11782 Jollyville Road, Ste. 211B
Austin, TX 78759
Telephone: 512-464-1225
Fax: 512-276-6602
www.usaoilandgas.com
1,029,378,400 common shares outstanding
371,706,055 shares in the float
2 beneficial shareholders
1,098 shareholders of record
121,888 preferred shares outstanding
0 shares in the float
0 beneficial shareholders
25 shareholders of record
Earnings
i)
strategy is to steadily acquire small to mid-size family owned oil and gas service
companies that meet the following criteria:
minimum of three years.
important benefits. First and foremost we have found that well-established businesses in
this industry provide very stable growth and profits. Oil and gas products, primarily
refined fuel, propane, and lubricants are purchased from local suppliers and then sold and
delivered to a broad range of regional customers. While oil prices can affect demand it
has very little impact on gross profit as margins are fairly fixed. Secondly, within the
Midwest region where we are focused, there is a robust supply of possible target
acquisitions. New businesses in the industry tend to be rare because of the relatively high
cost of entry (bulk plants and tanker trucks) and more stringent environmental regulation.
Finally, the Midwest region also has a wide variety of suppliers and propane costs that
are lower than the rest of the country. This combination provides what we believe is a
unique opportunity for growth and success: An industry with many small regional
players, a business that has stable growth and profits, and a region that has a strong,
varied network of suppliers providing comparatively low price fuel to a part of the
country that shows increased demand for oil and gas products.
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investment:
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nature of the business provides a large number of acquisition targets; and
at a time, or one storage tank at a time.
business. Such commodities are in constant demand and have largely escaped
recessionary pressure.
At the corporate level we offer acquisition prospects a unique opportunity in that, at least
in the near term, we do not intend to take over operational control. Sellers therefore are
able to gain the financial security of a sale while staying on board to manage the
business, share in the continued success and participate in eventually replacing
themselves when they are ready to retire. The goal is to combine the benefits of a
publically traded company with the efficiency and close customer relationships of a small
company. Once several acquisitions are complete we will utilize synergies to work
towards achieving greater operational efficiencies. This is an opportunity that does not
often present itself to sellers and which we feel is a competitive advantage when bidding
against other potential buyers.
We deploy a proprietary prospecting system to identify companies that fit our strategy.
The system incorporates successful middle-American companies that are not readily
targeted by large conglomerate industries. Our management then intends to use its
operational expertise to grow profits through streamlined processes and the synergies
between the companies that are purchased.
Form 10 with the United States Securities and Exchange Commission in order to register
its common stock pursuant to the Securities Exchange Act of 1934, as amended; and to
close a third acquisition.
efficiencies from the combined operations with Turnbull. Management has unique
experience and skill with improvement of operational efficiencies and will utilize that
experience to lower costs and increase profit. There is also the opportunity for growth
through marketing both at the local level and through the increased exposure that comes
with being a public company. To date, both Turnbull and United have done very little to
no advertising or direct marketing.
In addition to our acquisition strategy, we intend to investigate the development or
licensing of our patented technology for the measurement of the magnitude of
environmental disturbances in harsh environments. We hope this intellectual property
will facilitate the successful development and commercialization of techniques and
devices enabling greener exploration and production; ones that minimize the
environmental footprint of drilling activity.
The Issuer intends to purchase additional hauling equipment.
12 months. There will be additional employees once intended acquisitions are
completed; however these employees will remain with the target corporations.
Operations
On a consolidated basis, the balance sheet current assets are $2.2 million against current
liabilities of $5.6 million. The largest component of the current liabilities is a $4.4 million
note payable to Jeff Turnbull for the acquisition of Turnbull. USOG is targeting to pay
this note within six months of becoming a fully reporting company and has amended the
original acquisition agreement to extend the deadline for payment of the note to
December 31, 2010. Excluding the note payable, the ratio of current assets to current
liabilities is 1.87. When the note is included the current ratio is 0.40. The ratio of total
assets divided by total liabilities is 1.05. The United acquisition includes a note payable
for $500,000 that is due December 31, 2011.There is also a note payable to a Canadian
accredited investor for $750,000 that is due on April 15, 2011.
Accounts receivable are shown net of allowance for doubtful accounts in the amount of
$1.4 million. Accounts receivable is from Turnbull (and its subsidiary, Basinger Propane)
and United subsidiaries. Turnbull evaluates accounts receivable annually and writes off
accounts considered uncollectible. Turnbull also charges 21% interest on all accounts
receivable over 30 days, which historically has covered amounts lost due to uncollectible
accounts. Goodwill of $4.2 million is the result of the Turnbull/Basinger and United
acquisitions.
Statement of Operations
For the quarter ended March 31, 2010, the Issuer achieved sales of $5.6 million with net
income of $136,670. These figures include the financial results of Turnbull/Basinger and
United. Interest expense of $44,051 is comprised of 8% annual interest on $750,000 note
payable to Canadian investor and 3.5% annual interest on $4.0 million note payable to
Jeff Turnbull. Recovery of bad debt in the amount of $2,360 was made on a customer in
Kansas that had outstanding payables to the company for over two years. Continued
efforts will be made to collect on additional accounts that have previously been written
off. USOG has significantly cut its corporate overhead expenses and use of consultants to
reduce annual budget from approximately $1.0 million in 2008 and 2009 to projected
$650,000 for 2010.
Statement of Cash Flows
The cash balance increased in the quarter from $348,685 to $503,186. Operating
activities provided $21,517 of cash primarily from operating profit of $154,696.
During the quarter, the company raised an additional $125,000 via the sale of shares in a
Section 504 offering. The company is pursuing additional cash from the sale of
convertible notes to existing shareholders as well as equity financing through investment
banks and accredited investors to fund the remaining balance on the note to Jeff Turnbull
and owners of United Oil. Once these notes are paid, the Company will have full access
to the proceeds from operations.
default not cured within 30 days with respect to any indebtedness of the issuer exceeding
5% of the total assets of the issuer.
On January 1, 2010, the Issuer purchased all of the stock ownership in United Oil & Gas,
Inc. located in Bottineau, North Dakota.
shares of common stock, respectively, to a New York State accredited investor, for a total
amount of $125,000. This was approximately $0.0097 a share..
Officers
No amendments to the Certificate of Incorporation or Bylaws. However, the board did
designate a Series B preferred shares in January 2010 this did not change the Certificate
of Incorporation or Bylaws. No Series B preferred shares have been issued.
Contracts) and XIX (Certificate of Incorporation and Bylaws) of Section One of the
Reporting Guidelines have already been described and attached in prior disclosure
statements, and have not changed since such prior statements.
officer of the issuer (or any other persons with different titles, but having the same
responsibilities).
Oil and Gas Corp; 2. Based on my knowledge, this disclosure statement does not contain
any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information
included or incorporated by reference in this disclosure statement, fairly present in all
as of, and for, the periods presented in this disclosure statement.
Date: Wednesday, May 19, 2010
/s/ Alex Tawse