of inventory to blend and sell.
If
insufficient funds are raised in the offering to establish convenience stores, we believe that an increase in inventory and access
to more pipelines will enable us to increase sales sufficiently so as to permit us to find other financing sources for the development
of the convenience stores.
CW
will not undertake projects requiring cash outlays until and unless revenues or resources are sufficient to cover such outlays.
Our
plans may be modified depending on the factors set forth in the paragraph above or because of unexpected operating issues arising.
We
will not receive any proceeds from sales by the selling shareholders.
THE
OFFERING
We
will not receive any proceeds from sales of 2,995,000 shares by the selling shareholders.
CW
is offering a total of 10,000,000 shares of common stock for sale at a fixed price of $1.50 per share. There is no minimum number
of shares that must be sold by us for the offering to close, and we will retain the proceeds from the sale of any of the offered
shares that are sold.
The
offering is being conducted on a best-efforts basis without any minimum number of shares or amount of proceeds required to be
sold. The Company will not initially sell the Shares through commissioned broker-dealers but may do so after the commencement
of the offering. Any such arrangement will add to our expenses in connection with the offering. If we engage one or more commissioned
sales agents or underwriters, we will supplement this Form 1-A to describe the arrangement. No compensation will be paid to any
principal, the officers, or any affiliated company or party with respect to the sale of the Shares. This means that no compensation
will be paid with respect to the sale of the Shares to our officer or directors of the Company. We are relying on Rule 3a4-1 of
the Securities Exchange Act of 1934, Associated Persons of an Issuer Deemed not to be Brokers. The applicable portions
of the rule state that associated persons (including companies) of an issuer shall not be deemed brokers if they (a) perform substantial
duties at the end of the offering for the issuer; (b) are not broker dealers; and (c) do not participate in selling securities
more than once every 12 months, except for any of the following activities: (i) preparing written communication, but no oral solicitation;
or (ii) responding to inquiries provided that the content is contained in the applicable registration statement; or (iii) performing
clerical work in effecting any transaction. Neither the Company, its officers or directors, nor any affiliates conduct any activities
that fall outside of Rule 3a4-1 and are, therefore, not brokers nor are they dealers.
Funds
tendered by investors will be will be immediately available to the Company. All subscribers will be instructed by the Company
or its agents to transfer funds by wire, credit or debit cards or ACH transfer directly to the bank account established for this
Offering or deliver checks made payable to “CW Petroleum Corp.” Subscribers have no right to a return of their funds
unless the Company rejects a subscription agreement within ten days of tender, in which event investor funds held in the Company
account will promptly be refunded to each investor without interest. The Company may terminate the offering at any time for any
reason at its sole discretion and may extend the Offering past the Closing Date at the absolute discretion of the Company and
in accordance with the rules and provisions of Regulation A of the JOBS Act. It is expected that all subscriptions will be processed
through the Company’s website, www.cwpetroleumcorp.com.
After
the Offering Statement has been qualified by the SEC, the Company will accept tenders of funds to purchase the Shares. The Company
does not intend to use an escrow agent as this is a “best efforts” offering and funds will be available immediately
to the Company for use.
We
initially will use our existing website, www.cwpetroleumcorp.com, to provide notification of the Offering. This Preliminary Offering
Circular will be furnished to prospective investors via download 24 hours per day, 7 days per week, on the www. cwpetroleumcorp.com
website.
You
will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation
to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an
amount that does not exceed the greater of 10% of your annual income or 10% of your net worth, as described in the subscription
agreement.
The
Company may engage a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”),
to perform the following administrative and technology related functions in connection with this offering, but not for underwriting
or placement agent services:
|
|
●
|
Accept
investor data from the Company;
|
|
|
●
|
Review
and process information from potential investors, including but not limited to running reasonable background checks for anti-money
laundering (“AML”), IRS tax fraud identification and USA PATRIOT Act purposes, and gather and review responses
to customer identification information;
|
|
|
●
|
Review
subscription agreements received from prospective investors to confirm they are complete;
|
|
|
●
|
Advise
the Company as to permitted investment limits for investors pursuant to Regulation A, Tier 2;
|
|
|
●
|
Contact
the Company and/or the Company’s agents, if needed, to gather additional information or clarification from prospective
investors;
|
|
|
●
|
Provide
the Company with prompt notice about inconsistent, incorrect or otherwise flagged (e.g. for underage or AML reasons) subscriptions;
|
|
|
●
|
Serve
as registered agent where required for state blue sky requirements,
|
|
|
●
|
Transmit
data to the Company’s transfer agent in the form of book-entry data for maintaining the Company’s responsibilities
for managing investors (investor relationship management, aka “IRM”) and record keeping;
|
|
|
●
|
Keep
investor details and data confidential and not disclose to any third party except as required by regulators, by law or in
our performance under this Agreement (e.g. as needed for AML); and Comply with any required FINRA filings including filings
required under Rule 5110 for the offering.
|
Funds
will be deposited in an account and will be made immediately available to the Company. No escrow account will be utilized. If
a subscription is rejected, funds will be returned to subscribers within ten days of such rejection without deduction or interest.
Upon acceptance by us of a subscription, a confirmation of such acceptance will be sent to the subscriber by the Company. All
inquiries regarding this offering should be made directly to the Company.
This
offering commenced on the qualification of this Offering Circular on October 4, 2018, as determined by the SEC and continue indefinitely
until all of the offered Shares are sold or the Offering is terminated in the Company’s sole discretion. Funds received
from investors will be counted towards the Offering only if the form of payment, such as a check, clears the banking system and
represents immediately available funds held by us prior to the termination of the subscription period, or prior to the termination
of the extended subscription period if extended by the Company.
If
you decide to subscribe for any Common Stock in this offering, you must deliver an acceptable form of payment for acceptance or
rejection. The minimum investment amount for a single investor is in the cumulative principal amount of $150.00. If a subscription
is rejected, all funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance
by the Company of a subscription, a confirmation of such acceptance will be sent to the investor.
The
Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies
from rejected subscriptions will be returned by the Company to the investor, without interest or deductions.
Exchange
Listing
The
purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this offering
circular is for investment purposes only, and currently no market for our common stock exists. While a trading symbol,
“CWPE,” for our common stock was obtained on September 3, 2019, no application to have our shares traded on the
OTCQB or on the Pinksheets. Also, no estimate may be given as to the time that this application/listing process will
require.
A
broker-dealer and its clearing firm has applied to become eligible with the DTC which, if successful, would permit our
shares to be traded electronically. That application is currently pending. If an issuer is not “DTC-eligible,”
then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the
marketplace as it exists today (especially the OTCQB), means that shares of a company will not be traded (technically the
shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on
broker dealers for stock transactions - like all the companies on the OTCQB). What this means is that while DTC-eligibility
is not a requirement to trade on the OTCQB or Pinksheets, it is a necessity to process trades on the OTCQB if a
company’s stock is going to trade with any volume. There are no assurances that our shares will ever become
DTC-eligible or, if they do, how long it will take.
Pricing
of the Offering
Prior
to the Offering, there has been no public market for the Shares. The offering price of the common stock has been arbitrarily determined
and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value,
historical earnings or net worth. In determining the offering price, management considered such factors as the prospects, if any,
for similar companies, anticipated results of operations, present financial resources and the likelihood of acceptance of this
offering. No valuation or appraisal has been prepared for our business. We cannot assure you that a public market for our securities
will develop or continue or that the securities will ever trade at a price equal to or higher than the offering price.
Investment
Limitations
As
set forth in Title IV of the JOBS Act, there are no limits on how many shares an investor may purchase if the Offering results
in a listing of our Common Stock on the NYSE MKT or other national securities exchange. The following apply to us since it is
likely that our shares will initially trade on a platform of the OTC Markets.
Generally,
in the case of trading on the over-the-counter markets, no sale may be made to you in this Offering if the aggregate purchase
price you pay is more than 10% of the greater of your annual income or net worth (please see under How to calculate your net
worth elsewhere in this offering circular). Different rules apply to accredited investors and non-natural persons. Before
making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C)
of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
Because
this is a Tier 2, Regulation A offering, most investors in the case of trading on the over-the-counter markets must comply with
the 10% limitation on investment in the Offering. The only investor in this Offering exempt from this limitation is an “accredited
investor” as defined under Rule 501 of Regulation D under the Securities Act (an “Accredited Investor”). If
you meet one of the following tests you should qualify as an Accredited Investor:
|
|
●
|
You
are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you
purchase Shares (please see below under How to calculate your net worth);
|
|
|
|
|
|
|
●
|
You
are an executive officer or general partner of the issuer or a manager or executive officer of the general partner of the
issuer;
|
|
|
|
|
|
|
●
|
You
are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation,
a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the Shares, with
total assets in excess of $3,600,000;
|
|
|
●
|
You
are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered
pursuant to Section 15 of the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered
under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as
defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private
business development company as defined in the Investment Advisers Act of 1940;
|
|
|
|
|
|
|
●
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You
are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;
|
|
|
|
|
|
|
●
|
You
are a trust with total assets in excess of $3,600,000, your purchase of Shares is directed by a person who either alone or
with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge
and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective
investment, and you were not formed for the specific purpose of investing in the Shares; or
|
|
|
|
|
|
|
●
|
You
are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $3,600,000.
|
Offering
Period and Expiration Date
This
Offering started on the date that the Offering was qualified by the SEC on October 4, 2018, and will terminate at the earlier
of: (1) the date at which 12,995,000 Shares (including shares of selling shareholders) have been sold, (2) the date which is one
year after this Offering being qualified by the SEC, or (3) the date on which this Offering is earlier terminated by the Company
in its sole discretion.
Right
to Reject Subscriptions.
After
we receive your complete, executed subscription agreement (forms of which are attached to the Offering Statement) and the funds
required under the subscription agreement have been transferred to the specified Company account, we have the right to review
and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected
subscriptions immediately to you, without interest or deduction.
Acceptance
of Subscriptions.
Upon
our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at
closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request
your subscription funds. All accepted subscription agreements are irrevocable.
Under
Rule 251 of Regulation A, if our common stock will not trade on a national securities exchange, non-accredited, non-natural investors
are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s
revenue or net assets (as of the purchaser’s most recent fiscal year end). If our Common Stock will not trade on a national
securities exchange, a non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s
annual income or net worth (please see below on how to calculate your net worth).
How
to Calculate Net Worth:
For
the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation
must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an
amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements
may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds
for the purchase of the Shares.
In
order to purchase the Shares and prior to the acceptance of any funds from an investor, an investor will be required to represent,
to the Company’s satisfaction, that he is either an accredited investor or is in compliance with the 10% of net worth or
annual income limitation on investment in this Offering.
SELLING
STOCKHOLDERS
Share
issuances
At
September 23, 2019, we had 60 common shareholders.
CW
issued 11,475,000 common shares to seven shareholders upon incorporating in Wyoming in April 2018. These shares were issued for
services and assistance in developing the business plan that will be used by CW. Of the total shares issued, 96% were issued to
Christopher Williams and Graham Williams, our two officers who are related to each other as father and son.
Subsequently,
we sold 8,500 shares to 51 shareholders for an aggregate amount of $12,750 from the date the Regulation 1-A was qualified on October
4, 2018.
All
of these stockholders had an opportunity to ask questions of and receive answers from our executive officers and were provided
with access to our documents and records in order to verify the information provided. Each of these seven shareholders who was
not an accredited investor represented that he/she had such knowledge and experience in financial and business matters that he/she
was capable of evaluating the merits and risks of the investment, and we had grounds to reasonably believe immediately prior to
making any sale that such purchaser comes within this description. All transactions were negotiated in face-to-face or telephone
discussions between our executives and the individual purchaser, each of whom indicated that they met the standards for participation
in a non-public offering under Section 4(2) of the Securities Act of 1933, as amended. CW has made a determination that such investors
are “sophisticated investors” meaning that each is an investor who has sufficient knowledge and experience with investing
that he/she is able to evaluate the merits of an investment. Because of sophistication of each investor as well as, education,
business acumen, financial resources and position, each such investor had an equal or superior bargaining position in its dealings
with CW. In addition to providing proof that each shareholder paid for their shares as indicated in their respective investment
letters, signed investment letters also verify that each shareholder was told prior to and at the time of his or her investment,
that he/she would be required to act independently with regard to the disposition of shares owned by them and each shareholder
agreed to act independently. Each investor signed the same form of Investment Letter.
No
underwriter participated in the foregoing transactions (although all selling stockholders may be considered to be underwriters
for purposes of this offering), and no underwriting discounts or commissions were paid, nor was any general solicitation or general
advertising conducted. The securities bear a restrictive legend and stop transfer instructions are noted on our stock transfer
records. In addition, neither CW nor Mr. Williams has had any negotiations or discussions with any entity concerning an acquisition
or merger and has no current intentions to seek out any such entities for such purposes.
Selling
Shareholders
All
shares offered under this offering circular may be sold from time to time for the account of the selling stockholders named in
the following table. The table also contains information regarding each selling stockholder’s beneficial ownership of shares
of our common stock as of September 23, 2019.
|
Name
|
|
Number of Shares
|
|
Relation to Company
|
|
Christopher Williams
|
|
1,720,000
|
|
Chairman and President
|
|
Graham Williams
|
|
700,000
|
|
Vice President and Director
|
|
Greg Roda
|
|
100,000
|
|
Director
|
|
RJ Corporate Holdings, Inc.
|
|
115,000
|
|
Shareholder
|
|
One Park Place, LLC
|
|
115,000
|
|
Shareholder
|
|
Gary B. Wolff
|
|
115,000
|
|
Shareholder
|
|
Edward E. Heil
|
|
115,000
|
|
Shareholder
|
|
Patricia G. Skarpa
|
|
15,000
|
|
Shareholder
|
|
Total
|
|
2,995,000
|
|
|
Selling
Shareholders will sell at $1.50 per share until the offering is completed. None of the Selling Stockholders are broker/dealers
or affiliates of broker/dealers.
DILUTION
“Dilution”
represents the difference between the offering price of the shares of common stock hereby being offered and the net book value
per share of common stock immediately after completion of this Offering. “Net book value” is the amount that results
from subtracting total liabilities from total assets. In this Offering, the level of dilution is increased as a result of the
relatively low net book value of our issued and outstanding common stock. Assuming all of the shares of common stock offered by
the Company herein are sold, the purchasers in this Offering will lose a 53% portion of the value of their shares purchased.
The
following table illustrates the dilution to the purchasers of the common stock offered in this offering.
|
|
|
Assuming the sale of offered shares:
|
|
|
|
|
5,000,000 shares
|
|
|
10,000,000 shares
|
|
|
|
|
|
|
|
|
|
|
Offering Price Per Share
|
|
$
|
1.50
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Share Before the Offering
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Value Per Share After the Offering
|
|
$
|
0.45
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase to Original Shareholders
|
|
$
|
0.45
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in Investment to New Shareholders
|
|
$
|
1,05
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution to New Shareholders (%)
|
|
|
70
|
%
|
|
|
53
|
%
|
DIVIDEND
POLICY
We
have never paid cash or any other form of dividend on our common stock, and we do not anticipate paying cash dividends in the
foreseeable future. Moreover, any future credit facilities might contain restrictions on our ability to declare and pay dividends
on our common stock. We plan to retain all earnings, if any, for the foreseeable future for use in the operation of our business
and to fund the pursuit of future growth. Future dividends, if any, will depend on, among other things, our results of operations,
capital requirements and on such other factors as our board of directors, in its discretion, may consider relevant.
MARKET
FOR OUR SECURITIES
There
is no public market for our common stock, and a public market may never develop. A market maker filed an application with FINRA
so as to be able to quote the shares of our common stock on the OTCQB maintained or on the Pinksheets, a trading symbol “CWPE”
was obtained on September 3, 2019. Even though our application was accepted, there can be no assurances as to whether:
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any
market for our shares will develop;
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the
prices at which our common stock will trade; or
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the
extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets
generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
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If
we become able to have our shares of common stock quoted on the OTCQB or on the Pinksheets, we will then try, through a broker-dealer
and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. Application for such purpose
was made and is pending. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred
between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCQB), means
that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days
and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCQB).
What this means is that while DTC-eligibility is not a requirement to trade on the OTCQB, it is a necessity to process trades
on the OTCQB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become
DTC-eligible or, if they do, how long it will take.
In
addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market
makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock.
Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it
trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced
by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to in Risk Factors, investor perception of CW and general economic and market
conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.
The
trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCQB or on the
Pinksheets. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of
our securities.
Because
of the possible future low price of the securities being registered, many brokerage firms may not be willing to effect transactions
in these securities. Purchasers of our securities should be aware that any market that develops in our stock will continue to
be subject to the penny stock restrictions in the future.
Rule
3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity
security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject
to a limited number of exceptions which are not available to us. Our shares will be considered to be penny stocks. This classification
severely and adversely affects any market liquidity for our common stock.
For
any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s
account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction
setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person
and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has
sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating
to the penny stock market, which, in highlight form, sets forth:
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the
basis on which the broker or dealer made the suitability determination, and
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Disclosure
also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or
may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders
or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in
any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if
and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding
decrease in the price of our securities.
There
is no CW common equity subject to outstanding options or warrants to purchase or securities convertible into our common equity.
In general, under Rule 144, a holder of restricted common shares who is an affiliate at the time of the sale or any time during
the three months preceding the sale can resell shares, subject to the restrictions described below.
If
we had been a public reporting company under the Exchange Act for at least 90 days immediately before the sale, then at least
six months must have elapsed since the shares were acquired from us or one of our affiliates, and we must remain current in our
filings for an additional period of six months; in all other cases, at least one year must have elapsed since the shares were
acquired from us or one of our affiliates.
The
number of shares sold by such person within any three-month period cannot exceed the greater of:
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1%
of the total number of our common shares then outstanding; or
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The
average weekly trading volume of our common shares during the four calendar weeks preceding the date on which notice on Form
144 with respect to the sale is filed with the SEC (or, if Form 144 is not required to be filed, the four calendar weeks preceding
the date the selling broker receives the sell order) This condition is not currently available to the Company because its
securities do not trade on a recognized exchange.
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Conditions
relating to the manner of sale, notice requirements (filing of Form 144 with the SEC) and the availability of public information
about us must also be satisfied.
All
of the presently outstanding shares of our common stock are “restricted securities” as defined under Rule 144 promulgated
under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration,
if available.
At
the present time, the currently outstanding shares of our common stock may be sold subject to the rules and limitations of Rule
144 one year from the date of issuance provided that we are current in all of our Reporting Requirements at that date.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Note
Regarding Forward-Looking Statements
Certain
matters discussed herein are forward-looking statements. Such forward-looking statements contained in this annual report involve
risks and uncertainties, including statements as to:
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our
future operating results,
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our
business prospects,
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our
contractual arrangements and relationships with third parties,
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the
dependence of our future success on the general economy and its impact on the industries in which we may be involved,
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the
adequacy of our cash resources and working capital, and
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other
factors identified in our filings with the SEC, press releases, if any and other public communications.
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These
forward-looking statements can generally be identified as such because the context of the statement will include words such as
we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning.
Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which
could cause actual results to differ materially from those anticipated as of the date of this report. Shareholders, potential
investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as
of the date of this offering circular and we undertake no obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
The
following discussion and analysis provides information which management believes to be relevant to an assessment and understanding
of the Company’s results of operations and financial condition. This discussion should be read together with the Company’s
financial statements and the notes to financial statements, which are included in this offering circular.
This
management’s discussion and analysis or plan of operation should be read in conjunction with the financial statements and
notes thereto of the Company included elsewhere in this offering circular. Because of its nature of a development stage company,
the reported results will not necessarily reflect the future.
We
qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely
on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required
to:
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have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
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comply
with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(i.e., an auditor discussion and analysis);
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submit
certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;”
and
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disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
of the CEO’s compensation to median employee compensation.
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In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We
will remain an “emerging growth company” for up to five years, or until the earliest of
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the
last day of the first fiscal year in which our total annual gross revenues exceed $1 billion,
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ii.
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the
date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of
1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as
of the last business day of our most recently completed second fiscal quarter, or
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iii.
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the
date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
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Uncertainties
Our
independent auditors added an emphasis paragraph to their audit report addressing our ability to continue to operate as a going
concern. We consider this the only significant uncertainty impacting our business. The shareholders have committed to devoting
sufficient resources to assure that the Company continues operating as a going concern for an indefinite period.
Operations
Our
revenue for the year ended December 31, 2018 was approximately $2.2 million, a 35% reduction from the prior year revenue of $3.4
million. We recognized $129,000 in bonuses or rebates in 2018 as opposed to none in 2017.
Cost
of revenue amounted to approximately $1.7 million for the year ended December 31, 2018, a 43% reduction from the prior year total
of $3 million resulting in part by the decline in fuel costs.
Our
gross margin on total costs of revenue amounted to approximately $518 thousand in 2018, a 28% increase from the prior year total
of approximately $400 thousand.
For
the year ended December 31, 2018, we experienced a loss of approximately $248,000 a $143,000 reduction from 2017 resulting primarily
from the significant increase in our gross margin.
Our
revenue in 2018 decreased from revenue in 2017. Our cost of fuel increased significantly in 2018 due to the rise in crude oil
prices. This greatly impacted our ability to increase sales as our working capital did not increase in proportion to the increase
in fuel and inventory cost
We
lacked the financial resources to overcome these issues in the short-term. We believe that with access to more pipelines, having
the ability to buy inventory and having blending facilities that we could overcome many of these types of issues and grow although
we cannot provide any specific assurances.
Periods
Ended June 30, 2019 and 2018
Our
revenue for the six months ended June 30, 2019 was approximately $2.9 million, a 111% increase from the six months ended June
30, 2018 revenue of $1.4 million. We recognized $24,387 in bonuses or rebates in the six months ended June 30, 2019 as opposed
to $85,514 in the six months ended June 30, 2018.
Cost
of revenue amounted to $2.4 million for the six months ended June 30, 2019, a 122% increase from the prior six months ended June
30, 2018 total of $1 million resulting in part by the increase in sales.
Our
gross margin on total costs of revenue amounted to approximately $500 thousand in the six months ended June 30, 2019, a 72% increase
from the prior six months ended June 30, 2018 total of approximately $290 thousand.
For
the six months ended June 30, 2019, we produced net income of $88,575, a $100,766 increase from the six months ended June 30,
2018, resulting primarily from the significant increase in our operations offset by a reduction in our margins of nine-teen percent
(19%).
Liquidity
CW
has no committed sources of funds and will be dependent on funds provided or obtained by Christopher Williams until other sources
of funds are obtained. Mr. Williams’ ability to provide funds is very limited.
On
December 31, 2018, our cash balance amounted to approximately $180 thousand compared to approximately $28 thousand at the end
of 2017. Our net working capital has declined marginally.
Cash
Flow
Our
cash generated from operations amounted to approximately $241 thousand, a 177% increase from 2017. This increased the generation
of cash in operations primarily resulted from our increased profitability of existing sales.
During
2018, our cash used in investing activities amounted to approximately $3.3 thousand, a decrease over 2017, primarily from a small
acquisition of assets with no offsets for dispositions.
Cash
used in financing activities in 2018 amounted to approximately $86 thousand, generated primarily from $90 thousand in debt payments
on installment notes on transportation equipment, offset by proceeds from the sale of stock of $13 thousand and principal payment
on debt of approximately $8,000.
Trends
Our
only trend information relates to the price of oil. We have a limited capacity of inventory storage and containment facilities
which limited our revenue capacity. Therefor increases and decreases in revenue are primarily attributable to the price of diesel
fuel and oil.
Recently
Issued Accounting Pronouncements
In
June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands
the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity
should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model
and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition
over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU
to have a material impact on its consolidated financial statements.
In
March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118. The amendment provides guidance on accounting for the impact of the Tax Cuts and Jobs Act (the “Tax Act”)
and allows entities to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date.
This standard is effective upon issuance. The Tax Act has several significant changes that impact all taxpayers, including a transition
tax, which is a one-time tax charge on accumulated, undistributed foreign earnings. The calculation of accumulated foreign earnings
requires an analysis of each foreign entity’s financial results going back to 1986. The Company does not expect the adoption
of this ASU to have a material impact on its consolidated financial statements.
In
February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax
reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December
15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption.
The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.
In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies
when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance
requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately
before and after a change to the terms and conditions of the award. The new guidance is effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The
Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional
ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including
a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue
to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective with our
first interim reporting period for the year ended December 31, 2018. We use the modified retrospective method of adoption. We
have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance
obligations for all material revenue streams. Based on this initial evaluation, adoption does not have a material impact on our
financial position, results of operations, or cash flows. Related disclosures have been expanded in line with the requirements
of the standard.
There
are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material
effect on its financial position, results of operations, or cash flows.
Critical
Accounting Policies
The
following are deemed to be the most significant accounting estimates affecting us and our results of operations:
Inventories
Inventories
are valued primarily using average cost and are stated at the lower of average cost or market. CW utilizes a variety of fuel indices
and other indicators of market value. Sharp negative changes in these indices can result in reduction of our inventory valuation,
which could have an adverse impact on our results of operations in the period in which we take the adjustment. Historically these
adjustments have not had a significant impact on our consolidated statements of operations. Components of inventory include fuel
purchase costs, the related transportation costs and changes in the estimated fair market values for inventories included in a
fair value hedge relationship.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following
steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the
transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue
when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be
reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met:
(1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has
occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably
assured.
Fuel
sales are generated as a fuel reseller as well as from on-hand inventory supply. When acting as a fuel reseller, the Company generally
purchases fuel from the supplier, and contemporaneously resells the fuel to the customer, normally taking delivery for purchased
fuel at the same place and time as the delivery is made to the customer. The Company records the gross sale of the fuel as we
generally take inventory risk, have latitude in establishing the sales price, have discretion in the supplier selection, maintain
credit risk and are the primary obligor in the sales arrangement.
The
Company records the sale of fuel-related services on a gross basis as we generally have latitude in establishing the sales price,
have discretion in supplier selection, maintain credit risk and are the primary obligor in the sales arrangement.
Seasonality
We
do not expect a lot of seasonality affecting our business. However, December is likely to have somewhat lower sales than other
months.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements, as defined in Item 303(a) (4) (ii) of Regulation S-K, obligations under any guarantee
contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will
increase our operating costs or cash requirements in the future.
Management’s
Report on Internal Control over Financial Reporting
Under
the supervision and with the participation of our management, including our President and our Treasurer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting as of December 31, 2018, based on the framework stated by
the Committee of Sponsoring Organizations of the Treadway Commission’s 2013 Framework.
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) of the Exchange Act. Our internal control system was designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance
with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Based
on its evaluation as of December 31, 2018, our management concluded that our internal controls over financial reporting were not
effective as of December 31, 2018.
BUSINESS
CW
was founded as a Texas corporation by Christopher Williams and began operations in 2011. It reincorporated in Wyoming as a C corporation
in April 2018. CW supplies and distributes Biodiesel, Biodiesel Blends, Ultra Low Sulfur Diesel and Gasoline Blends to distributors
and end-users. It intends on being involved in blending fuels and selling directly to consumers using fuel stations at convenience
stores when it has the resources to do so.
The
various aspects of CW’s business and plans are:
Trading/Delivering
of Fuels – involves CW sending a truck to a fuel rack/terminal where it picks up the fuel and delivers it to customers.
The customers include retailers, convenience stores that also sell gasoline and diesel fuel and fuel distributors that deliver
to their own customers.
CW
delivers regular gasoline, diesel fuel and biodiesel fuel. It also can deliver nonethanol fuel that uses isobutanol in place of
ethanol in Reformulated Gasoline Markets (see paragraph below). If the fuel to be delivered is a biofuel or needs other blending,
CW’s truck goes to a blending station to obtain the fuel needed for the blend. The blending is done in the truck and then
delivered.
Much
of the fuel currently delivered by CW needs to be blended. Reformulated gasoline (RFG) is gasoline blended to burn more cleanly
than conventional gasoline and to reduce smog-forming and toxic pollutants in the air we breathe. The RFG program was mandated
by Congress in the 1990 Clean Air Act amendments. RFG is required in cities with high smog levels and is optional elsewhere. RFG
is currently used in 17 states and the District of Columbia. About 30 percent of gasoline sold in the U.S. is reformulated. The
Houston-Galveston-Brazoria nonattainment area is required by the Clean Air Act Amendments of 1990 to use RFG. This eight-county
area includes Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties. These are the principal
areas where CW has operated since its inception.
CW
has an inventory position at Magellan Terminals and is seeking fuel inventory positions at other terminals and pipelines. The
various Terminals require a user to maintain agreed upon amounts of inventory with the terminal. However, CW’s limited resources
have limited its ability to make use of these large terminals and pipelines, since large purchases are standard for most terminals.
CW
payments to its vendors range from prepayment to net ten-day payments. It bills its customers on a comparable basis.
Currently
CW owns two trucks and four trailers. Christopher Williams negotiates all contracts with customers.
CW’s
plans for the future consist of increasing the number of trucks and having the resources to make large shipments through the pipelines.
In addition, it plans to:
Open
a Specialty Bending Facility – which would be opened near a major fuel rack facility. It would allow CW to blend biodiesel
with diesel fuel needed by our retail customers. It would also permit distributors that pickup diesel fuel from the fuel rack
terminal to do the same thing which will provide another source of revenue. Construction of this facility, which will look like
the photo below, will probably cost in the range of $500,000 for land, equipment and site work.
Convenience
Stores – The plan includes opening convenience stores that will have fuel islands in their parking lots. The locations
of these stores will be in areas inside of the RFG requirement zones and areas near the Gulf of Mexico or lakes used by boat owners.
Boat owners often prefer to use non-ethanol fuel because it is more stable and means less engine maintenance costs if the boat
is idle for periods of time. These fuels are a bit more profitable for the retailer as well.
CW
will provide all the fuels sold at these convenience stores and initially engage contract management to manage the retail side
of the convenience stores.
No
assurances can be given as to the likely success that CW will have in implementing its plans or, if successful, the timing that
it will require.
Regulations
and Licenses
CW
has State and EPA licenses to sell, ship and blend products in many states as follows:
Licensed
to Sell Motor Fuel in:
Texas:
Supplier of Diesel Fuel and Gasoline
Louisiana:
Supplier of Diesel Fuel and Gasoline
Oklahoma:
Exporter, Wholesaler, Fuel Vendor
California:
Supplier Diesel Fuel and Gasoline
New
Jersey: Supplier of Motor Fuels
Pennsylvania
– Class 1 Refiner/Wholesaler (All Fuels)
Maryland
– Class B Gasoline Dealer
Colorado
– Diesel Fuel
Arizona
– Supplier of Diesel Fuel and Gasoline
Federal
Licenses: IRS 637 (Excise Tax) “S” Position Holder, “M” Blender & “AL” Alternative Fueler
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Shipper
Refined Products:
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Magellan
South and Mountain Systems
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Kinder
Morgan SFPP Pipeline
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EPA
Registered Activities #6026: Renewable Fuels Exporter/Oxygenate Blender/Refiner
EPA
Licensed Isobutanol Additive Gasoline Blender
Position
Holder: (Gasoline & Diesel Fuel)
Magellan
Midstream Terminal – East Houston
7901
Wallisville Rd
Houston,
TX 77029
Terminal
Control# T-76-TX-2831
Competition
There
are numerous companies that compete with CW. Many of these companies have significantly greater financial resources and name recognition
than does CW. CW competes by offering customers and potential customers direct contact with senior management. In that way, it
can deal with customer issues, needs and concerns quickly. CW cannot offer any assurances as to the likelihood of succeeding in
its efforts.
Employees
CW
currently has two fulltime employees including Christopher Williams. They devote 100% of their time to us. Graham Williams works
part-time. We currently use contractors to perform all other needed work. Mr. Williams does not have an employment agreement.
Most of his compensation has been accrued and has not yet been paid. If and when revenue increases, we will consider hiring full-time
employees and enter into employment agreements with Mr. Williams.
Facilities
The
Company’s address is 23501 Cinco Ranch Blvd., Ste H120 - #325, Katy, Texas 77494. The office space used by CW is provided
by Christopher Williams. Its telephone number is (713) 857-8142.
Litigation
CW
is not party to any pending, or to our knowledge, threatened litigation of any type.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
management consists of:
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Name
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Age
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Title
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Christopher
Williams
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42
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President
and Chairman
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Graham
Williams
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74
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Vice
President, Secretary, Treasurer and Director
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Greg
Roda
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Director
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Christopher
Williams – founded CW as a legal entity and has devoted fulltime to it since 2013. From 2011 to 2013 he was general
manager of Berryhill Baja Grill in Houston, TX. From 2008 to 2011 he was vice president of Zicix Corporation in Houston, TX. He
holds a B.S. from the University of Houston.
Graham
Williams – has worked with CW since 2013. Since 2012 he has been president of Tier 3 Capital, private company that provides
equipment loans, working capital loans and accounts receivable financing. He holds a B.S. from Bishop’s University Sherbrook,
Quebec, Canada.
Greg
Roda – became a director of CW in 2018. He provides consulting and advisory services to us. Since 2013 he has been chief
commercial officer of Gevo Inc., a technology company that produces isobutanol from a genetically modified yeast in retro-fitted
ethanol plants and is headquartered in Englewood, CO. He holds a B.S. from the University of Michigan and an M.B.A. from the University
of Chicago.
Christopher
Williams and Graham Williams are related to each other as father and son.
Possible
Potential Conflicts
The
OTCQB on which we may have our shares of common stock quoted does not currently have any director independence requirements. A
market maker has agreed to file an application with FINRA on our behalf so as to be able to quote the shares of our common stock
on the OTCQB commencing upon the effectiveness of our registration statement of which this offering circular is a part and the
subsequent closing of this offering. There can be no assurance that the market maker’s application will be accepted by FINRA
No
member of management is contracted by us to work on a full-time basis. Accordingly, certain conflicts of interest may arise between
us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their
attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result,
conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer’s
understanding of his/her fiduciary duties to us.
Code
of Business Conduct and Ethics
We
adopted a Code of Ethics and Business Conduct which is applicable to our future employees and which also includes a Code of Ethics
for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written
standard designed to deter wrongdoing and to promote:
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honest
and ethical conduct,
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full,
fair, accurate, timely and understandable disclosure in regulatory filings and public statements,
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compliance
with applicable laws, rules and regulations,
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the
prompt reporting violation of the code, and
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accountability
for adherence to the code.
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Board
of Directors
We
currently have three directors, two of whom are not considered independent. Christopher Williams and Graham Williams are related
to each other as father and son.
All
directors hold office until the completion of their term of office, which is not longer than one year, or until their successors
have been elected. Our directors’ terms of office expire on April 30, 2019. All officers are appointed annually by the board
of directors and, subject to existing employment agreements (of which there are currently none) and serve at the discretion of
the board. Currently, a person serving as a director receives no compensation for serving in the role as a director.
If
at any point we have an even number of directors, tie votes on issues are resolved in favor of the chairman’s vote.
Involvement
in Certain Legal Proceedings
During
the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of
CW:
1.
had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent
or similar officer appointed by a court for the business or property of such person, or any partnership in which he/she was a
general partner at or within two years before the time of such filing, or any corporation or business association of which he/she
was an executive officer at or within two years before the time of such filing;
2.
was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other similar
minor offenses);
3.
was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him/her from or otherwise limiting his/her involvement in any of the following activities:
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i.
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acting
as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any
of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
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ii.
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engaging
in any type of business practice; or
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iii.
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engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws; or
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4.
was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of a federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in
paragraph (3)(i), above, or to be associated with persons engaged in any such activity; or
5.
was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been
reversed, suspended or vacated.
Committees
of the Board of Directors
We
currently have no independent directors. Concurrent with having sufficient independent members and resources, if ever, the CW
board of directors will establish an audit committee and a compensation committee. The audit committee will review the results
and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal
controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation
arrangements for the officers. No final determination has yet been made as to the size of memberships of these committees or when
we will have sufficient members to establish committees. See “Executive Compensation” hereinafter.
All
directors will be reimbursed by CW for any expenses incurred in attending board meetings provided that CW has the resources to
pay these fees. CW will consider applying for liability insurance for officers and directors at such time as it has the resources
to do so.
Summary
Executive Compensation Table
The
following table shows, for the period ended December 31, 2018 compensation awarded to or paid to, or earned by, our two officers.
SUMMARY
COMPENSATION TABLE
Name
and
principal
position
(a)
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Year
(b)
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Salary
($)
(c)
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Bonus
($)
(d)
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Stock
Awards
($)
(e)
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Option
Awards
($)
(f)
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Non-Equity
Incentive
Plan
Compensation
($)
(g)
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Nonqualified
Deferred
Compensation
Earnings
($)
(h)
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All Other
Compensation
($)
(i)
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Total ($)
(j)
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Christopher Williams
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2018
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-
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-
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-
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-
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-
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-
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-
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-
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2017
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100,000
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100,000
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Graham Williams
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2018
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-
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-
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-
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-
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-
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-
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-
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-
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2017
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-
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-
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-
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-
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-
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-
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-
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(i)
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Officers’
compensation for the years ended December 31, 2018 and 2017, amounts to $0 and $100,000, respectively. Accrued officers’
compensation amounts to $140,087 as of December 31, 2017. As of December 31, 2018, all accrued officer compensation was relieved
through the forgiveness of debt by the Company’s officers.
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There
are currently no formal written employment agreements.
Graham
Williams assists Christopher Williams in numerous aspects of the business. His current hours vary but average about 20 hours per
week. It is planned that he will devote fulltime to us when the offering is complete. No amounts were accrued for or paid to Graham
in 2018 or 2017.
None
of our named executive officers received any grants of stock, option awards or other plan-based awards. The Company has never
issued these types of awards.
Grants
of Plan-Based Awards Table
None
of our named executive officers received any grants of stock, option awards or other plan-based awards. The Company has never
issued these types of awards.
Options
Exercised and Stock Vested Table
None
of our named executive officers has ever been granted or exercised any stock options
Outstanding
Equity Awards at Fiscal Year-End Table
No
equity award arrangements have ever been awarded or granted by the Company.
PRINCIPAL
SHAREHOLDERS
As
of September 23, 2019, we had 11,698,500 shares of common stock outstanding which are held by 60 shareholders. The chart below
set forth the ownership, or claimed ownership, of certain individuals and entities. This chart discloses those persons known by
the board of directors to have, or claim to have, beneficial ownership of more than 5% of the outstanding shares of our common
stock as of September 23, 2019; of all directors and executive officers of the Company and of our directors and officers as a
group (of which there are currently only three persons).
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Title of Class
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Name, Title and Address of
Beneficial Owner of Shares(a)
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Amount of
Beneficial
Ownership(b)
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Percent (c)
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Preferred
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Christopher Williams
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1,000,000
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100
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Preferred
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All Directors and Officers as a group (1 person)
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1,000,000
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100
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Common
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Christopher Williams
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10,000,000
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85.48
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Graham Williams
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1,000,000
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8.55
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Greg Roda
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-
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-
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Common
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All Directors and Officers as a group three persons)
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11,000,000
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94.03
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a)
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The
address for purposes of this table is the Company’s mailing address which is 23501 Cinco Ranch Blvd., Ste H120 - #325,
Katy, Texas 77494.
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b)
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Unless
otherwise indicated, CW believes that all persons named in the table have sole voting and investment power with respect to
all shares of the common stock beneficially owned by them. A person is deemed to be the beneficial owner of securities which
may be acquired by such person within 60 days from the date indicated above upon the exercise of options, warrants or convertible
securities. Each beneficial owner’s percentage ownership is determined by if options, warrants or convertible securities
that are held by such person (but not those held by any other person) and which are exercisable within 60 days of the date
indicated above, have been exercised.
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c)
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Christopher
Williams and Graham Williams are related to each other as father and son.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
promoters of CW are Christopher Williams, our CEO and President, and Graham Williams, our Vice President and CFO.
Christopher
Williams and Graham Williams are related to each other as father and son.
CW
issued 1,000,000 shares of preferred stock to Christopher Williams at the time of incorporation in Wyoming in exchange for the
organization efforts and business plan. The preferred stock gives the holder 51% of all shareholder votes, converts share for
share into common stock at the option of the holder and receives dividends if any on equal basis with shares of common stock.
The holder controls all shareholder votes.
Director
Independence; Committees of the Board of Directors
Our
Board of Directors is comprised of three individuals. We do not have a majority of independent directors as that term is defined
under Rule 4200(a) (15) of the NASDAQ Marketplace Rules, even though that definition does not currently apply to us, because we
are not listed on the NASDAQ. We anticipate that if we expand our Board of Directors in the future, that we will seek to include
members who are independent. Our securities are not quoted on an exchange that has requirements that a majority of our Board members
be independent, and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of
our Board of Directors include “independent” directors
Our
Board of Directors has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating
Committee, or any committee performing a similar function. The functions of those committees are being undertaken by the entire
board as a whole. Our board of directors does not believe that it is necessary to have such committees because it believes the
functions of such committees can be adequately performed by our Board of Directors as a whole. Further, since our securities are
not listed on an exchange, we are not subject to any qualitative requirements mandating the establishment of any particular committees.
We
do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including
the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating
director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates
by our shareholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as
we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given the nature
of our operations and lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will
make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event
such a proposal is made, all members of our Board will participate in the consideration of director nominees.
None
of our directors is an “audit committee financial expert” within the meaning of Item 407(d) (5) of Regulation S-K.
In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors
who:
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a)
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understands
generally accepted accounting principles and financial statements,
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b)
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is
able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
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c)
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has
experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our
financial statements,
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d)
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understands
internal controls over financial reporting, and
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e)
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understands
audit committee functions.
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We
believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements
and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director
who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted
in our circumstances.
DESCRIPTION
OF CAPITAL STOCK
Introduction
We
were incorporated under the laws of the State of Wyoming on April 15, 2018. CW is authorized to issue 99,000,000 shares of common
stock and 1,000,000 shares of preferred stock. All shares have a par value of $0.0001.
Preferred
Stock
Our
certificate of incorporation authorizes the issuance of 1,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by our board of directors.
CW
issued 1,000,000 shares of preferred stock to Christopher Williams. The issued preferred stock gives the holder 51% of all shareholder
votes, converts share for share into common stock at the option of the holder and receives dividends if any on equal basis with
shares of common stock. The holder controls all shareholder votes.
Common
Stock
Our
certificate of incorporation authorizes the issuance of 99,000,000 shares of common stock with a par value of $.0001 per share.
There are 11,698,500 shares of our common stock issued and outstanding at September 23, 2019, that are held by sixty shareholders.
Holders of our common stock:
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have
equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board
of directors;
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are
entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
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do
not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and
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are
entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders
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The
rights of shareholders of Wyoming corporations are described below. In addition, the Board of Directors, without a shareholder
vote, has the right to amend our bylaws to make it harder or easier to effect a change in our control. A majority of shareholder
votes are required for persons to become directors. In addition, shareholders may submit proposals to be voted on at annual meetings,
but such items may be rejected by the Board of Directors.
Authorized
but Un-issued Capital Stock
Wyoming
law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety
of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.
One
of the effects of the existence of un-issued and unreserved common stock (and/or preferred stock) may be to enable our board of
directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage
an attempt to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect
the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of our common stock
at prices higher than prevailing market prices.
Shareholder
Matters
As
an issuer of “penny stock” the protection provided by the federal securities laws relating to forward looking statements
does not apply to us if our shares are considered to be penny stocks which they currently are and probably will be for the foreseeable
future. Although the federal securities laws provide a safe harbor for forward-looking statements made by a public company that
files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we
will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us, including
this offering circular, contained a material misstatement of fact or was misleading in any material respect because of our failure
to include any statements necessary to make the statements not misleading.
The
Board of Directors may change provisions in the bylaws at any time.
Wyoming
Anti-Takeover Laws
As
a Wyoming corporation, we are subject to certain anti-takeover provisions that apply to public corporations under Wyoming law.
The Wyoming Management Stability Act (WMSA) applies to “control shares” of an “issuing public corporation.”
The WMSA defines “control shares” as the shares of an issuing public corporation that would entitle a person to exercise
voting power within any of the following ranges of voting power:
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1/5
or more but less than 1/3 of all voting power.
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1/3
or more but less than a majority of all voting power.
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A
majority or more of all voting power.
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(WY
Stat § 17-18-301)
The
WMSA defines an issuing public corporation as a corporation, other than a depository institution, that is organized under the
laws of the State of Wyoming and that has all of the following:
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At
least ten percent (10%) of the corporation’s full-time permanent employees are employed within the state;
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At
least ten million dollars ($10,000,000.00) in fair market value of the corporation’s assets are deposited within Wyoming
financial institutions;
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The
principal operating headquarters and the primary offices of the chief executive officer are within Wyoming; or
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The
corporation has a combination of assets deposited within Wyoming financial institutions, assets assessed for ad valorem taxation
within Wyoming, and assets within Wyoming not subject to ad valorem taxation which are sufficient to cause the corporation
to pay the tax required by W.S. 17-16-1630(a). The payment of the tax required by W.S. 17-16-1630(a) shall be deemed conclusive
evidence of substantial business operations within Wyoming;
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(WY
Stat § 17-18-102)
Any
person who proposes to make or has made a control share acquisition (as defined in the WMSA) may deliver an acquiring person statement
to the public corporation. The statement must contain:
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The
identity of the acquiring person and each other member of any group of which the person belongs to.
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A
statement that the acquisition statement is given under the WMSA.
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The
number of shares of the public corporation owned by the acquiring person and each other member of the group.
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The
range of voting power under which the control share acquisition falls, if completed.
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If
the control share acquisition has not taken place:
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a
description in reasonable detail of the proposed control share acquisition; and
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a
statement by the acquiring person stating that the acquisition is not contrary to law and that the acquiring person has the
financial capacity to make the proposed control share acquisition.
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(WY
Stat § 17-18-303)
After
the acquiring person statement has been delivered to the corporation, the corporation must call a meeting of the shareholders
to vote on the proposed acquisition. The proposed acquisition must be approved by each voting group entitled to vote, voting separately,
by a majority of the votes entitled to be cast by that group (excluding all interested shares). (WY Stat § 17-18-304)
A
corporation’s articles of incorporation or by-laws may provide that this chapter does not apply to control share acquisitions
of shares of the corporation. However, the provision must have been adopted before a control share acquisition to exempt it. (WY
Stat § 17-18-309)
Transfer
Agent
The
Transfer Agent for our common stock is Transfer Online, Inc. Its address is 512 SE Salmon Street Portland, OR 97214. Its telephone
number is 503-227-2950.
OTCQB
Considerations
We
are considering requesting to have our shares trade on the OTCQB.
OTCQB
securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTCQB securities
transactions are conducted through a telephone and computer network connecting dealers in stocks. OTCQB stocks are traditionally
smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
To
be quoted on the OTCQB, a market maker must file an application on our behalf in order to make a market for our common stock.
We are not permitted to file such application on our own behalf. A market maker has filed an application with FINRA on our behalf
so as to be able to quote the shares of our common stock on the OTCQB commencing upon the effectiveness of our registration statement
of which this offering circular is a part. There can be no assurance that the market maker’s application will be accepted
by FINRA, nor can we estimate as to the time period that the application will require.
The
OTCQB is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted
on the OTCQB. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted
on the OTCQB.
Although
the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not
meeting those standards, the OTCQB has no listing standards. Rather, it is the market maker who chooses to quote a security on
the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot
deny an application by a market maker to quote the stock of a company assuming all FINRA questions relating to its Rule 211 process
are answered accurately and satisfactorily. The only requirement for ongoing inclusion in the OTCQB is that the issuer be current
in its reporting requirements with the SEC.
Although
we anticipate that quotation on the OTCQB will increase liquidity for our stock, investors may have difficulty in getting orders
filled because trading activity on the OTCQB in general is not conducted as efficiently and effectively as with NASDAQ-listed
securities. As a result, investors’ orders may be filled at a price much different than expected when an order is placed.
Investors
must contact a broker-dealer to trade OTCQB securities. Investors do not have direct access to the bulletin board service. For
bulletin board securities, there must be one market maker.
OTCQB
transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the OTCQB,
they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant
increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell
a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly
during the lapse of time between placing a market order and getting execution.
We,
through a broker-dealer and its clearing firm, have filed to become eligible with the DTC to permit our shares to trade electronically.
Application remains pending. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred
between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCQB), means
that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days
and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCQB).
What this means to is that while DTC-eligibility is not a requirement to trade on the OTCQB, it is a necessity to process trades
on the OTCQB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become
DTC-eligible or, if they do, how long it will take.
Because
OTCQB stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.
Rule
144
In
general, under Rule 144 as currently in effect, any person who is or has been an affiliate of ours during the 90 days immediately
preceding the sale and who has beneficially owned shares for at least six months is entitled to sell, within any three-month period
commencing 90 days after the date of this Offering Circular, a number of shares that does not exceed the greater of:
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●
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1%
of the then-outstanding shares of common stock; and
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●
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the
average weekly trading volume during the four calendar weeks preceding the sale, subject to the filing of a Form 144 with
respect to the sale.
|
Sales
under Rule 144 by our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability
of current public information about us.
A
person who is not deemed to have been an affiliate of ours at any time during the 90 days immediately preceding the sale and who
has beneficially owned his or her shares for at least six months is entitled to sell his or her shares under Rule 144 without
regard to the limitations described above, subject only to the availability of current public information about us during the
six months after the initial six-month holding period is met. After a non-affiliate has beneficially owned his or her shares for
one year or more, he or she may freely sell his or her shares under Rule 144 without complying with any Rule 144 requirements.
We
are unable to estimate the number of shares that will be sold under Rule 144, since this will depend on the market price for our
common stock, the personal circumstances of the sellers and other factors. Prior to the offering, there has been no public market
for the common stock, and there can be no assurance that a significant public market for the common stock will develop or be sustained
after the offering. Any future sale of substantial amounts of the common stock in the open market may adversely affect the market
price of the common stock offered by this Offering Circular
State
Securities – Blue Sky Laws
Reg
A, Tier II offers “covered securities” under the National Securities Markets Improvement Act of 1996 (“NSMIA”)
and, therefore, are exempt from state registration and qualification requirements. States can (and generally will) still require
that information provided to the SEC also be filed with the state, and that the issuer pay filing fees for the privilege. Satisfying
state filing requirements is far less burdensome than full Blue Sky compliance.
ERISA
Considerations
An
investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are
subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and restrictions imposed by Section 4975
of the Code. For these purposes the term “employee benefit plan” includes, but is not limited to, qualified pension,
profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs established
or maintained by an employer or employee organization. Among other things, consideration should be given to:
|
|
●
|
whether
the investment is prudent under Section 404(a)(1)(B) of ERISA;
|
|
|
|
|
|
|
●
|
whether
in making the investment, that plan will satisfy the diversification requirements of Section 404(a)(1)(C) of ERISA; and
|
|
|
|
|
|
|
●
|
whether
the investment will result in recognition of unrelated business taxable income by the plan and, if so, the potential after-tax
investment returns.
|
The
person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine
whether an investment in us is authorized by the appropriate governing instrument and is a proper investment for the plan.
Section
406 of ERISA and Section 4975 of the Code prohibit employee benefit plans from engaging in specified transactions involving “plan
assets” with parties that are “parties in interest” under ERISA or “disqualified persons” under
the Code with respect to the plan.
In
addition to considering whether the purchase of Offered Shares is a prohibited transaction, a fiduciary of an employee benefit
plan should consider whether the plan will, by investing in us, be deemed to own an undivided interest in our assets, with the
result that our operations would be subject to the regulatory restrictions of ERISA, including its prohibited transaction rules,
as well as the prohibited transaction rules of the Code.
The
Department of Labor regulations provide guidance with respect to whether the assets of an entity in which employee benefit plans
acquire equity interests would be deemed “plan assets” under some circumstances. Under these regulations, an entity’s
assets would not be considered to be “plan assets” if, among other things:
|
|
1)
|
the
equity interests acquired by employee benefit plans are publicly offered securities - i.e., the equity interests are widely
held by 100 or more investors independent of the issuer and each other, freely transferable and registered under some provisions
of the federal securities laws;
|
|
|
|
|
|
|
2)
|
the
entity is an “operating company”—i.e., it is primarily engaged in the production or sale of a product or
service other than the investment of capital either directly or through a majority-owned subsidiary or subsidiaries; or
|
|
|
|
|
|
|
3)
|
there
is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class
of equity interest is held by the employee benefit plans referred to above.
|
We
do not intend to limit investment by benefit plan investors in us because we anticipate that we will qualify as an “operating
company”. If the Department of Labor were to take the position that we are not an operating company and we had significant
investment by benefit plans, then we may become subject to the regulatory restrictions of ERISA which would likely have a material
adverse effect on our business and the value of our common stock.
Plan
fiduciaries contemplating a purchase of Offered Shares should consult with their own counsel regarding the consequences under
ERISA and the Code in light of the serious penalties imposed on persons who engage in prohibited transactions or other violations.
ACCEPTANCE
OF SUBSCRIPTIONS ON BEHALF OF PLANS IS IN NO RESPECT A REPRESENTATION BY OUR BOARD OF DIRECTORS OR ANY OTHER PARTY RELATED TO
US THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN OR THAT THIS
INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR PLAN. THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT WITH HIS OR HER ATTORNEY
AND FINANCIAL ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN US IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN.
LEGAL
MATTERS
The
validity of the issuance of the shares of common stock offered hereby will be passed upon for us by Morgan E. Petitti, Attorney-at-Law,
118 West Streetsboro Road, #317, Hudson, Ohio 44236.
EXPERTS
The
financial statements of CW as of December 31, 2018 and 2017 and for the years then ended included in this offering circular have
been audited by M&K CPAS, PLLC independent registered public accountants and have been so included in reliance upon the report
of M&K CPAS, PLLC given on the authority of such firm as experts in accounting and auditing.
UNAUDITED
INTERIM STATEMENTS
The
information for the interim periods ended June 30, 2019 and 2018 is unaudited; however, it includes all adjustments considered
necessary by management for a fair presentation of our financial condition and results of operations.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of Common
Stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the
information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us
and the Common Stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements
contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the
Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full
text of such contract or other document filed as an exhibit to the Offering Statement.
Upon
the completion of this Offering, we will be required to file periodic reports, proxy statements, and other information with the
SEC pursuant to the Exchange Act. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information
about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of CW Petroleum Corp.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of CW Petroleum Corp. (the Company) as of December 31, 2018 and 2017,
and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the
two-year period ended December 31, 2018, and the related notes and schedules (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period
ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which
raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are
described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/
M&K CPAS, PLLC
We
have served as the Company’s auditor since 2018.
Houston,
TX
April
29, 2019
CW
PETROLEUM CORP
Consolidated
Balance Sheets
December
31, 2018 and 2017
|
|
|
2018
|
|
|
2017
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
180,260
|
|
|
$
|
28,800
|
|
|
Accounts receivable
|
|
|
|
|
|
|
|
|
|
Trade, net
|
|
|
128,155
|
|
|
|
129,989
|
|
|
Income taxes
|
|
|
-
|
|
|
|
20,147
|
|
|
Inventory
|
|
|
127,607
|
|
|
|
260,820
|
|
|
Fuel bond
|
|
|
2,000
|
|
|
|
2,000
|
|
|
Total current assets
|
|
|
438,022
|
|
|
|
441,756
|
|
|
Property and equipment, net
|
|
|
308,846
|
|
|
|
349,639
|
|
|
Other assets
|
|
|
3,234
|
|
|
|
3,541
|
|
|
Total assets
|
|
$
|
750,102
|
|
|
$
|
794,936
|
|
|
LIABILITES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
233,356
|
|
|
$
|
35,305
|
|
|
Accrued officer compensation
|
|
|
-
|
|
|
|
140,000
|
|
|
Customer deposits
|
|
|
-
|
|
|
|
31,461
|
|
|
Short term notes payable – related party
|
|
|
295,000
|
|
|
|
303,452
|
|
|
Current maturities of long-term debt
|
|
|
96,725
|
|
|
|
80,356
|
|
|
Total current liabilities
|
|
|
625,081
|
|
|
|
590,574
|
|
|
Long-term debt, net
|
|
|
211,679
|
|
|
|
241,317
|
|
|
Total liabilities
|
|
$
|
836,760
|
|
|
$
|
831,891
|
|
|
Shareholders’ deficit
|
|
|
|
|
|
|
|
|
|
Preferred stock –1,000,000 shares authorized, issued and outstanding with a par value of $.0001 per share in 2018 and 2017, respectively
|
|
|
100
|
|
|
|
100
|
|
|
Common stock – 99,000,000 shares authorized, $0.0001 par value 11,698,500 and 11,475,000 issued and outstanding in 2018 and 2017, respectively
|
|
|
1,170
|
|
|
|
1,148
|
|
|
Additional paid-in capital
|
|
|
198,567
|
|
|
|
(218
|
)
|
|
Accumulated deficit
|
|
|
(286,495
|
)
|
|
|
(37,985
|
)
|
|
Total shareholders’ deficit
|
|
|
(86,658
|
)
|
|
|
(36,955
|
)
|
|
Total liabilities and shareholders’ deficit
|
|
$
|
750,102
|
|
|
$
|
794,936
|
|
The
Accompanying Notes are an Integral Part of These Financial Statements
CW
PETROLEUM CORP
Consolidated
Statements of Operations
For
the Years Ended December 31, 2018 and 2017
|
|
|
2018
|
|
|
2017
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
Fuel sales
|
|
$
|
2,073,268
|
|
|
$
|
3,368,297
|
|
|
Bonuses and rebates
|
|
|
129,051
|
|
|
|
-
|
|
|
Total revenue
|
|
|
2,202,319
|
|
|
|
3,368,297
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
Cost of fuel sold
|
|
|
1,648,034
|
|
|
|
2,725,457
|
|
|
Transport costs
|
|
|
35,645
|
|
|
|
237,973
|
|
|
Total cost of revenue
|
|
|
1,683,679
|
|
|
|
2,963,430
|
|
|
Margin on operations
|
|
|
518,642
|
|
|
|
404,867
|
|
|
Gain on sale of asset
|
|
|
-
|
|
|
|
76,281
|
|
|
Gain on settlement
|
|
|
32,318
|
|
|
|
-
|
|
|
Operating expenses
|
|
|
(747,608
|
)
|
|
|
(850,567
|
)
|
|
Loss from operations
|
|
|
(196,648
|
)
|
|
|
(369,419
|
)
|
|
Interest expense
|
|
|
50,238
|
|
|
|
20,794
|
|
|
Loss before income taxes
|
|
|
(246,886
|
)
|
|
|
(390,213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(1,624
|
)
|
|
|
(2,501
|
)
|
|
Deferred
|
|
|
-
|
|
|
|
-
|
|
|
Total income tax provision
|
|
|
(1,624
|
)
|
|
|
(2,501
|
)
|
|
Net loss
|
|
$
|
(248,510
|
)
|
|
|
(392,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
11,528,745
|
|
|
|
11,475,000
|
|
|
Basic and fully diluted loss per share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
The
Accompanying Notes are an Integral Part of These Financial Statements
CW
PETROLEUM CORP
Consolidated
Statements of Equity (Deficit)
For
the Years Ended December 31, 2018 and 2017
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance December 31, 2016
|
|
|
11,475,000
|
|
|
$
|
1,148
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
(218
|
)
|
|
$
|
354,729
|
|
|
$
|
355,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(392,714
|
)
|
|
|
(392,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2017
|
|
|
11,475,000
|
|
|
|
1,148
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
(218
|
)
|
|
|
(37,985
|
)
|
|
|
(36,955
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140,087
|
|
|
|
-
|
|
|
|
140,087
|
|
|
Interest imputed on related party borrowings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,600
|
|
|
|
-
|
|
|
|
23,600
|
|
|
Issuance of common stock for cash
|
|
|
8,500
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,599
|
|
|
|
-
|
|
|
|
12,600
|
|
|
Shares issued for services
|
|
|
15,000
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,499
|
|
|
|
-
|
|
|
|
22,500
|
|
|
Founders shares issued for stock payable
|
|
|
200,000
|
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
Net loss for the year ended December 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(248,510
|
)
|
|
|
(248,510
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2018
|
|
|
11,698,500
|
|
|
$
|
1,170
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
$
|
198,567
|
|
|
$
|
(286,495
|
)
|
|
$
|
(86,658
|
)
|
The
Accompanying Notes are an Integral Part of These Financial Statements
CW
PETROLEUM CORP
Consolidated
Statements of Cash Flow
For
the Years Ended December 31, 2018 and 2017
|
|
|
2018
|
|
|
2017
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(248,510
|
)
|
|
$
|
(392,714
|
)
|
|
Depreciation
|
|
|
121,305
|
|
|
|
105,758
|
|
|
Gain on sale of assets
|
|
|
-
|
|
|
|
(76,281
|
)
|
|
Services paid for with common stock
|
|
|
22,500
|
|
|
|
-
|
|
|
Founders shares issued for stock payable
|
|
|
20
|
|
|
|
-
|
|
|
Imputed Interest
|
|
|
23,600
|
|
|
|
-
|
|
|
Changes in
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,834
|
|
|
|
109,586
|
|
|
Inventory
|
|
|
133,213
|
|
|
|
(134,820
|
)
|
|
Prepaid expenses
|
|
|
20,147
|
|
|
|
-
|
|
|
Accounts payable and accrued expenses
|
|
|
198,138
|
|
|
|
(22,266
|
)
|
|
Accrued officer compensation
|
|
|
-
|
|
|
|
100,000
|
|
|
Other Assets
|
|
|
307
|
|
|
|
630
|
|
|
Customer deposits
|
|
|
(31,461
|
)
|
|
|
487
|
|
|
Net cash provided by (used in) operations
|
|
|
241,093
|
|
|
|
(309,620
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
(3,297
|
)
|
|
|
(29,086
|
)
|
|
Cash received from sale of fixed assets
|
|
|
-
|
|
|
|
50,439
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(3,297
|
)
|
|
|
21,353
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of stock
|
|
|
12,600
|
|
|
|
-
|
|
|
Debt proceeds
|
|
|
-
|
|
|
|
304,290
|
|
|
Principle payments on related party debt
|
|
|
(8,453
|
)
|
|
|
-
|
|
|
Debt payments
|
|
|
(90,483
|
)
|
|
|
(114,132
|
)
|
|
Cash flows provided by (used in) financing activities
|
|
|
(86,336
|
)
|
|
|
190,158
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
151,460
|
|
|
|
(98,109
|
)
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
28,800
|
|
|
|
126,909
|
|
|
End of year
|
|
$
|
180,260
|
|
|
$
|
28,800
|
|
Supplemental
Cash Flow Disclosures Note 10
The
Accompanying Notes are an Integral Part of These Financial Statements
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Note
1 - Basis of Presentation and Significant Accounting Policies
Basis
of Presentation
The
financial statements are prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”).
CW
Petroleum Corp (CW or the Company) was incorporated in the state of Texas in 2005 and supplies biodiesel, biodiesel blends, ultra-low
sulfur diesel and gasoline blends to distributors and end users. It reincorporated in Wyoming in April 2018.
The
transaction in which CW became a Wyoming C corporation has been accounted for in a manner similar to a recapitalization for financial
reporting purposes. The accompanying financial statements have been prepared as if the transaction had occurred on the first day
of the first period included in the financial statements, and all operating data represents an ongoing continuation of the Company’s
operations.
Estimates
and Assumptions
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results
could materially differ from estimated amounts. We evaluate our estimated assumptions based on historical experience and on various
other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying
values of assets and liabilities.
Cash
and Cash Equivalents
Our
cash equivalents consist principally of overnight investments, bank money market accounts and bank time deposits which have an
original maturity date of less than 90 days. These securities are carried at cost, which approximates market value. There were
no cash equivalents as of December 31, 2018 or 2017.
Accounts
Receivable and Allowance for Bad Debt
CW
performs ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s
current creditworthiness, as determined by our review of our customer’s credit information. We extend credit on an unsecured
basis to most of our customers. Accounts receivable are deemed past due based on contractual terms agreed to with our customers.
Although we analyze customers’ payment history and creditworthiness, we cannot predict with certainty that the customers
to whom we extend credit will be able to remit payments on a timely basis, or at all. Because we extend credit on an unsecured
basis to most of our customers, there is a possibility that any accounts receivable not collected will ultimately need to be written
off. CW continuously monitors collections and payments from our customers and maintain a provision for estimated credit losses
based upon our historical experience with our customers, current market and industry conditions affecting our customers and any
specific customer collection issues that we have identified.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Inventories
Inventories
are valued primarily using average cost and are stated at the lower of average cost or market. CW utilizes a variety of fuel indices
and other indicators of market value. Sharp negative changes in these indices can result in reduction of our inventory valuation,
which could have an adverse impact on our results of operations in the period in which we take the adjustment. Historically these
adjustments have not had a significant impact on our consolidated statements of operations. Components of inventory include fuel
purchase costs, the related transportation costs and changes in the estimated fair market values for inventories included in a
fair value hedge relationship.
Fair
Value of Financial Instruments
Financial
instruments include accounts receivable, accounts payable and notes payable and are considered reflected a market value based
on the short-term nature of these instruments.
Property
and Equipment
Property
and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the assets which are all five years.
Costs
of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life
of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation
and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived
assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following
steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the
transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue
when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be
reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met:
(1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has
occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably
assured. Fuel sales are generated as a fuel reseller as well as from on-hand inventory supply. When acting as a fuel reseller,
the Company generally purchases fuel from the supplier, and contemporaneously resells the fuel to the customer, normally taking
delivery for purchased fuel at the same place and time as the delivery is made to the customer. The Company records the gross
sale of the fuel as we generally take inventory risk, have latitude in establishing the sales price, have discretion in the supplier
selection, maintain credit risk and are the primary obligor in the sales arrangement.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
The
Company records the sale of fuel-related services on a gross basis as we generally have latitude in establishing the sales price,
have discretion in supplier selection, maintain credit risk and are the primary obligor in the sales arrangement.
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and operating loss and income tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax
rates is recognized in the income tax provision in the period that includes the enactment date.
CW
must assess the likelihood that its deferred tax assets will be recovered from our future taxable income, and to the extent CW
believes that recovery is not likely, CW must establish a valuation allowance against those deferred tax assets. Deferred tax
liabilities generally represent items for which CW has already taken a deduction in our income tax return, but we have not yet
recognized the items as expenses in our results of operations.
The
state of Texas has a franchise tax based on earnings. This tax is considered a local income tax and is expensed in the year incurred.
Earnings
per Common Share
Basic
earnings per common share is computed by dividing net income attributable to CW Petroleum Corp and available to common shareholders
by the sum of the weighted average number of shares of common stock. Diluted earnings per common share is computed by dividing
net income attributable to us and available to common shareholders by the sum of the weighted average number of shares of common
stock and the number of additional shares of common stock that would have been outstanding if our outstanding potentially dilutive
securities had been issued. We currently have no common stock equivalents. Common stock, preferred stock and Additional paid-in
capital were reclassified in conformity with accounting standards.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Accounting
Standards Issued but Not Yet Adopted
In
June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands
the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity
should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model
and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition
over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU
to have a material impact on its consolidated financial statements.
In
March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118. The amendment provides guidance on accounting for the impact of the Tax Cuts and Jobs Act (the “Tax Act”)
and allows entities to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date.
This standard is effective upon issuance. The Tax Act has several significant changes that impact all taxpayers, including a transition
tax, which is a one-time tax charge on accumulated, undistributed foreign earnings. The calculation of accumulated foreign earnings
requires an analysis of each foreign entity’s financial results going back to 1986. The Company does not expect the adoption
of this ASU to have a material impact on its consolidated financial statements.
In
February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax
reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December
15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption.
The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.
In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies
when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance
requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately
before and after a change to the terms and conditions of the award. The new guidance is effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The
Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional
ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including
a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue
to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective with our
first interim reporting period for the year ended December 31, 2018. We use the modified retrospective method of adoption. We
have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance
obligations for all material revenue streams. Based on this initial evaluation, adoption does not have a material impact on our
financial position, results of operations, or cash flows. Related disclosures have been expanded in line with the requirements
of the standard.
There
are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material
effect on its financial position, results of operations, or cash flows.
Reclassifications
Certain
prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact
on net earnings, financial position or cash flows.
Note
2 – Going Concern
As
reflected in the accompanying financial statements, the Company had a net loss of $248,510, net cash provided by operations of
$241,093 for the year ended December 31, 2018 and has an accumulated deficit of $286,495, as of December 31, 2018. These factors
raise 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 Management’s plans which include further implementation
of its business plan and continuing to raise funds through debt or equity financings. The Company will likely rely upon related
party debt or equity financing in order to ensure the continuing existence of the business.
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Note
3 - Accounts Receivable
CW
has accounts receivable of $149,504 and $161,735, net of an allowance for bad debt of $21,349 and $31,746, as of December 31,
2018 and December 31, 2017, respectively. Accounts receivable are written-off when it becomes apparent based upon age or customer
circumstances that such amounts will not be collected.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
The
following table sets forth activities in our allowance for bad debt:
|
Description
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
Balance as of beginning of period
|
|
$
|
31,746
|
|
|
$
|
58,509
|
|
|
Charges to provision for bad debt
|
|
|
(10,397
|
)
|
|
|
43,670
|
|
|
Write-off of uncollectible accounts receivable
|
|
|
-
|
|
|
|
(70,433
|
)
|
|
Recoveries of bad debt
|
|
|
-
|
|
|
|
-
|
|
|
Balance as of end of period
|
|
$
|
21,349
|
|
|
$
|
31,746
|
|
Note
4 – Inventories
Inventories
as of December 31, 2018 and December 31, 2017, consists of the following:
|
Description
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
Tank Heel Inventory
|
|
$
|
127,607
|
|
|
$
|
260,820
|
|
|
Total
|
|
$
|
127,607
|
|
|
$
|
260,820
|
|
Tank
heel inventory represents the cost of fuel maintained in storage tanks owned by other parties to assure maintenance of capacity.
Note
5 - Property and Equipment
The
amount of property and equipment as of December 31, 2018 and December 31, 2017, consist of the following:
|
Description
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
Furniture, fixtures and equipment
|
|
$
|
25,222
|
|
|
$
|
25,222
|
|
|
Transportation equipment
|
|
|
614,299
|
|
|
|
533,787
|
|
|
Total property cost
|
|
|
639,521
|
|
|
|
559,009
|
|
|
Less accumulated depreciation
|
|
|
330,675
|
|
|
|
209,370
|
|
|
Property and equipment, net
|
|
$
|
308,846
|
|
|
$
|
349,639
|
|
For
December 31, 2018 and 2017, CW recorded depreciation expense of $121,305 and $105,758, respectively. We acquired equipment of
$80,512 and $237,973 during 2018 and 2017, respectively. Equipment with a book value of $223,306 was disposed of during 2017,
resulting in a gain on disposition of $76,281 and settlement of $121,006 of notes payable.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Note
6 - Gain on Settlement
On
December 28, 2017, the Company reached a settlement with Travelers Insurance for the loss of an asset in May 2017. As a result
of this settlement, the Company received $32,318 on January 4, 2018.
Note
7 - Debt
CW
has installment notes payable secured by our transportation equipment. Interest rates range from 2% to 13% per annum and averaged
6.98% and 5.47% as of December 31, 2018 and 2017, respectively. The terms of these notes range from 36 to 72 months and average
60. Total payments under these notes amounted to $9,232 and $7,793 as of December 31, 2018 and 2017, respectively.
In
2017, CW borrowed $304,290, and had repayments of $89,704 and $106,339for 2018 and 2017. CW also acquired notes of $77,215 for
property and equipment in 2018 and acquired notes of $208,887 for property and equipment and settled property and equipment notes
of $121,006 from disposals in 2017.
As
of December 31, 2018, the aggregate annual maturities of debt are as follows:
|
Year Ending December 31,
|
|
Amount
|
|
|
2019
|
|
$
|
96,725
|
|
|
2020
|
|
|
88,513
|
|
|
2021
|
|
|
58,025
|
|
|
2022
|
|
|
49,850
|
|
|
2023
|
|
|
15,291
|
|
|
Thereafter
|
|
|
-
|
|
|
Total
|
|
$
|
308,404
|
|
Note
8 - Income Taxes
The
income tax provision for the years ended December 31, 2018 and 2017 reflect current tax payments for state franchise taxes which
are considered an income tax. There are no provisions or recoveries for current or deferred federal income taxes.
A
reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:
|
Description
|
|
2018
|
|
|
2017
|
|
|
Tax provision at federal statutory tax rate
|
|
$
|
(52,187
|
)
|
|
$
|
(138,847
|
)
|
|
Permanent differences
|
|
|
5,998
|
|
|
|
8,355
|
|
|
Change in valuation allowance
|
|
|
46,189
|
|
|
|
130,492
|
|
|
Federal income tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
The
statutory rates noted above were 21% in 2018 and 34% in 2017 due to the change in federal tax law.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
The
temporary differences which comprise our net deferred tax assets and liabilities as of December 31, 2018 and 2017, are as follows:
|
Description
|
|
2018
|
|
|
2017
|
|
|
Gross Deferred Tax Assets
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24,305
|
|
|
$
|
-
|
|
|
Cash method of accounting
|
|
|
4,483
|
|
|
$
|
11,111
|
|
|
Accrued officer’s compensation
|
|
|
-
|
|
|
|
49,000
|
|
|
Net operating loss carryforward
|
|
|
(50,611
|
)
|
|
|
46,234
|
|
|
Charitable contribution carryforwards
|
|
|
1,175
|
|
|
|
4,886
|
|
|
Less: Valuation allowance
|
|
|
-
|
|
|
|
(41,391
|
)
|
|
Gross deferred tax assets, net of valuation allowance
|
|
|
(25,131
|
)
|
|
|
69,840
|
|
|
Deferred Tax Liabilities
|
|
|
|
|
|
|
|
|
|
Cash method of accounting
|
|
|
201
|
|
|
|
(68,284
|
)
|
|
Property and equipment
|
|
|
(25,332
|
)
|
|
|
(1,556
|
)
|
|
Total gross deferred tax liabilities
|
|
|
(25,332
|
)
|
|
|
(69,840
|
)
|
|
Net deferred tax asset (liability)
|
|
$
|
-
|
|
|
$
|
-
|
|
As
of December 31, 2018, CW has net operating losses (“NOLs”) of approximately $282,265. This NOL expires according to
the following table:
|
Year Ending December 31,
|
|
Amount
|
|
|
2036
|
|
$
|
47,320
|
|
|
2037
|
|
|
90,879
|
|
|
2038
|
|
|
144,066
|
|
|
Total
|
|
$
|
282,265
|
|
CW
assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use
the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2018, a valuation allowance of $31,746 has
been recorded to recognize the portion of the deferred tax asset that is more likely than not to be realized, which is zero. The
amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward
period change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may
be given to subjective evidence such as growth projections.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Open
tax years that could potentially be examined and changed by the IRS are 2013-2017, 2018 has not yet been filed.
Note
9 – Related Party Transactions
The
Company issued 200,000 shares to certain founders and were valued at par value of $20. 15,000 were shares were issued as share-based
compensation resulting in share-based compensation expense of $22,500.
Short
term notes payable includes $295,000 and $303,452 as of December 31, 2018 and 2017, respectively of noninterest-bearing loans
from related parties. Interest expense of $23,600 was imputed for the year ended December 31, 2018.
Officers’
compensation for the years ended December 31, 2018 and 2017, amounts to $0 and $100,000, respectively. Accrued officers’
compensation amounts to $140,087 as of December 31, 2017. As of December 31, 2018, all accrued officer compensation was relieved
through the forgiveness of debt by the Company’s officers.
The
Company leases land for storage of transportation equipment on a month to month lease from its President for $1,500 per month.
Accrued
compensation in the amount of $140,087 was forgiven by the shareholders and officers for the year ended December 31, 2018.
Note
10 – Supplemental Cash Flow Disclosures
Supplemental
cash flow disclosures for the years ended December 31, 2018 and 2017, are as follows:
|
Description
|
|
2018
|
|
|
2017
|
|
|
Cash payments for
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest
|
|
$
|
50,238
|
|
|
$
|
20,793
|
|
|
Non-cash financing and investing activities
|
|
|
|
|
|
|
|
|
|
Installment notes issued for property acquisitions
|
|
$
|
77,215
|
|
|
$
|
208,887
|
|
|
Notes settled with property disposals
|
|
$
|
-
|
|
|
$
|
121,006
|
|
|
Forgiveness of accrued compensation – related party
|
|
$
|
140,087
|
|
|
$
|
-
|
|
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Note
11 – Stockholders’ Equity (Deficit)
Preferred
Stock
The
Company’s certificate of incorporation authorizes the issuance of 1,000,000 shares of preferred stock with designations,
rights and preferences determined from time to time by its board of directors. Accordingly, the Company’s board of directors
is empowered, without stockholder approval, to issue shares of preferred stock with voting, liquidation, conversion, or other
rights that could adversely affect the rights of the holders of the common stock.
The
Company issued 1,000,000 shares of preferred stock to its President which gives the holder an aggregate of 51% of all shareholder
votes, converts share for share into common stock at the option of the holder and receives dividends if any on equal basis with
shares of common stock. The holders control all shareholder votes.
As
of March 31, 2019, the Company had 1,000,000 shares of preferred stock issued and outstanding.
Common
Stock
The
holders of the Company’s common stock:
●
Have equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board
of directors;
●
Are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
●
Do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and
●
Are entitled to one noncumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.
Upon
incorporation in Wyoming, the Company issued 11,475,000 shares for all of the outstanding shares of the Texas corporation. The
three officers of the Company hold 11,100,000 of these shares.
During
the year ended December 31, 2018, the Company issued 8,500 shares of common stock to investors for cash at a purchase price of
$1.50 per share for proceeds of $12,600. The Company also issued an aggregate of 15,000 shares of common stock for services during
FY 2018. These shares were valued at the most recent PPM of $1.50 per share. The Company recorded $22,500 in consulting fees.
The
Company issued 200,000 shares to certain founders and were valued at par value of $20. 15,000 were shares were issued as share-based
compensation resulting in share-based compensation expense of $22,500.
CW
PETROLEUM CORP
Notes
to the Consolidated Financial Statements
For
the Years Ended December 31, 2018 and 2017
Note
12 – Concentrations
Accounts
receivable as of December 31, 2018 are concentrated among three customers representing 72%, 15% and 11% of accounts receivable.
As of December 31, 2017, four customers make up 34%, 29%, 16% and 12% of accounts receivable
Revenue
includes a significant concentration among customers for the year ended December 31, 2018, in which two customers represent 42%
and 21% of revenue.
Revenue
includes a significant concentration among customers for the year ended December 31, 2017, in which two customers represent 24%
and 19% of revenue.
Note
13 – Subsequent Events
Subsequent
events have been evaluated through April 29, 2019, the date these financial statements were available to be released and noted
no other events requiring disclosure.
CW
PETROLEUM CORP
Consolidated
Balance Sheets
(Unaudited)
|
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
224,774
|
|
|
$
|
180,260
|
|
|
Accounts receivable
|
|
|
|
|
|
|
|
|
|
Trade, net
|
|
|
193,665
|
|
|
|
128,155
|
|
|
Inventory
|
|
|
127,607
|
|
|
|
127,607
|
|
|
Fuel bond
|
|
|
2,000
|
|
|
|
2,000
|
|
|
Total current assets
|
|
|
548,046
|
|
|
|
438,022
|
|
|
Property and equipment, net
|
|
|
358,219
|
|
|
|
308,846
|
|
|
Other assets
|
|
|
3,234
|
|
|
|
3,234
|
|
|
Total assets
|
|
$
|
909,499
|
|
|
$
|
750,102
|
|
|
LIABILITES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
248,878
|
|
|
$
|
233,356
|
|
|
Short term notes payable – related party
|
|
|
295,000
|
|
|
|
295,000
|
|
|
Current maturities of long-term debt
|
|
|
52,658
|
|
|
|
96,725
|
|
|
Total current liabilities
|
|
|
596,536
|
|
|
|
625,081
|
|
|
Long-term debt, net
|
|
|
311,046
|
|
|
|
211,679
|
|
|
Total liabilities
|
|
$
|
907,582
|
|
|
$
|
836,760
|
|
|
Shareholders’ equity (deficit)
|
|
|
|
|
|
|
|
|
|
Preferred stock –1,000,000 shares authorized, issued and outstanding with a par value of $.0001 per share
|
|
|
100
|
|
|
|
100
|
|
|
Common stock – 99,000,000 shares authorized, $0.0001 par value 11,698,500 issued and outstanding as of June 30, 2019 and December 31, 2018
|
|
|
1,170
|
|
|
|
1,170
|
|
|
Additional Paid-in capital
|
|
|
198,567
|
|
|
|
198,567
|
|
|
Accumulated deficit
|
|
|
(197,920
|
)
|
|
|
(286,495
|
)
|
|
Total shareholders’ equity (deficit)
|
|
|
1,917
|
|
|
|
(86,658
|
)
|
|
Total liabilities and shareholders’ equity (deficit)
|
|
$
|
909,499
|
|
|
$
|
750,102
|
|
The
accompanying notes are an integral part of these financial statements
CW
PETROLEUM CORP
Consolidated
Statements of Operations
(Unaudited)
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel sales
|
|
$
|
1,805,257
|
|
|
$
|
782,757
|
|
|
$
|
2,836,066
|
|
|
$
|
1,268,431
|
|
|
Bonuses and rebates
|
|
|
20,887
|
|
|
|
-
|
|
|
|
24,387
|
|
|
|
85,514
|
|
|
Total revenue
|
|
|
1,826,144
|
|
|
|
782,757
|
|
|
|
2,860,453
|
|
|
|
1,353,945
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of fuel sold
|
|
|
1,462,475
|
|
|
|
624,962
|
|
|
|
2,269,585
|
|
|
|
1,038,461
|
|
|
Freight
|
|
|
21,500
|
|
|
|
-
|
|
|
|
23,200
|
|
|
|
-
|
|
|
Transport costs
|
|
|
35,955
|
|
|
|
14,943
|
|
|
|
67,765
|
|
|
|
25,398
|
|
|
Total cost of revenue
|
|
|
1,519,930
|
|
|
|
639,905
|
|
|
|
2,360,550
|
|
|
|
1,063,859
|
|
|
Margin on operations
|
|
|
306,214
|
|
|
|
142,852
|
|
|
|
499,903
|
|
|
|
290,086
|
|
|
Gain on sale of asset
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,316
|
|
|
Operating expenses
|
|
|
174,842
|
|
|
|
161,720
|
|
|
|
389,337
|
|
|
|
306,765
|
|
|
Earnings (loss) from operations
|
|
|
131,372
|
|
|
|
(18,868
|
)
|
|
|
110,565
|
|
|
|
15,637
|
|
|
Interest expense
|
|
|
19,437
|
|
|
|
17,466
|
|
|
|
21,989
|
|
|
|
23,497
|
|
|
Loss before income taxes
|
|
|
111,935
|
|
|
|
(36,334
|
)
|
|
|
88,576
|
|
|
|
(7,860
|
)
|
|
Income tax recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
|
|
|
(1,885
|
)
|
|
|
-
|
|
|
|
(4,331
|
)
|
|
Net income (loss)
|
|
$
|
111,935
|
|
|
|
(38,219
|
)
|
|
$
|
88,575
|
|
|
|
(12,191
|
)
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
11,698,500
|
|
|
|
11,475,000
|
|
|
|
11,698,500
|
|
|
|
11,475,000
|
|
|
Basic and fully diluted loss per share
|
|
|
(0.01
|
)
|
|
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
(0.00
|
)
|
The
accompanying notes are an integral part of these financial statements
CW
PETROLEUM CORP
Consolidated
Statements of Cash Flow
(Unaudited)
|
|
|
For the Six Months Ended
|
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
88,575
|
|
|
$
|
(12,191
|
)
|
|
Depreciation
|
|
|
68,585
|
|
|
|
57,308
|
|
|
Imputed Interest
|
|
|
-
|
|
|
|
-
|
|
|
Changes in
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(65,510
|
)
|
|
|
36,803
|
|
|
Inventory
|
|
|
-
|
|
|
|
126,000
|
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
20,147
|
|
|
Accounts payable and accrued expenses
|
|
|
15,522
|
|
|
|
15,756
|
|
|
Other Assets
|
|
|
|
|
|
|
307
|
|
|
Net cash provided by operations
|
|
|
107,172
|
|
|
|
244,130
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
(10,000
|
)
|
|
|
(7,469
|
)
|
|
Cash received from sale of fixed assets
|
|
|
|
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(10,000
|
)
|
|
|
(7,469
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of stock
|
|
|
-
|
|
|
|
-
|
|
|
Debt proceeds
|
|
|
|
|
|
|
-
|
|
|
Debt payments
|
|
|
(52,658
|
)
|
|
|
(47,925
|
)
|
|
Cash flows used in financing activities
|
|
|
(52,658
|
)
|
|
|
(47,925
|
)
|
|
Net increase in cash and cash equivalents
|
|
|
44,513
|
|
|
|
188,736
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
180,260
|
|
|
|
28,800
|
|
|
End of year
|
|
$
|
224,774
|
|
|
$
|
217,536
|
|
|
Supplemental disclosures
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cash paid for interest
|
|
$
|
(11,703
|
)
|
|
$
|
(11,703
|
)
|
|
Non-cash financing and investing activities
|
|
|
|
|
|
|
|
|
|
Installment notes issued for property acquisitions
|
|
$
|
(107,958
|
)
|
|
$
|
(73,044
|
)
|
|
Notes settled with property disposals
|
|
$
|
-
|
|
|
|
-
|
|
|
Forgiveness of accrued compensation – related party
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial statements
CW
PETROLEUM CORP
Notes
to Consolidated Financial Statements
For
the Six Months Ended June 30, 2019
(Unaudited)
Note
1 - Basis of Presentation and Significant Accounting Policies
Basis
of Presentation
The
accompanying consolidated balance sheets as of June 30, 2019 and December 31, 2018, which was derived from audited financial statements,
and the unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP for
interim financial information, the instructions to Form 1-SA and Article 10 of Regulation S-X. In the opinion of management, the
accompanying unaudited, consolidated financial statements contain all adjustments necessary to present fairly the financial position
of the Company as of June 30, 2019, and the cash flows and results of operations for the six-month periods ended June 30, 2019
and 2018. Such adjustments consisted only of normal recurring items. The results of operations for the six-month periods ended
June 30, 2019 and 2018 are not necessarily indicative of the results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed
or omitted. The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial
statements contained in the Company’s Offering Statement (Regulation A) on Form 1-K filed on April 30, 2019, and it is suggested
that these interim consolidated financial statements be read in conjunction therewith.
Earnings
per Common Share
Basic
earnings per common share is computed by dividing net income attributable to CW Petroleum Corp and available to common shareholders
by the sum of the weighted average number of shares of common stock. Diluted earnings per common share is computed by dividing
net income attributable to us and available to common shareholders by the sum of the weighted average number of shares of common
stock and the number of additional shares of common stock that would have been outstanding if our outstanding potentially dilutive
securities had been issued. We currently have no common stock equivalents.
Accounting
Pronouncements Recently Issued and Adopted
In
2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) guidance on leases, with amendments issued in 2018. The guidance requires
lessees to recognize most leases on the balance sheet but does not change the manner in which expenses are recorded in the income
statement. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing
leases. The two permitted transition methods under the guidance are the modified retrospective transition approach, which requires
application of the guidance for all comparative periods presented, and the cumulative effect adjustment approach, which requires
prospective application at the adoption date. The Company adopted the standard on January 1, 2019. The Company does not have any
long-term lease as of June 30, 2019, as such the adoption of the standard has no impact on the Company’s financial statement
and disclosures.
Accounting
Pronouncements Recently Issued and Not Yet Adopted
In
November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic
808 and Topic 606 (“ASU 2018-18”). ASU 2018-18 clarifies when certain transactions between collaborative arrangement
participants should be accounted for under ASC 606 and incorporates unit-of-account guidance consistent with ASC 606 to aid in
this determination. ASU 2018-18 is effective for public companies for annual and interim periods beginning after December 15,
2019, with early adoption permitted. ASU 2018-18 should generally be applied retrospectively to the date of initial application
of Topic 606. Management is currently assessing the impact ASU 2018-18 will have on the Company, but it is not expected to have
a material impact on the Company’s financial statement disclosures.
In
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) (“ASU 2018-13”).
ASU 2018-13 modifies the disclosure requirements for fair value measurements. ASU 2018-13 is effective for public companies for
annual and interim periods beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures.
Management is currently assessing the impact ASU 2018-13 will have on the Company, but it is not expected to have a material impact
on the Company’s financial statement disclosures.
Note
2 – Going Concern
As
reflected in the accompanying financial statements, the Company had a net income of $88,575, net cash provided by operations of
$107,171 for the period ended June 30, 2019 and has an accumulated deficit of $197,919, as of June 30, 2019. These factors raise
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 Management’s plans which include further implementation
of its business plan and continuing to raise funds through debt or equity financings. The Company will likely rely upon related
party debt or equity financing in order to ensure the continuing existence of the business.
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Note
3 - Accounts Receivable
CW
has accounts receivable of $219,249 and $149,504, net of an allowance for bad debt of $25,584 and $21,349, as of June 30, 2019
and December 31, 2018, respectively. Accounts receivable are written-off when it becomes apparent based upon age or customer circumstances
that such amounts will not be collected.
The
following table sets forth activities in our allowance for bad debt:
|
Description
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
Balance as of beginning of period
|
|
$
|
21,349
|
|
|
$
|
31,746
|
|
|
Charges to provision for bad debt
|
|
|
4,235
|
|
|
|
(10,397
|
)
|
|
Write-off of uncollectible accounts receivable
|
|
|
-
|
|
|
|
-
|
|
|
Recoveries of bad debt
|
|
|
-
|
|
|
|
-
|
|
|
Balance as of end of period
|
|
$
|
25,584
|
|
|
$
|
21,349
|
|
Note
4 – Inventories
Inventories
as of June 30, 2019 and December 31, 2018, consists of the following:
|
Description
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
Tank Heel Inventory
|
|
$
|
127,607
|
|
|
$
|
127,607
|
|
|
Total
|
|
$
|
127,607
|
|
|
$
|
127,607
|
|
Tank
heel inventory represents the cost of fuel maintained in storage tanks owned by other parties to assure maintenance of capacity.
Note
5 - Property and Equipment
The
amount of property and equipment as of June 30, 2019 and December 31, 2018, consist of the following:
|
Description
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
Furniture, fixtures and equipment
|
|
$
|
37,259
|
|
|
$
|
25,222
|
|
|
Transportation equipment
|
|
|
720,220
|
|
|
|
614,299
|
|
|
Total property cost
|
|
$
|
757,479
|
|
|
$
|
639,521
|
|
|
Accumulated depreciation
|
|
|
399,259
|
|
|
|
330,675
|
|
|
Property and equipment, net
|
|
$
|
358,219
|
|
|
$
|
308,846
|
|
For
the six months ended June 30, 2019 and 2018, CW recorded depreciation expense of $68,585 and $121,305, respectively. We acquired
equipment of $117,958 and $80,513 during the six months ended June 30, 2019 and 2018, respectively.
Note
6 - Debt
CW
has installment notes payable secured by our transportation equipment. Interest rates range from 2% to 18% per annum and averaged
7.98% and 6.98% as of June 30, 2019 and December 31, 2018, respectively. The terms of these notes range from 36 to 72 months and
average 59. Total payments under these notes amounted to $12,305 and $9,232 as of June 30, 2019 and December 31, 2018, respectively.
In
2019, CW acquired notes of $107,958 for property and equipment and made repayments of $52,658 and acquired notes of $76,485 for
property and equipment and made repayments of $89,755 in 2018.
As
of June 30, 2019, the aggregate annual maturities of debt are as follows:
|
Year Ending December 31, 2019
|
|
Amount
|
|
|
2019
|
|
$
|
57,446
|
|
|
2020
|
|
|
108,297
|
|
|
2021
|
|
|
79,291
|
|
|
2022
|
|
|
68,431
|
|
|
2023
|
|
|
33,965
|
|
|
Thereafter
|
|
|
16,275
|
|
|
Total
|
|
$
|
363,704
|
|
Note
7 – Related Party Transactions
Short
term notes payable includes $295,000 and $295,000 as of June 30, 2019 and 2018, respectively of noninterest-bearing loans from
related parties. Interest expense of $11,703 and $11,703 was imputed for the six months ended June 30, 2019 and 2018.
The
Company leases land for storage of transportation equipment on a month to month lease from its President for $1,500 per month.
Note
8 – Concentrations
Accounts
receivable as of June 30, 2019 are concentrated among three customers representing 64%, 16% and 11% of accounts receivable. As
of December 31, 2018, three customers make up 72%, 15% and 11% of accounts receivable
Revenue
includes a significant concentration among customers for the six-month ended June 30, 2019, in which two customers represent 72%
and 14% of revenue.
Revenue
includes a significant concentration among customers for the year ended December 31, 2018, in which two customers represent 42%
and 21% of revenue.
Note
9 – Subsequent Events
Subsequent
events have been evaluated through July 29, 2019, the date these financial statements were available to be released and noted
no other events requiring disclosure.
CW
PETROLEUM CORP
12,995,000
SHARES OF COMMON STOCK
OFFERING
CIRCULAR
October
15, 2019
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