UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 000-31945
For the quarter ended June 30, 2003
POWDER RIVER BASIN GAS CORP.
(Exact name of small business issuer as specified in its charter)
Colorado
(State of incorporation)
84-1521645
(IRS Employer Identification #)
11600 German Pines
Evansville, In 47725
(812) 867-1433
(Address and telephone number of principal executive office)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No As of June 30, 2003, 46,387,833
shares of common stock, $0.001 par value, were outstanding. Transitional Small
Business Disclosure Format (check one): [ X ] Yes [ ] No .
PART I: Financial Information: Item 1. Financial Statements
Powder River Basin Gas Corp.
Consolidated Balance Sheets
As of June 30, 2003 and December 31, 2002
(unaudited)
June30 December 31
------------------------------
------------------------------
ASSETS
CURRENT ASSETS
Cash $ 2,516 $ 12,556
Accounts receivable - -
Other current assets - -
------------------------------
------------------------------
Total current assets 2,516 12,556
Oil and gas properties using full cost
accounting (note 3)
Properties not subject to amortization 1,284,251 1,853,469
Accumulated amortization - -
------------------------------
------------------------------
Net oil and gas properties 1,284,251 1,853,469
------------------------------
------------------------------
Other Assets 28,576 -
Total assets $ 1,315,343 $ 1,853,469
==============================
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 50,028 $ 114,020
Accrued expenses 9,476 48,953
Related party payable - 317,700
Notes payable 151,400 626,400
------------------------------
------------------------------
Total current liabilities 210,904 1,107,073
------------------------------
------------------------------
Long term debt (note 4) 199,461 -
Total liabilities 410,365 1,107,073
------------------------------
------------------------------
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share;
50,000,000 shares authorized; 20,437,833
and 19,907,833 shares issued and
19,517,833 and 16,347,833 outstanding 46,387 20,437
Capital in excess of par value 4,292,317 3,870,467
Accumulated deficit (3,458,655) (3,131,032)
Treasury stock; 920,000 and 3,560,000 shares (920) (920)
------------------------------
------------------------------
Total stockholders' equity 879,128 758,952
------------------------------
------------------------------
Total liabilities and stockholders' equity $ 1,315,343 $ 1,866,025
==============================
POWDER RIVER BASIN GAS CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
AS OF JUNE 30, 2003 AND JUNE 30, 2002
Three Months Ending Six Months Ending
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------------------- -------------------
REVENUE
Oil and gas sales $ - $ - $ - $ -
Other operating revenue - - - -
------------------- -------------------
Total revenue - - - -
EXPENSES
General and administrative 354,256 72,181 356,462 137,229
Lease operating costs - 16,211 - 71,315
Legal and professional 21,371 19,633 23,371 43,270
Travel - 1,400 - 9,216
------------------- ------------------
Total expenses 375,627 109,425 379,833 261,030
NET OPERATING LOSS (375,627) (109,425) (379,833) (261,030)
OTHER INCOME (EXPENSE)
Interest expense (9,476) 1 (9,476) (502)
--------- --------- --------- --------
NET LOSS (385,103) (109,424) (389,309) (261,532)
--------- ---------- --------- ---------
BASIC LOSS PER COMMON SHARE (0.008) (0.01) (0.015) (0.03)
--------- ---------- --------- ---------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 46,387,833 9,341,538 25,237,833 9,341,538
========== ========= ========== =========
Powder River Basin Gas Corp.
Consolidated Statement of Stockholders' Equity (Unaudited)
For the Period Ended June 30, 2003
Capital in
Common Stock Excess of Retained Treasury Stock
---------------------- Par Value Deficit --------------------
Shares Amount Shares Amount
---------- -------- ----------- --------- -------- ---------
Balance at inception on June 13, 2001 $ - $ - $ - - $ - $ -
Common stock issued for organization
costs; $0.001 per share 3,350,000 3,350 (3,350) - - -
Common stock issued for services; $0.001
per share 5,650,000 5,650 (5,650) - - -
Common stock returned due to non
completion of services; $0.001 per
share - - - - (5,040,000) (5,040)
Reverse acquisition adjustment 9,960,000 9,960 (9,960) - - -
Common stock issued for related party
payable at $0.81 per share 100,000 100 89,900 - - -
Common stock issued for services at
$0.81 per share - - 453,040 - 560,000 560
Common stock issued for cash at $1.10
per share 600,000 600 664,390 - - -
Common stock issued for services at
$1.11 per share - - 1,023,730 - 920,000 920
Common stock issued for payable at $1.00
per share 247,833 247 247,587 - - -
Net loss for the year ended December 31,
2002 - - - (1,786,236) - -
---------- --------- ----------- ----------- ----------- ---------
Balance at December 31, 2001 19,907,833 19,907 2,459,687 (1,786,236) (3,560,000) (3,560)
Powder River Basin Gas Corp.
Consolidated Statement of Stockholders' Equity (Unaudited) (continued)
For the Period Ended June 30, 2003
Capital in
Common Stock Excess of Retained Treasury Stock
---------------------- Par Value Deficit --------------------
Shares Amount Shares Amount
---------- -------- ----------- --------- -------- ---------
Balance at December 31, 2001 19,907,833 19,907 2,459,687 (1,786,236) (3,560,000) (3,560)
Common stock issued for payables; $0.61
per share - - 152,250 - 250,000 250
Common stock issued for services at
$0.65 per share - - 407,420 - 630,000 630
Common stock issued for cash at $1.00
per share 30,000 30 29,970 - - -
Common stock issued for services at
$0.59 per share - - 665,570 - 1,130,000 1,130
Common stock issued for services; $0.09
per share - - 56,070 - 630,000 630
Common stock issued for related party
payables; $0.20 per share 500,000 500 99,500 - - -
Net loss for the year ended December 31,
2002 - - - (1,283,110) - -
---------- --------- ----------- -----------------------------------
Balance at December 31, 2002 20,437,833 $ 20,437 $ 3,870,467 $ (3,069,346) (920,000) $ (920)
---------- --------- ----------- -----------------------------------
Common stock issued for accrued
salaries and services; $0.025 per share 5,200,000 5,200 124,800 - - -
---------- --------- ----------- -----------------------------------
Common stock issued for services & N/P 20,750,000 20,750 297,050 - - -
---------- --------- ----------- -----------------------------------
Net Loss for the period ending June 30,
2003 - - - (389,309) - -
---------- --------- ----------- -----------------------------------
Balance at June 30, 2003 46,387,833 46,387 4,292,317 (3,458,655) (920,000) (920)
========== ========= =========== ===================================
Powder River Basin Gas Corp.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Month Period Ending June 30
2003 2002
------------ -------------
------------ -------------
Cash flows from operating activities
Net loss $ (389,309) $ (152,109)
Adjustments to net loss provided by
operating activities:
Common stock issued for services
rendered -
Common stock issued for payment of acct
payable (662,199) 200,000
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable - (75,000)
Increase in other current assets - -
(Decrease) increase in accounts
payable 19,452 (167,313)
------------ ------------
Net cash provided by (used in)
operating activities (1,032,056) (194,421)
------------ ------------
Cash flows from investing activities
Relinquishment of leases 569,217 -
Expenditures for oil and gas property
development - (42,000)
------------ -------------
Net cash used in investing activities 569,217 (42,000)
------------ -------------
Cash flows from financing activities
Proceeds from notes payable and long-term
liabilities (1,282) 134,466
Proceeds from issuance of common stock 130,000 100,000
------------ -------------
Additional Paid in Capital 317,700 -
Net cash provided by financing
activities 446,417 234,466
------------ -------------
Net increase (decrease) in cash and cash
equivalents (16,421) (1,955)
Cash at beginning of period 18,938 2,323
------------ -------------
Cash at end of period $ 2,516 $ 368
============ =============
Cash paid for:
Interest $ 9,476 $ -
Income taxes $ - $ -
Non cash financing activities:
Common stock issued for payment of accounts
payable pertaining to acquisition of oil and
gas properties $ - $ -
Common stock issued to retire accounts payable $ 130,000 $ -
Powder River Basin Gas Corp.
Notes to Consolidated Financial Statements
For the Period Ended June 30, 2003
NOTE 1 - PREPARATION OF FINANCIAL STATEMENTS
The unaudited consolidated financial statements of Powder River Basin Gas Corp.
for the period ended June 30, 2003, included herein have been prepared in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission ("SEC") and should be read
in conjunction with the audited financial statements and notes thereto contained
in the Company's latest Annual Report filed with the SEC on Form 10-KSB/A. In
the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim period presented have been reflected
herein. The results of operations for the interim period are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosures
contained in the audited financial statements for the most recent year ending ,
December 31, 2002, as reported in the Form 10-KSB/A, have been omitted.
NOTE 2 - ORGANIZATION
The Company was incorporated under the laws of Colorado on August 27, 1999 as
Celebrity Sports Network, Inc. The principal activities since inception have
been organizational matters and obtaining financing. The Company was formed in
an effort to broaden the scope of public appearances available to current and
former professional athletes. The Company, however, changed their operations in
2001 through a reverse acquisition with Powder River Basin Gas Corp., an oil and
gas company.
Power River Basin Gas Corp. (PRBG) was incorporated in Colorado on June 13,
2001. The Company is engaged in the business of assembling and managing a
portfolio of undeveloped acreage in the Powder River basin coal bed methane
(CBM) play in Sheridan County, Wyoming. This acreage is located in a proven
geological setting and near operators such as Western Gas Resources, Barrett
Resources, Phillips Petroleum, J.M. Huber and others. The Company has leasehold
interests in approximately 7,070 net acres. Two wells have been drilled on one
lease and eleven additional wells have been spudded and partially drilled.
Pursuant to a reverse acquisition and reorganization agreement, PRBG was
acquired by Celebrity Sports on September 5, 2001. At the time of the
acquisition, the Company changed its name to Power River Basin Gas Corp. and
issued 9 million shares of common stock for all the issued and outstanding stock
of PRBG; thus, making PRBG a wholly-owned subsidiary of the Company. Because
PRBG is the accounting acquirer in the reverse acquisition, all financial
history in these financial statements are that of PRBG.
The Company issued 9 million shares of common stock for 9 million shares of
PRBG, therefore, an adjustment to the shares outstanding was necessary to
reflect the other shareholders of the Company at the time of acquisition. No
goodwill was recorded in the acquisition and the purchase method of accounting
was used to record the transaction.
In March 2003, the Company completed an amendment to its Articles of
Incorporation providing for a re-capitalization such that the Company increased
its authorized capital stock to 200,000,000 shares, par value $0.001 and
10,000,000 shares of Preferred stock, par value $0.001.
In May 2003, Imperial Petroleum, Inc. acquired Board and Management control of
the Company through the acquisition of approximately 54% of the common stock of
the Company from its former management, Greg Smith, and entities controlled by
Smith. In connection with the acquisition of shares by Imperial, all outstanding
notes and accounts payable to Smith and entities controlled by Smith were
retired. As a result of the change in control, the Company is now a subsidiary
of Imperial Petroleum, Inc. and is managed by Imperial's management.
NOTE 3 - OIL AND GAS PROPERTIES
The full cost method is used in accounting for oil and gas properties.
Accordingly, all costs associated with acquisition, exploration, and development
of oil and gas reserves, including directly related overhead costs, are
capitalized. In addition, depreciation on property and equipment used in oil and
gas exploration and interest costs incurred with respect to financing oil and
gas acquisition, exploration and development activities are capitalized in
accordance with full cost accounting. Capitalized interest for the quarter ended
June 30, 2003 was $0. All capitalized costs of proved oil and gas properties
subject to amortization are being amortized on the unit-of-production method
using estimates of proved reserves. Investments in unproved properties and major
development projects not subject to amortization are not amortized until proved
reserves associated with the projects can be determined or until impairment
occurs. If the results of an assessment indicate that the properties are
impaired, the amount of the impairment is added to the capitalized costs to be
amortized. As of June 30, 2003, proved oil and gas reserves had been identified
on one of the Company's oil and gas properties, however, no extraction has
begun; therefore, no amortization was recorded for the period ending June 30,
2003. All other wells are incomplete as of June 30, 2003.
NOTE 4 - LONG TERM DEBT
At June 30, 2003, the Company had the following long-term liabilities:
Debentures held by accredited investors, which are
convertible into Company common stock upon effective
registration and bear interest at 6% per annum,
though maturity or conversion; Debentures are
convertible into Company common stock at a price
equal to 75% of the lowest closing bid price per
share (as reported by Bloomberg, LP) of the Company's
common stock for the seven trading days immediately
preceding the conversion date $ 199,461
--------------
Powder River Basin Gas Corp.
Notes to Consolidated Financial Statements (continued)
For the Period Ended June 30, 2003
NOTE 5 - COMMON STOCK
In February 2003, the Company issued 5,200,000 shares of treasury stock to
satisfy debt associated with accrued salaries and other services at $0.025 per
share.
In March 2003, the company issued 5,000,000 shares of common stock to retire
notes and accounts payable and other services at $0.017 per share.
ITEM 2: Management's Discussion and Analysis OR PLAN OF OPERATION
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
The Company is including the following cautionary statement to make applicable
and take advantage of the safe harbor provision of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statements made by, or on
behalf of, the Company. This quarterly report on form 10-QSB/A contains
forward-looking statements. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, expectations, future events or
performance and underlying assumptions and other statements which are other than
statements of historical facts. Certain statements contained herein are
forward-looking statements and, accordingly, involve risks and uncertainties
which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. The Company's expectations, beliefs
and projections are expressed in good faith and are believed by the Company to
have a reasonable basis, including without limitations, management's examination
of historical operating trends, data contained in the Company's records and
other data available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result or be achieved or
accomplished. In addition to other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause actual results to differ materially from those discussed in the
forward-looking statements: the ability of the Company to respond to changes in
the information system environment, competition, the availability of financing,
and, if available, on terms and conditions acceptable to the Company, and the
availability of personnel in the future.
PLAN OF OPERATION
The Company's business strategy for the next twelve months includes focused
acquisitions and drilling operations which may be curtailed, delayed or canceled
as a result of a variety of factors, including unexpected drilling conditions,
pressure or irregularities in formations, equipment failures or accidents,
weather conditions and shortages or delays in equipment delivery. The Company
has drilled two gas wells that will produce commercially viable gas resources
once the appropriate infrastructure (i.e., pipeline) is in place. The Company
does not currently have sufficient funds to implement drilling and completion
operations on its leases and properties alone. As a result, the Company is
seeking out and entertaining offers from outsiders who wish to purchase all or
part of the Company's leases for development.
Liquidity and Capital Resources
The Company's working capital deficit on June 30, 2003 was $234,238, resulting
primarily from the use of accounts payable to finance the acquisition of
leasehold interests in the Powder River Basin. The Company has no established
revenue sources and continues to rely on loans from shareholders, sales of
equity and other financing to sustain operations as a going concern. There is
currently no agreement from any officer or shareholder to continue to provide
working capital in order to maintain operations. The Company is seeking to raise
the necessary funds to commence drilling operations on its leasehold properties
and it may become necessary to farmout or joint venture a portion or all of its
properties, if sufficient funds cannot be raised..
Current Liabilities
On June 30, 2003, the Company had approximately $236,754 in current liabilities.
Of this amount, approximately $151,400 is due to various entities for the
purchase of leasehold interests in the Powder River Basin and related expenses
incurred by the Company. The company is delinquent in the payment of these
obligations and as a result some of its leases may be forfeited.
Need for Additional Financing for Growth
The growth of the Company's business will require substantial capital on a
continuing basis, and there is no assurance that any such required additional
capital will be available on satisfactory terms and conditions, if at all. The
Company may pursue, from time to time, opportunities to acquire oil and natural
gas properties and businesses that may utilize the capital currently expected to
be available for its present operations. The amount and timing of the Company's
future capital requirements, if any, may depend upon a number of factors,
including drilling, transportation, and equipment costs, marketing expenses,
staffing levels, competitive conditions, and purchases or dispositions of
assets, many of which are not in the Company's control. Failure to obtain any
required additional financing could materially adversely affect the growth, cash
flow and earnings of the Company. In addition, the Company's pursuit of
additional capital could result in the incurrence of additional debt or
potentially dilutive issuances of equity securities.
The Company's ability to meet any future debt service obligations will be
dependent upon the Company's future performance, which will be subject to oil
and natural gas prices, the Company's level of production, general economic
conditions and financial, business and other factors affecting the operations of
the Company, many of which are beyond its control. There can be no assurance
that the Company's future performance will not be adversely affected by such
changes in oil and natural gas prices and/or production nor by such economic
conditions and/or financial, business and other factors. In addition, there can
be no assurance that the Company's business will generate sufficient cash flow
from operations or that future bank credit will be available in an amount to
enable the Company to service its indebtedness or make necessary expenditures.
In such event, the Company would be required to obtain such financing from the
sale of equity securities or other debt financing. There can be no assurance
that any such financing will be available on terms acceptable to the Company.
Should sufficient capital not be available, the Company may not be able to
continue to implement its business strategy.
ITEM 3: CONTROLS AND PROCEDURES
Based on their evaluation of the Company's disclosure controls and procedures as
of a date within 90 days of the filing of this Report, the Chairman and Chief
Executive Officer have concluded that such controls and procedures are
effective.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect such controls subsequent to the date of
evaluation.
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company is a Plaintiff involved in a legal proceeding in the United States
District Court for the District of Colorado, Civil Action No. 02-0764, versus
John Skinner, an individual. The lawsuit was settled in the fourth quarter of
2002 and as a result, the Company recorded a note payable to Mr. Skinner of
$40,000 which remains outstanding as of June 30, 2003.
ITEM 2: CHANGES IN SECURITIES
In March 2003, the Company filed a Schedule 14C , Definitive Information
Statement in which the majority of the shareholders of the Company had agreed to
amend the Articles of Incorporation of the Company and increase the authorized
shares of common stock, par value $0.001, of the Company from 50,000,000 shares
to 200,000,000 shares of common stock, par value, $0.001 and to authorize the
issuance of 10,000,000 shares of preferred stock. The Schedule 14C is included
herein by reference.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5: OTHER INFORMATION
NONE
ITEM 6: Exhibits and Reports on Form 8-K
(a)Exhibit 99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 of the Chief Executive Officer.
(b)Reports
Report on Form 8-K, as amended, Celebrity Sports Network, Inc.,
filed January 24, 2002; Change in Registrant's Certifying Accountant
Signatures
Pursuant to the requirements of Section 13 or 15(d) the Securities and Exchange
Act of 1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Powder River Basin Gas Corp.
Registrant
By: \s\ Jeffrey T. Wilson, President
Jeffrey T. Wilson, President
Date: August 12, 2003
Certificate of Chief Executive Officer
I, Jeffrey T. Wilson, President and Chairman of Powder River Basin Gas Corp.
certify that:
1. I have reviewed this annual report on Form 10-QSB of Powder River Basin Gas
Corp. ("PRVB").
2. Based on my knowledge, this annual report 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 annual report.
3. Based on my knowledge, the financial statements and other financial
information included in this annual report fairly present, in all material
respects, the financial condition, results of operations and cash flows of
PRVB as of, and for, the periods presented in this report.
4. PRVB's other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in the Exchange
Act Rules 13a-14 and 15d-14) for PRVB and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to PRVB, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b. evaluated the effectiveness of PRVB's disclosure controls and
procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. PRVB's other certifying officers and I have disclosed, based on our most
recent evaluation, to our auditors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect PRVB's ability to record,
process, summarize and report financial data and have identified for
PRVB's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in PRVB's internal controls.
6. PRVB's other certifying officers and I have indicated in this annual report
whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: August 15th, 2003
____________________________________________________
Jeffrey T. Wilson, President and Chairman
Exhibit 99.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and
(b) of Section 1350, Chapter 63 of Title 18, United States Code) (the "Act"),
each of the undersigned officers of Powder River Basin Gas Corp., a Colorado
corporation (the "Company"), does hereby certify that:
The Quarterly Report on Form 10-QSB for the quarter ended June 30, 2003 (the
"Periodic Report") of the Company fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
780(d)) and information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Jeffrey T. Wilson
-----------------------------------
Jeffrey T. Wilson
President
Powder River Basin Gas Corp.
Dated: August 15, 2003
The foregoing certification is being furnished solely pursuant to Section 906 of
the Act and is not being filed as part of the Periodic Report or as a separate
disclosure document.